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A Good Time to Refinance?

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
November 13, 2020 7:03 am

A Good Time to Refinance?

MoneyWise / Rob West and Steve Moore

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November 13, 2020 7:03 am

If you’ve been wondering whether it’s time to refinance your house, today’s low interest rates could help you make up your mind. But is interest the only thing to consider when deciding to refinance? On the next MoneyWise Live, hosts Rob West and Steve Moore talk with mortgage expert, Dale Vermillion, about the current real estate climate. We’ll ask on the next MoneyWise Live at 4pm Eastern/ 3pm Central on Moody Radio. 

Rob West and Steve Moore
Rob West and Steve Moore
The Todd Starnes Show
Todd Starnes
Rob West and Steve Moore
The Todd Starnes Show
Todd Starnes
Rob West and Steve Moore

If you've been sitting on the fence, wondering whether it's finally time to refinance your house to these low interest rates could help you make up your mind right rates have never been lower, but consider when deciding refinance today host Rob Wescott mortgage expert Dale Elliott about the currently listed miniature falls on anything financial at 805 five 7805 two 5000 is now a good time to be financed. Let's find out. That's not moneywise. Yes, Dale Vermillion, is author of navigating the mortgage may use the simple truth about financing your home but he's also the perfect guy to talk to about refinancing your home or rebuilding a Chevy 396 might have to ask A little later in the program Dale great to have your back on moneywise live Rob, have you been building many cars lately do well I'm building any but I'm actually going to a car show tomorrow to drop this development have a little fun with it will make sure it's all in your budget okay onto the view started writing now.

Steve you might be able to make it there in time to join him so I let's start with a little background Dale, if you will. What drives mortgage interest rates and why are we seeing these record lows today. Well, you know that's a twofold question because what we drive right is the treasurer in the 10 year bond yields that that's what has always for decades and decades.

But over the last several years with all the economic downturns we had started in 2008 and up to now were seeing more more the Fed is really controlling interest rates and we are seeing rates right now at the lowest they've been in 49 years and it is amazing the average rate is 2.84% as of today that the average 30 year fixed rate on alone. It's really incredible. Now that is incredible and you can understand why there's been a C run on refinancing, which is why so many of these companies are backed up working to get into the details on how and why you should consider refinancing.

But let's talk about the real estate market.

What happens to the real estate market. When interest rates are so low.

Well, you know, that's another interesting thing because we are now in our 10th year on a national scale of increased property values. That's not common. You don't want to run and these low interest rates have really had a major impact and continue to bring them up. In fact, just in the last quarter we saw 12% increase in property values in one quarter nationwide.

The median value of a home today is $313,000. That's among the highest we've ever seen in history. Incredible.

Yeah, you know, and we say you need to be careful because you can't assume that housing prices will always continue to rise, but were in one of these you know that there is where you said it's been literally a decade and you were seeing these big spikes in home values are you seeing any pockets where home prices are more reasonable.

Well, you know there's there's a couple of things are really important. Talk about real estate today. One of the biggest trends right now Rob that were seeing as is a real big push to vacation type resort type areas because of all the work from home, becoming very common thing that people now are saying you know what I'm working from home. I might for a long time. I want to work where I want to vacation that's become a real big thing. So those values are going through the roof. The Midwest seems to have a little bit more median size values that people can actually afford and get into and some pockets run other parts of the country works a little bit more rural and a little bit more suburban your seeing that to one of the concerns were seeing in the marketplace is a people even urban areas because of some of the problems you had in our cities over this year that a recent trend to the restart and see if same time. Still I do see if you're selling a home in the midst of this, you're going to get top dollar which helps you when you're buying a top dollars with your home a first-time homebuyer though how these conditions affect that group.

