A Good Time to Refinance?

If you've been sitting on the fence wondering whether it's finally time to refinance your house, today's low interest rates could help you make up your mind. That's right, it's true, mortgage rates have never been lower, but is that the only thing to consider when deciding to refinance? Well, today host Rob West talked with mortgage expert Dale Vermillion about the current real estate climate, and then it's your calls on anything financial at 800-525-7000. 800-525-7000 is now a good time to refinance.

Let's find out. That's next on MoneyWise Live. Well, Rob, our guest Dale Vermillion is author of Navigating the Mortgage Maze, 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.

We might have to ask about that a little later in the program. Dale, great to have you back on MoneyWise Live. Oh, Rob, Steve, it's great to be with you guys.

Thank you for having me. Have you been building any cars lately, Dale? Well, I haven't been building any, but I'm actually going to be going to a car show tomorrow to show off the Chevelle a little bit and have a little fun with it. Dale, Dale, just make sure it's all in your budget. Okay, on to the next question. If you start driving now, Steve, you might be able to make it there in time to join them. So, I don't know.

All right. Hey, 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 typically drives interest rates is the Treasury and the 10-year bond yields.

That's what has always for decades and decades. But over the last several years, with all the economic downturns we've had starting in 2008 and up to now, we're seeing more and more of the Fed is really controlling interest rates and we are seeing rates right now at the lowest they've been in 49 years. It's just amazing. The average rate is 2.84% as of today. That's the average 30-year fixed rate on a loan. It's really incredible.

Yeah, that is incredible. And you can understand why there's been a huge run on refinancing, which is why so many of these companies are backed up. We're going 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 normally see that long of a 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 a 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 we're in one of these UNIROC periods where you said it's been literally a decade. And, you know, we're seeing these big spikes in home values. Are you seeing any pockets where home prices are more reasonable?

Well, you know, there's a couple of things that are really important to talk about when it comes to real estate today. And one of the biggest trends right now, Rob, that we're seeing is a real big push to vacation type resort type areas is becoming a big thing because of all the work from home. It's becoming a 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 becoming 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 around other parts of the country where it's a little bit more rural and a little bit more suburban. You're seeing that, too. One of the concerns we're seeing in the marketplace is people leaving urban areas because of some of the problems we've had in our cities over this year.

That's a recent trend, too, that we're starting to see at the same time. Dale, obviously, 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 it top dollar. What if you're a home a first time home buyer, though?

How do these conditions affect that group specifically? Well, the biggest thing for our first time home buyers that you have to understand that, you know, values are up from where they normally are. You're not be prepared to buy a little more, but you got to remember you offset that through the interest rate. It is the most affordable time that we've seen to buy a home in a long time. So the fact that rates have gone down by almost one and a quarter percent in the last six months, which is a massive drop, and they're the lowest ever does allow you to be able to afford that. The key is just make sure you're doing your budget and doing all the things we teach you every time to make sure you're making a wise decision on that. Well, when we come back from this break, we're going to talk about a lot more.

Should you rent if you can't afford to buy? And what are those rules for refinancing that and much more? Here are the rules for getting involved in today's program. Just give us a call.

Toll free 800-525-7000. This is MoneyWise Live. Many people are experiencing financial challenges such as credit card debt, downsizing, dead-end jobs, and depleted savings.

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That's christiancreditcounselors.org or call 800-557-1985. Nice to have you along today. It's MoneyWise Live. Your host is Rob West.

I'm Steve Moore and our guest, none other than our good friend Dale Vermilion. 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.

That's how you get to the simple part and we'll tell you how to find this book in a little bit. But first, all of a sudden lots of blinking lights here. Let's take a call guys from Scott in Indianapolis and what's on your mind Scott?

Good afternoon guys. I have a friend who has purchased a home and he's got a loan at 4% and he purchased or he borrowed $335,000. He's been aggressive and has paid down the loan. His current balance is like $210,000 but he's not willing to consider refinancing at a lower rate because his thoughts is that he would be paying the highest principal at the beginning of the loan and he doesn't want to start that whole loan process and paying the highest principal at the beginning of the loan again.