Specifically, well, the biggest thing for first-time homebuyers that you have to understand that you know values are are up from where they normally are you not be prepared to buy little more, but you remember, you offset that through the interest rate is the most formal time that we see the buy a home in a long time so the fact that rates have gone down by almost 1 1/4% in the last six months, which is a massive drop in the lowest ever does allow you before that you just make sure you do in your budget doing all the things we teach you every time to make sure you're making a wise decision. When we come back from this break to talk about a lot more should you rinse if you can't afford to buy for refinancing that is much more of the rules for getting involved in today's program. Just give us a call 355-7000. This is only one is many people are experiencing financial challenges such as credit card debt downsizing that in jobs, savings, more than half of all divorces are the result of financial pressures at home, but there's hope in your money counts biblical financial expert Howard date shows that the Bible is a veritable managing your finances will discover the profound relationship with God, your money counts is available when you click the start button moneywise live when it comes to investing guidance you want advice, grounded in God's word.

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Don't do this alone. That's real. Follow me for more resources on Instagram.spell radio that is robbing you of freedom and peace of mind. Christian credit counselors can help where nationwide nonprofit counseling organization has helped over 3000 individuals in the last 27 years get out of credit card debt percent faster while honoring that that info to learn how Christian credit counselors can help you visit Christian Christian credit counselors not call 800-557-1985 one today is your host is Rob Moore and our guests. None other than our good friend Dale Vermillion.

He's the author of navigating the mortgage maze. The simple truth about financing your home but of course it's only simple because you've read the first half of the book is how you get to the simple part will tell you to find this book in a little bit.

But first, all the sudden lots of blinking lights here, let's take a call guys from Scott Indianapolis and what's in your mind. Scott, I have a friend who is purchased a home, and he's got a loan at 4% and he purchased the borrowed $335,000 is been aggressive in his pay down loan's current balances like 210,000 but he's not willing to consider refinancing at a lower rate because in his his thoughts is that he would be paying the highest principle at the beginning of the loan and he doesn't want to start that whole loan process and paying a higher being the highest principle at the beginning of loan again just to give him some wisdom on how to how to pursue this well it's a great question Scott because this is where so many people find themselves and they don't want to inadvertently by going for a lower rate. Put themselves in a bad spot because they are in effect resetting the term do you know what the original term was and how many years into this mortgagee is, I believe that the original term was 30 years and he's in a sortie paid five years. Okay, so Dale 25 years remaining is got to euros to 10 on three or $35,000 home at 4%. He's obviously been aggressive in paying this down. What advice do you have, given his concerns. First off, your friend is very wise thought process. Not wanting to repay monies already paid, and I love that, but effective matter is weighted to set up 25 years left. You got lenders all over the country can do 25 year financing 20 year financing 15 year financing. Some of them in odd terms 22 or 23 years, so one of the great advantages of refinancing the weight you should always door all the listeners. If you never want to reach them term because then you are repaying interest. You've already paid, but his principal when he refinances that on a 25 year loan he just picking up where he left off at a lower interest rate, which means that he is actually saving more money storing his money better. It's a great use of God's resources. That's the way you would want to do it and what I would do if I was in this position is try to get down to maybe a 20 year loan for about the same payment based on the interest rate difference he's gotten five years right off is going to pay off much sooner and save tons of money during the process to let me ask you somebody who says you know what if I go with the 25 year mortgage program I might limit limit myself in the number of lenders willing to offer that I'm in a go with the new 30 year mortgage but I'm and asked them to run the amortization schedule to tell me how much extra I need to send every month to turn that thirty-year into a 25 year does that work in theory it it it works in Perry and not in practice, so you thought I intend to do that we might do it for three, four, five, six months one economic downturn. One thing that that that you know a message of our finances we change you want to be discipline.

I call this in the book before savings account create that for savings report yourself into it and then once you budget around your good and you're sure you get that benefit. That's the way to go but I think that's the key is we want to make sure the payments that's right.

And we would say 25% for principal, interest, taxes and insurance. But if it does let's try to at least match the remaining term if not shrink the remaining term Scotty feel like that helps you answer this question with your friend. It does, and it really comes down to shortening the length of the remaining length of the loan, so long as he stays less than 25 years, then he's he's in a better position to refine it yet.

What if I pick it up right of this principle plus any cost refinance alone will be that much money and then he's accelerating principal much faster. From day one.

So because a lower interest rate. Less is going interest more is going to principal. He's going to see within a year.

A good difference in his balance. Very good slice that we appreciate your calling your being a great friend and looking out for your buddy there. We should you checking in dear, let's get back to what we were discussing earlier. Let's talk about renting. You know you mentioned interesting what's going on in the housing market right now we've got historically low interest rates, which obviously may make some folks who are renting and feeling like they're throwing money away every month try to stretch to get that first home talk about whether you think renting is always a bad thing, and whether or not we should try to push it to make that purchase. Yet renting is not always a bad thing. It's not a preference obviously want to try to home home and buy or buy a home you want to get in the position were building equity. That's the key to it that's good stewardship, but look short term renting to be a very good solution for people and you never want to stretch beyond your means.

If you're buying just a by your pushing yourself to an uncomfortable budget. That's a mistake. You don't want to do that you want to make sure your position of affordability and save up that money then for that home. So when you do bite got a good down payment.

Got a good affordable payment. I'd rather see her rent a couple more years and then own the rest of your life and try to push to quick and get yourself in trouble is a phone number again were talking mortgages today. Of course I would also reduced. Would we discussed with Dale Vermillion. He's the author of navigating the mortgage bays and if you're thinking about taking out a mortgage. Maybe it's a first time mortgage. Maybe you're thinking of refinancing with these rates super ultra low this to be a good time to think about it, and a good time to call because we have a bunch of open lines 800-525-7000 toll-free 800-525-7000. If you'd like to speak with Dale and Rob West that we have our brand-new moneywise app out and by the way, if you haven't downloaded it yet, get it in your app store. Whether that's the Apple App Store the Google play store where you could just go to and that this is going to be our digital envelope system, but also the community where you can engage with other money was listeners pose questions and here's one from Louise Dale the just came in on the moneywise app that she's talking about a piece of property they have.

It's a homestead property there planning on building audit.

They're going to build a barn and this was a new term for me.

They're going to build up barn dominium that now. I may be there to rent these out or something. I don't know it's fabulous but here's the thing.

They gotta sell their primary residence first and she's wondering should we get a construction loan and then pay it off with the proceeds of the home or should we delay this and try to pay it with cash obviously would want them to try to delay that they can pay out a cash that way then I can get stuck with a construction loan in a home that won't sell another having to carry two mortgages but let's say they decided to go ahead with the construction what type of loan would they need and what else might they need to know you call the construction department so that's where the lender is going to bring the funds in the bill the construction and then when the home is done, that they take care of you know, making sure the inspections are done and in all everything all permits are in place and then when it's all done to convert that into a permanent mortgage that's the best kind alone to go for that. But while I'm with you. Look especially in today's marketplace were we don't know what coronavirus is going to do. We don't know what the economy is going to do. I never want to see people in a double mortgage situation. Ever they can help it, or to be caught in midstream.

So I would really recommend if you can wait, wait. If you can't then look for construction to perm loan.

I love it if you want to get involved in the moneywise community.moneywise app today in the app store Dell. Every line is full and I think every one of them is a mortgage question. Can you stay around to the next segment by the way the app is cool allotted to go. It is for the Tampa Florida not too far from where guest is today and let's see Gabby how can we help you get what you question for do time home buyer grant that long.

I don't know that that that call grants and loans for first-time homebuyers Dale the redhead was a lot of first-time homebuyer programs. A lot of them run on state levels.