So I'm just trying to give him some wisdom on 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're in effect resetting the term. Do you know what the original term was and how many years into this mortgage he is? I believe that the original term was for 30 years and he's already paid 5 years.

Okay so Dale 25 years remaining. He owes $210,000 on a $335,000 home at 4%. He's obviously been aggressive at paying this down.

What advice do you have given his concerns? So Scott first off your friend is very wise in his thought process not wanting to repay money he's already paid and I love that but the fact of the matter is the way that this is set up is that 25 years left you've 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 refinance and the way that you should always do our finance for all the listeners is you never want to re-extend term because then you are repaying interest you've already paid but his principal when he refinances that on a 25 year loan he's 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 he would want to do it and what I would do if I was in his position is try to get it down to maybe a 20 year loan for about the same payment based on the interest rate difference he's cut five years right off he is going to pay off much sooner and save tons of money during the process. Dale let me ask you what about somebody who says you know what if I go with the 25 year mortgage program I might limit myself and the number of lenders willing to offer that I'm going to go with a new 30 year mortgage but I'm going to ask them to run the amortization schedule to tell me how much extra I need to send every month to turn that 30 year into a 25 year. Does that work in theory?

It works in theory and not in practice. So look here's the deal you know we see this all the time we intend to do that we might do it for three four five six months one economic downturn one thing that that you know messes with our finances we change out you want to be disciplined I call this in the book a forced savings account create that force savings where you force yourself into it and then once you budget around it you're good and you're assured you're going to get that benefit that's the way to go. Well I think that's the key is we want to make sure the payment fits right and we would say twenty five percent 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. Scott do you 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 as long as he stays less than twenty five years then he's in a better position to refinance. Yeah what he's going to see is he's picking up right at his principal plus any cost of a financial loan which won't be that much money and then he's accelerating principal much faster from day one so because of the lower interest rate less is going to interest more is going to principal he's going to see within a year a good difference in his balance. Very good well hey Scott we appreciate your calling you're being a great friend and looking out for your buddy there and we appreciate you checking in. Dale 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.

Yeah renting is not always a bad thing it's not the preference obviously we want to try to home build a home and buy or buy a home we want to get in the position where we're building equity that's the key to it that's good stewardship but look short term renting would be a very good solution for people and you never want to stretch beyond your means you know if you're buying just to buy and you're pushing yourself to an uncomfortable budget that's a mistake you don't want to do that you want to make sure you're in a position of affordability and save up that money then for that home so when you do buy it you got a good down payment you got a good affordable payment I'd rather see your rent a couple more years and then own the rest of your life than try to push too quick and get yourself in trouble. Hey here's our phone number again we're talking mortgages today of course so what else would we discuss with Dale Vermillion he's the author of Navigating the Mortgage Maze 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 would 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. You know Dale 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 or the Google Play Store or you could just go to app.moneywise.org and this is going to give you our digital envelope system but also the community where you can engage with other MoneyWise listeners post questions and here's one from Louise Dale that just came in on the MoneyWise app she's talking about a piece of property they have it's a homestead property they're planning on building on it they're going to build a barn and this was a new term for me they're going to build a barn-dominium. Have you heard that term?

I have now. I know I love it that's great maybe they're going to rent these out or something I don't know it's fabulous but here's the thing they've got to 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 we'd want them to try to delay it if they can pay out of cash that way they're not going to get stuck with a construction loan and a home that won't sell and now they're 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? Yeah you need what's called a construction to perm so that's where the lender is going to bring the funds in to build the construction and then when the home is done they take care of you know making sure the inspections are done and and all everything all the permits are in place and then when it's all done they're going to convert that into a permanent mortgage that's the best kind of loan to go for that but Rob I'm with you look especially in today's marketplace where we don't know what coronavirus is going to do we don't know what the economy's going to do I never want to see people in a double mortgage situation ever if they can help it or to be caught in you know 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 download the MoneyWise app today in the app store. Hey Dale every line is full and I think every one of them is a mortgage question can you stay around till the next segment?

I can and by the way the app is cool I love it way to go. All right great let's go to Tampa Florida not too far from where our guest is today and let's see Gabby how can we help you? Hi what's your question for Dale? My question is about first-time homebuyer grants and loans I don't know that much about that. All right grants and loans for first-time homebuyers Dale go right ahead.