What you want to do is talk to your local bank or local lender about what kind of programs they have many of those have what's called down payment assistance, which is a pretty cool program where you can go in and when you buy your going to get assistance on that down payment that you stay in the home for a certain number of years you don't have to repay that money so there are some really good programs out there. It just depends on what that state offers. I would again talk your lender and find out and see what they got available called in today wish you the best as you pursue this. Thanks so much, just tuning in its moneywise live with Rob Weston today Dale Vermillion with us to help us work through the world, mortgages, and where we are. We're heading these days building. Among the many in my condominium. Maybe a condo maximum something really.

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What you discover. Life will never look the same treasure principle is available when you click the store, but moneywise mortgage questions you have coming up is it a good idea to make mortgage payments every two weeks. What to look out for when refinancing don't want to be trapped some sort of plan I will get to those questions, but first Peter in Worcester, Ohio, and what your situation there. Today Peter I need my question is that I'm living with my parents right now. I'm 19 years old.

I'm looking to move out sometime in the future.

I don't really want to read. My parents have told me I couldn't stay living with them as long as I continue to save most of my money would be the best way to get property of my own without taking on a whole lot that obviously saving saving and paying cash would be best way would be the best way that I could do that will getting a property somewhat sooner than a couple questions and I look for Dale to weigh in. First of all, tell me about your work situation and then I'd also love to know how much you already have saved up that you could put toward a down payment so I graduated last year from high school. I am working full-time in construction actually working 50 hours a week.

Mo most weeks I am saved about $12,000 and I've been working that job August so I'm building money somewhat quickly, but yeah, about that you know that was helpful in and how much are you able to add to that every month in your current environment. Limited home about $2000 a month less, depending on the month. Sure your thoughts well anything you're looking to buy a home and move on to renting the first going to do a comparative analysis of what you're paying in rent and what that would get you in a mortgage that that'll start to get you in a mindset of at least what you know you can afford comfortably and you and what to make sense.

Your budget then once you have that number.

You can start the thing backwards into okay, what would it take you 20% down for that amount and what's my marketplace and sometimes you start with a condominium or duplex is your first home or smaller single-family home to begin any kind of a starters can be a good start for your mom about my personal exit 19. Like you, and it was only $40,000 in 1980, but today that be probably 110, 20,000 are equivalent and build equity very fast and help me to buy the next house in exile so that's the best way to approach it. The key is take the time got right now. Are you going to be home to parents to save that money up to get that good down payment and if you get in the sum that's equivalent to rent you really get yourself in a good position. I think that's exactly right immune mom and dad are giving you a great opportunity here.

You're obviously a hard worker Yorty thinking about your financial future.

Keep your lifestyle at a minimum try to save as much as you can and being able to put not only 20% down, but imagine if you could put 30 or 40% down and really get yourself in a solid financial position moving forward. I think that would be great. Peter understand the why not want to send you a copy of Howard Dean's book your money counts so you can explore this a bit further around the biblical principles of managing money. We appreciate your call him Peter as toward getting your first home, apartment, condo, whatever it is I don't forget your education you're still a very very young man and who knows what God has for you down the road a bit. Thanks much for calling Lehigh acres Florida WSR station and there are down there and Ora, what's your question today for Rob and Dale Vermillion called what if you're thinking about me financing and you know there are some things that these deep into internal and a happy knowing you don't know what I think that you can out party not a party to be exempt out of their very yeah Dale any traps she should keep her eye on this is refinancing yeah you don't make sure.

You're talking to multiple lenders talk to at least 3 to 4 between your bank. I maybe a credit union local mortgage broker, banker to get some different perspectives. You can start online with that by going to place like bank right make sure you remember that when you refinance you want to not just focus on what is payment but making sure you reduce that term on that mortgage image that earlier that's really critical and most important, make sure you do a budget before you moving about so you know what you can afford and then when it comes the fees.

Remember, you can finance fees into the loan. To minimize the cost of the front and just make sure that you're getting comparative offers so that you're getting a good deal between those letters and that way you know you're getting what you want.