So there's 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 you're going to get assistance on that down payment that if 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 to your lender and find out and see what they've got available. Gabby we're glad you called in today we wish you the best as you pursue this thanks so much. If you're just tuning in it's Money Wise Live with Rob West and today Dale Vermillion with us to help us work through the world of mortgages and where we are where we're heading these days. What are you building a barnominium a condominium maybe a condo maximum something really big and we'll be right back after this. Many people adopt an attitude toward marriage and finances that it'll all work out somehow but sadly it often doesn't financial woes can devastate a marriage but there is a better way God's way money and marriage God's way by Howard Dayton will help you discover God's approach to growing your finances strengthening your relationship with your mate and cultivating godly joy money and marriage God's way is available when you click the store button at MoneyWiseLive.org for the word of God is quick and powerful and sharper than any two-edged sword here's Beth Moore with a quick word as Christians we pay our bills on time it's just saying that that's part of the responsibility that's part of being responsible believer someone who respects authority is that when we have borrowed just like on a credit card for a purchase we borrowed against that when when the payment comes due we make that payment it is saying we don't let that debt remain outstanding now let me say to you something that we all know we has had financial disasters of one kind or another I do not want you to get a load of condemnation on you all of us have been in situations where we have needed urgent help that's another matter entirely and boy does God call upon the body to be there for one another in a time of extremely urgent need that's not what I'm talking about here what I'm talking about is something that is so classic in the era that we live in is that ordinarily one of the reasons why we can't pay our bills is because we have so much debt for so many extras in our life so much excess in our lives that then it becomes prohibitive to us to ever get it paid off that's what he's speaking against just accruing a ton of debt on a ton of excesses and extras that we're never going to be able to pay off and so he is pulling us in from there and says if you want to owe something I'll point you to owe love to one another let that be the only outstanding debt you've had we have two ways to experience now that faith has come a study of galatians the online experience is now available at bethmore.org the workbook edition will release in january 2021 either way beth would love to have you in bible study see you next time for another quick word with beth more would you like your life to be infused with joy would you like to interject an eternal dimension into even the most ordinary day author randy alcorn says you can when you discover the treasure principle in a concise power pack style this newly revised and updated book offers a six-step plan to finding the immediate pleasure and eternal rewards of the treasure principle and once you discover it life will never look the same the treasure principle is available when you click the store button at moneywiselive.org hey here are the mortgage questions we 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 in some sort of a bad plan we'll get to those questions but first it's peter in wooster ohio and what's your situation there today peter hello um my my question is uh this 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 rent my parents have told me i can stay living with them as long as i continue to save most of my money what would be the best way to uh get a property of my own without taking on a whole lot of debt uh obviously saving all of saving and paying cash would be the best way but what would be the best way uh that i could do that will still getting a property somewhat sooner than that yeah peter let me ask you a couple of questions and i'd love 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 all right so i graduated last year uh from high school i am working full-time in construction actually working 50 hours a week mo most weeks uh i am i've saved about twelve thousand dollars um and i've been working that job since august so i'm building money somewhat quickly but uh yeah i'm sure you asked about that and yeah no that was helpful and and how much are you able to add to that every month in your current environment living at home uh about two thousand dollars a month okay a little less depending on the month sure dale your thoughts well anytime you're looking to buy a home and move out of running renting the first thing you want to do is you want to do a comparative um 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 what's going to make sense for your budget then once you have that number you can start to think backwards into okay what would it take to get 20 down for that amount and what's in my marketplace and you know sometimes you can start with a condominium or a duplex as your first home or a smaller single-family home to begin you know any kind of a starter is going to be a good start for you i remember i bought my first home actually at 19 like you and it was only 40 000 in 1980 but today that'd be probably 110 120 000 equivalent and it built equity very fast and it helped me to buy the next house in the next house so that's the best way to approach it the key is take the time you got right now while you're being home with your parents to save that money up to get that good down payment and if you get into something that's equivalent to rent you're really getting yourself in a good position yeah i think that's exactly right i mean mom and dad are giving you a great opportunity here you're obviously a hard worker you're already 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 percent down and really get yourself in a solid financial position moving forward i