Really appreciate your call today. Dale just a few seconds left Julie calling from Orlando wanted to know about a biweekly mortgage payment, making her payments every two weeks. One half payment every two weeks instead of one payment a month your thoughts on that approach. It also because what it does is it creates literally because you're paying 1/2 payment every 26 weeks of 13 payments per year. One additional payment per year that you're paying. Therefore, your reduction of 3 to 5 years of 30 year mortgage. Payback is a great half a payment every two weeks get you for the five years off your mortgage. I love it. Thanks for stopping by today. My friend were so grateful for. Love you guys got left to do sales in the mortgage may find Thanks for Dale, 57. How should we as Christians think about testing. What if we could invest our money in a way that aligns with what we believe that Eventide we believe it is supposed to love God and love our neighbor in the very practice of investing design investments for performance and a better world so you can invest for the future with a sense of wholeness and purpose. We call this investing makes the world rejoice. More information is Christian healthcare ministries enables believers to show love for one another by sharing each other's health costs through CHN's voluntary health cost-sharing programs members uplift each other spiritually and financially. CHN was an eligible option under the affordable care act and a Better Business Bureau accredited charity interested. Learn more by calling 800-791-6225 or online at CH ministries.more hi my name is how Hudson biblical studies major at the Moody Bible remember our nation's veterans meeting the week strong in the Lord your God with you and maybe radio you may know that you are loved by family and friends, by God, but do you really Dr. Gary Chapman writes known loan five how God uses it to communicate and how God is intimately involved, do you know if you have enough money of house. Do you know how much is enough. If not, one blue can help with this book. Mastering your money a step-by-step plan for experiencing financial contentment. Learn how to save, invest, and give wisely create a long-term financial plan and how to get out of debt. Find it all. Mastering your money by Ron blue available when you click the start button moneywise live John Scott and recount of the votes cast in the presidential election in has gotten underway. The audit will be completed by next Wednesday resurgence of the rotavirus and New York City Mayor Bill de Blasio says he will close schools.

If 3% of coronavirus test over a seven-day. Come back positive bears as the city is preparing to close all school buildings as soon as Monday if that rate crosses the threshold over the weekend. It's currently at 2.8%. Also, prices rose moderately in October as food cost jump by the largest amount in five months. The Labor Department reports its producer price index, which measures inflation pressures before they reach the consumer increased pretense percent last month talks I have it out again 399 points. The NASDAQ up 119 this is SRA news to moneywise live that's the place where you'll find well the homepage L for our like to know more about who we are and what we do like to find archives of past radio programs, free resources that you can use to balance your own home budget. Also maybe want to find a certified kingdom advisor in your specific area ways to connect with the budget coach. All of this and more. When you visit our newly updated website moneywise live.ORG let's go up to St. Cloud, Minnesota now and and thanks so much for your patience.

What you question for up being the claim crying value will be going down our economy many years and been thinking that in gold, silver, and wondering how beneficial that is how it can't purchase gold. How do you agree on how to utilize it right well and I would be careful with that.

Anytime we go through a period of unrest or uncertainty. This would certainly qualify with a global pandemic, and we've got to all kinds of market gyrations, especially early in the cycle of this pandemic we see a rise in the middle of the number of people selling gold physical gold coins and bars and so forth. But just a lot more talk about it because the price of gold tends to perform well during these periods of uncertainty, but I would guard against trying to get swept up into that for a few reasons. Number one is if we just look historically at the performance of gold. It tends to be more volatile than a properly diversified stock and bond portfolio and doesn't perform as well. Over time, yes there's got a wild moves to the upside, where people can get excited about a big game, but just if you look over a long period of time. It just doesn't tend to perform quite as well and so what you do with that. Well, I'd recommend you have an allocation to gold in your portfolio and the easiest way to do it and is without taking physical possession because to your point very illiquid and often times buying and selling involves a dealer with a markup.