think that would be great peter uh stay on the line i want to send you a copy of howard daton's book your money counts so you can explore this a bit further around the biblical principles of managing money and we appreciate your call and peter as you work toward getting your first home apartment condo whatever it is 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 so much for calling lehigh acres florida wsor our station in there or down there and aura what's your question today for rob and dale vermilion hi rob thanks for taking my call my question is what if you're thinking about refinancing and you know there are some things that these uh investors they put in to push in the loan in the applicant you know in your loan so i need to know what are the things that you can uh look out for in order for it to be exempted out of their the preparation uh yeah dale any traps she should keep her eye on as she's refinancing yeah you know make sure first off that you're talking to multiple lenders talk to at least three to four between your bank maybe a credit union a local mortgage broker or banker just to get some different perspectives you can start online with that by going on places like bankrate make sure you remember that when you refinance you want to not just focus on reducing payment but making sure you reduce that term on that mortgage i mentioned that earlier that's really critical and most importantly make sure you do a budget before you move into that so you know what you can afford and then when it comes to the fees remember you can finance fees into the loan to minimize the cost on the front end just make sure that you're getting comparative offers so that you're getting a good deal between those lenders and that way you know you're getting what you want or we appreciate your call today dale just a few seconds left julie calling from orlando wanted to know about a bi-weekly mortgage payment making her payments every two weeks uh... one half payment every two weeks instead of one payment a month your thoughts on that approach it's awesome because what it does is it creates literally because you're paying a half payment every twenty six weeks is thirteen payments per year or one additional payment per year that you're paying therefore you're going to see a reduction of you know three to five years on a typical thirty-year mortgage in your payback it's a great thing to do a half a payment every two weeks skits you four to five years off your mortgage i love it hey dale thanks for stopping by today my friend we're so grateful for you love you guys god bless and have a happy thanksgiving thank you too dale dale's book navigating the mortgage maze you'll find it at our website moneywise live dot o-r-g thanks for uh... being there again dale we're going to pause then we'll come back with your calls at eight hundred five two five seven thousand how should we as christians think about investing what if we could invest our money in a way that aligns with what we believe at eventide we believe it is possible to love god and love our neighbor in the very practice of investing we 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 that makes the world rejoice more information is available at investing eventide dot com christian health care ministries enables believers to show love for one another by sharing each other's health costs through CHM's voluntary health cost sharing programs members uplift each other spiritually and financially CHM is 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 chministries.org hi my name is hal hudson a biblical studies major at the moody bible institute as we remember our nation's veterans the moody radio verse of the week is found in deuteronomy 31 6 be strong and courageous do not fear or be in dread of them for it is the lord your god who goes with you he will not leave you or forsake you that's deuteronomy 31 6 the moody radio verse of the week you may know that you're loved by family friends by god but do you really feel it dr gary chatman and york moore have teamed up to write seen known love five truths about god in your love language in it you'll learn how to know your own love language and how god uses it to communicate with you personally learn how god is intimately involved in your life in beautiful and unexpected ways purchase your copy of seen known love at moody publishers.com do you know if you have enough enough money enough house do you know how much is enough if not ron blue can help with his book master your money a step by step plan for experiencing financial contentment learn how to save invest and give wisely how to create a long-term financial plan and how to get out of debt you'll find it all in master your money by ron blue available when you click the store button at money wise live dot org with s r n news i'm john scott a hand recount of the votes cast in the presidential election in georgia has gotten underway the audit will be completed by next wednesday a resurgence of the coronavirus in new york city mayor bill de Blasio says he will close schools if three percent of coronavirus tests over a seven-day period come back positive the mayor says 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 two point eight percent wholesale prices rose moderately in october as food costs jumped 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 three-tenths percent last month stocks higher the dow gained 399 points the nasdaq up 119 this is srn news and welcome back to money wise live money wise live.org that's the place where you'll find well the home page for our ministry if you'd like to know more about who we are and what we do if you'd like to find archives of past radio programs uh free resources that you can use to balance your own home budget also uh maybe you want to find a certified kingdom advisor in your specific area uh ways to connect with a budget coach all of this and more when you visit our newly updated website money wise live dot o-r-g let's go up to uh st cloud minnesota now and ann thanks so much for your patience uh what's your question for rob yes i have a question