Not only that, but you have to take possession of it. You've got a store and secure it, which means a safe and you gotta decide is that in your home or at your banker where and then to your point if you ever needed to converted to cash. You'd have to sell it because you're not getting it out there with a chisel and pay for the some gasoline with a borrowed for gold so there's a reason to have it because it's a store of value. It's a hedge against a falling dollar, and periods of unusual unrest, but I would do it through a mutual fund or an exchange traded fund, you can buy what are called tracking stocks or ETF's that basically the price of the underlying security mirrors the price. In this case of the commodity of gold and as the price of gold moves up it moves up with it and and consequently on the downside as well. And so it's a way for you to have an allocation to gold without actually taking physical possession in dealing with the other issues I just described. I would say you don't want more than 5% of your portfolio, and that just to maintain proper diversification is that all make sense to you, though I need help.


So for instance if you buy an exchange traded fund, which is essentially like a mutual fund. It's a basket of securities. The trades like a stock.

A great example this is not the only one is the ETF GLD which, as you might imagine stands for gold in its tracks. The underlying movement of the price of gold. So it's a way for you to have an allocation in your portfolio to gold. That's gonna move with gold, but you don't have to take physical possession, so you just own the ETF GLD and there's ETF's that represent all kinds of commodities and and precious metals and and so forth just like indexes so that's an example of a way you can have an allocation to gold without having to buy the physical and what's the best way for and to maybe get some more details and if she decides she wants to get involved perhaps by her way into the stock market was the best way for the customer. Well, you know, I would always recommend more talking about our hard earned and saved money and putting it to work.

Having a professional who can help you make these decisions or make them on your behalf. Obviously, with your goals and objectives in mind inside look at having an investment professional. If you have the time and expertise to do it yourself.

Perhaps that's what you been doing, then you know, depending on where your custody in terms of your portfolio in just about every custodian would be able to allow you to make a trade where you buy an allocation of an exchange traded fund, like the one I mentioned. So it really just depends on are you a do-it-yourselfer or have you delegated this responsibility to a professional. But again, and for most people. If you want to buy some gold as you look at the stock market and your life going forward. I'm probably there are better ways than buying gold bullion as you put it, breaking off a piece of chalk to our or our chunk of the hole to buy for a loaf of bread or gold coins. They also are difficult to handle, manage and store there better ways to do that in the stock market is a much better way than a taking possession of physical gold. Thank you very much.

Chicago, Illinois Tracy, how can we help one we have about hundred thousand bathing, earning any money so I that we would maybe take about 25,000 credit either towards our mortgage or one of our vehicle and we are not a refinance to a 15 year mortgage at about 2.250. We are offered so I don't know if it would be better to put the money to the vehicle wanted to let it out and put it toward the principle of the vehicle and if we did that that that work when you're paying down the principal on the home.

Yeah, the interest rates on both on the car loan as well as the home entry on how we have we have an offer like right now we have a 30 year that we had an offer for 15 year which is what we want to want to pay off quickly atop the ball at 2.25 per 15 year and the vehicle we one is at 1.9 but the other one is 2.9 okay in the mortgage you said you're considering refinancing or you are you have an existing mortgage that you're looking to hang onto. We would like to refinance, but we want a shorter term. Right now we have a 30 year and we would like to go with the 15 year and we were told to write credit that they can offer out around 2.25 450 and that's a fabulous rate. I think the thing you can want to look at their Tracy is whether there's discount points there. Whether they're charging you a good bit on the front end, buy down the rate or whether that is the APR that they're offering right out of the gate and you're only playing paying normal and customary closing costs so you want to look at that and probably shop around and compare that good faith estimate to some other lenders at least get would say three to compare it to, you know I like the idea of you owning these cars especially just because you know these are depreciating assets, and so I'd love for you to get out from under that payment every month and so I think you refinancing to this 15 year and then using that surplus over and above your emergency savings to pay off the cars makes a lot of sense. Every dollar you pay toward that principle will go writing using that balance was simple interest, which is what is basically exactly what relation is interest every month. Principle is right against it will be right back. The financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst, and splitting hairs, giving your money and things to your children without ruining their lives. Ron blue explains why it's important to make these decisions now, instead of forcing your heirs to do it later. Splitting hairs will foster a real appreciation for the precious resources that God has entrusted to you, and it's available. Click the start button moneywise hi I'm very glad I'm here to help you understand how urgent it is a sugar for every up to the eyes of a layman, you may be running out of time to get your friends and loved ones into heaven. These are not normal days and they could be the end. No one knows what if they are, what we heard the sound of the trumpet tomorrow, your friends and loved ones that you want to get into heaven, will be left behind are already halfway there. Thanks the world were living in. It's impossible to feel safe and carefree today without knowing for sure where you're going to spend eternity because even unbelievers know that the attorney could start a new moment is a huge opportunity.

Think about it, you can't influence both of what's happening but you can huge the influence where your friends and loved ones will spend their eternity want to do you want to. There is nothing more exciting than knowing God is using you to move people closer to join is not society in which the world is constant pressure on Billy Graham talks about worldliness you cannot find world in his particular circumstance of life and now live in God's people need to be different and separated from the world is now we will never win the world. And anyway demonstrate his. Some ideas.that's find peace with God. Graham evangelistic Association money and life run on the same track. Unfortunately, sometimes it seems like your money is heading in a different direction from your goal, and never enough three keys to financial contentment. Author Ron blue helps you to break down all your financial options to a basic floor and then shows you how to keep it all chugging along in the right direction on the same track never enough three keys to financial contentment available when you click the store button moneywise is great versus Morris any day. Proverbs 8 choose my instruction and silver knowledge rather than choice gold.

Let's go back to our phones, Dallas, Texas and Renée. Thanks for your patience. How can we help you yeah I practically everyday when I'm lost here in Dallas lately situation as my daughter single mom and dad. It was good established yourself so we are only house that we've ever owned 3029 years ago.

So we we bought a house for 80,000. My daughter was happy with us hundred thousand. So the question I have the proceeds from the realist transaction 1099 form 2020 and that shows that we have capital gains 80,000. So my understanding is that when I bought the house back right now.

What I would I have to do a capital gain amount shown on my this year's tax forms make sure I understand this is not your primary residence, is that right now we live in the parsonage we hear 70 years of very good okay so yeah. The key here would be since this is not your primary residence and you don't get that exclusion from capital gains. You gotta determine what is truly your gain. And that's going to be you want to involve a tax professional to make sure you have that number right it's essentially the selling price minus the purchase price minus any improvements you made along the way and any transaction cost to come up with your true game and that's then going to be a capital gain long-term capital gain that you will pay tax on with your 2020 tax return.

I think the key whenever you're selling to a family member and it sounds like you address this, given the appreciation that took places but you want to make sure that you're selling at fair market value. Because the IRS if you sell it for less than fair market value to a family member they're going to consider that a gift and that's obviously you can make a gift of up to 15,000 a year per person and then beyond that, it's going to eat away at your lifetime gift exclusion so just recognize if it was less than fair market value that's a part of the equation. If not, then your perfectly entitled to sell to a family member as long as it's at fair market value, but yes, there would be a capital gain on, then you'll just want to make sure you get some counsel on exactly what that number is and then plan for it so doesn't catch you by surprise when you file your return for this year pastors that does that help or direction that God is using your ministry for his glory. So we thought about where we're supporting other beyond our church family.

My wife questions and that in the wisdom that God is giving you think you what an encouragement. God bless you.