because i have mutual funds and some savings and being the coins there's been a shortage in coins and paper money they say the value will be going down and with our economy many people for years have been saying to invest in gold or silver so i'm wondering how beneficial that is and how if you purchase gold how do you re um how do you utilize it because you're not going to give a hunk of gold right someone right well and i would be careful with that i mean obviously that anytime we go through a period of unrest or uncertainty and this would certainly qualify with a global pandemic and we've got all kinds of market gyrations especially early in the cycle of this pandemic we see a rise in the not only 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 kind of wild moves to the upside where people can get excited about a big gain but just if you look over a long period of time it just doesn't tend to perform quite as well and so what do 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 oftentimes buying and selling involves a dealer with a markup not only that but you have to take possession of it you've got to store it and secure it which means a safe and you've got to decide is that in your home or at your bank or where and then to your point if you ever needed to convert it to cash you'd have to sell it because you're not going to get out there with a chisel and pay for some gasoline with a bar of gold so you know 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 etfs 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 and dealing with the other issues i just described i would say you don't want more than five percent of your portfolio in that just to maintain proper diversification does that all make sense to you though okay so what did you mean by mutual fund how do how do you do that then with an exchange or mutual yeah so for instance if you buy an exchange traded fund which is essentially like a mutual fund it's a basket of securities that trades like a stock a great example and this is not the only one is the etf gld which as you might imagine stands for gold and it's it 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 going to move with gold but you don't have to take physical possession and so you just own the etf gld and there's etfs that represent all kinds of commodities and and precious metals and so forth just like indexes so that's an example of a way you can have an allocation of gold without having to buy the physical gold and what's the best way for and to maybe get some more details and if she decides she wants to get involved perhaps buy her way into the stock market what's the best way for her to come for her to well you know I would always recommend when we're 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 and so I'd look at having an investment professional if you have the time and the expertise to do it yourself perhaps that's what you've been doing then you know depending on where you're custody'd in terms of your portfolio and just about every custodian would be able to allow you to make a trade where you'd 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 probably there are better ways than buying gold bullion as you put it breaking off a piece of chunk to or chunk of gold to buy for a loaf of bread or gold coins they also are difficult to handle manage and store there are better ways to do that and the stock market is a much better way than taking possession of physical gold thank you very much Chicago Illinois Tracy how can we help thanks for taking my call just two quick questions one is we have my husband I have about a hundred thousand in savings but it isn't earning any money so we thought that we would maybe take about twenty five thousand to put it either towards our mortgage or one of our vehicles and we just we are going to refinance to a fifteen year mortgage at about two point two five is what we were offered so I don't know if it would be better to put the money towards the vehicles and wanted to like split it up and put it towards the principle of the vehicle and if we did that does that work the same as when you're paying down the principal on a home yeah one of the interest rates on both on the car loan as well as the home the interest on the home we have we have an offer like right now we have a thirty year but we had an offer for fifteen year which is what we want to want to pay it off quickly as possible at a two point two five for the fifteen year mortgage and the vehicles go ahead the vehicles we one is at one point nine but the other one is at two point nine nine okay and the mortgage you said you're considering refinancing or you or you have an existing mortgage that you're looking to hang on to we would like to refinance but we want a shorter term right now we have the third year and so we would like to go with the fifteen year and we were told through our credit union that they can offer us around two point two five for a fifteen year and that's a fabulous rate I think the thing you're going to want to look at there Tracy is whether there's discount points there whether they're charging you a good bit on the front end to kind of 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 you know normal and customary closing costs so you're going to want to look at that and probably shop it around and compare that good faith estimate to some other lenders at least get I would say three to compare it to you know I like the idea of you you know 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 fifteen 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 right against reducing that balance and with simple interest which is what the car loan is it's basically exactly what the calculation is for interest every month but the principal payment goes right against it we'll be right back the financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst in splitting heirs 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 heirs will foster a real appreciation for the precious resources that God has entrusted to you and it's available when you click the store button at money wise