Certainly appreciate your called us continue on here quickly. West Palm Beach and Maria what you question for Rob West and Michael that night I my not going to be going anyway and I went to our 40 kn time to be able to 90 on the mortgage. I was able to buy like for you to call my car. I am not planning looking to retire until I even bought a on my maritime settlement that would be great to you would be to put that off my car 994 sure that you putting it on night I got that goodwill. Yes, let me ask you, Maria, is the reason you haven't been contributing to the retirement plan, you just don't have enough you need every bit of your paycheck just to cover your expenses including your debt payments or some other reason that I okay so in terms of where to put this money and unite with the Social Security survivor's benefits. Obviously I love the fact that that's to be extra money to you and so I think you need to understand a couple things number one is if you don't know what to expect in terms of your survivor's benefits amounts because you as you said you came to the US in your 40s and so you want to know based on how the number of years you been paying into the Social Security system what your benefits are you can call the Social Security ministration even make an appointment in the local office. The walk you through that that would be a good starting point.

Second, I think it's really important understand what you can expect from the FRS Florida retirement system. When you get to that point. I understand you to continue to work and that's great because then that gives you the survivor's benefits to repurpose. I think in terms of how to allocate those funds. Assuming you feel like you're on track with the retirement you're going to receive added to the Social Security benefits. Either the survivor's benefits or your own benefits that you might claim down the road if those are enough to cover your needs in retirement and that's great that I'd focus on a making sure you have 3 to 6 months in your emergency fund and I have that an online savings account link to your checking account, use the social survivor's benefits to fund out first and then second, I'd start going after paying off the car that love to see you recoup that monthly payment for you to do additional savings. Once the cars paid for and we got enough going in the maintenance and reserves that I think you want to begin attacking that mortgage because I love to see you enter the retirement years completely debt-free with Social Security and the FRS at the same time and never really put you in a strong position moving forward. Maria, thank you very much appreciate that you, the fact that you got through today. After three attempts Indianapolis hi David, what you question for Rob yeah so I recently a neighbor of mine is an insurance agent and she's been trying to sell us some life insurance for our children and got some extra income now that I can either use towards life insurance policies and got two kids for them to or I also recently started a college savings 529 plan with some inheritance money for him. I didn't know I got a small amount of life insurance for my my employer but doesn't make sense to you rather than take out a separate policy, just use that extra income and put it into the 529 monthly or you take this $80 a month in and taken a separate life insurance policy yeah I like the second option there. Obviously, 529 plans and permanent life insurance or both ways to create college funds for kids.

I much prefer the 529 because you can save on a tax-deferred basis draws are tax-free if using for qualified educational expenses. The permanent life insurance is going to include. As you know about the death benefit and the savings account you can borrow against it to pay for college, but the other downside is, it comes with costly fees, which can make it considerably more expensive each year.

The 529 and I think the question is, is there really a need for that death benefit so I'd much rather you take that surplus put that into a 529 for your your son and just continue investing that systematically between now in college so you got that to fall back on when that time comes. David, thank you very much plant city, Florida Daniel, we have like 45 seconds. So let us here quickly bought a house through private individual got 12 years left on my mortgage and I want to refinance because I want to build a barn, but my lienholder.

The previous owner liked the idea so he says you don't need a barn. I got a 0% interest loan with him payment, taxes and insurance. Everything is 750 amount and no interest rates are low right now but am I completely stupid to do that. Eliminate that problem to get a second mortgage to build the barn if you got 0% on the first one why I don't need the mortgage to build the barn. I just I need the right to build a barn because the property still in his name. Oh, okay. Okay.

I thought the title, I see. Well I think that's the next step is really to sit down and see if you can talk that through just to make known why it is you're doing this and obviously this is the direction you feel the Lord is leading then I think refinancing taking him out of that position by paying it off in full so you can regain the title and then have the ability to through a new mortgage make the improvements you want to make on your property.

That's the key.

So this is obviously been about a blessing to you, but if you feel like you want to move ahead with something that you're being prevented from. I think this is the only way to do it. Good news is it's a great time to do it because interest rates are very very low. Certainly not 0% but not too far away.

Daniel got bless you sir, thanks for so much for your patience and for holding. We hope you have a great weekend and we hope you have a good weekend as well that Rob West is alive is a partnership between Moody radio and moneywise media drive safely. Join us again next time for another dish and moneywise

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