live dot org Hi I'm Gary McGuire I'm here to help you understand how urgent and how fun it is to share your faith at every opportunity through 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 of days no one knows but what if they are what if we heard the sound of the trumpet tomorrow how many of your friends and loved ones that you want to get into heaven will be left behind they're already halfway there thanks to the world we're 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 eternity can start at any moment there's a huge opportunity think about it you can't influence most of what's happening today but you can hugely influence where your friends and loved ones will spend their eternity if you want to do you want to there is nothing more exciting than knowing God is using you to move people closer to him join us at United America dot com we're living in a materialistic society in which the pull of the world is a constant pressure on all of us Billy Graham talks about worldliness you cannot confine worldliness to a particular walk or circumstance of life worldliness is actually a spirit an atmosphere an influence permeating our lives and it needs to be guarded against day and night if ever there was an hour when God's people need to be different and separated from the world it is now we will never win the world by conforming to the world standards and ways we will win the world only when we are different and demonstrate that this difference is superior to that that the world has to offer would you like some ideas on how to do that check out our website find peace with God dot net that's fine peace with God dot net where the Billy Graham evangelistic Association money and life run on the same track but unfortunately sometimes it seems like your money is heading in a different direction from your goals in never enough three keys to financial contentment author Ron blue helps you to break down all your financial options to a basic 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Here's a great verse for us any day of the week that's Proverbs eight verse ten choose my instruction instead of silver knowledge rather than choice goals let's go back to our phones Dallas Texas and Renee thanks for your patience sir how can we help you. Thank you very much yes good afternoon thank you for your ministry I listen to it practically every day when I'm taking a walk here in Dallas the situation is my daughter was single 34 years old and as a mom and dad felt it was good for her to establish herself so we did so our only house that we've ever owned back 30 29 years ago so we bought the house for 80,000 and my daughter was happy with us selling it for 165,000 so the question I have I did get the proceeds from the real estate transaction the 1099 form for 2020 and that shows that we had capital gains of 180,000 so I my understanding is that when I bought the house back then and what I'm paying for it now what I have to would I have to do a capital gain amount shown on my this this coming year's tax forms. Let me make sure I understand so this was not your primary residence is that right. No we live in the parsonage we've been here seven eight years of the parts and it's the church yes sir. Yeah very good okay so yeah the key here would be since this was not your primary residence and you don't get that exclusion from capital gains you've got to 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 you know the selling price minus the purchase price minus any improvements you made along the way and any transaction costs to come up with your true gain 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 addressed this given the appreciation that it took places but you want to make sure that you're selling it 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 know you can make a gift of up to fifteen thousand 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 you're 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 that and you'll just want to make sure you get some counsel on exactly what that number is and then plan for it so it doesn't catch you by surprise when you file your return for this year. Pastor, does that help? It sure does. Thank you so much for your ministry and for the direction that God is using your ministry for his glory so yeah we thought about this and we're supporting other ministries beyond our church and my wife introduced me to your app and I tell you it's been a blessing just to listen to the questions and the wisdom that God has given you guys to help us. Thank you so much. Well thank you. What an encouragement. God bless you sir and we appreciate your call today. Amen. All right let's continue on here quickly West Palm Beach and Maria what's your question for Rob West? I am so glad. Good afternoon. Thank you for taking my call and I am so glad that I was able to go through this time.

This is my third time that I'm trying. This is my question. Very soon next year in February I'm going to start receiving my survivor's benefits. I am not very sure how much that is going to be. It's not going to be much anyways because my husband and I we moved to United States close to our 40s. We didn't have much history time to be able to put money on our Social Security.

My question is this. The only debts that I have is the mortgage I was able to buy a condominium like four years ago and my car. I am not planning on using that money at all because I am still working and I am not planning to retire until either they kick me out or the Lord takes me home. And therefore my question is I bought a 403 through my employer which is the school district but I have not been able to put much on it and my concern is my retirement. So my question is why do you think that would be the best way to use the money that is coming from the survivor's benefit would be to put that on any of my two debts that are out of the car or my mortgage or should I use that money and start putting it on my phone. I can make sure that I make that grow.

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. Well no I am I am being that are I am being let's see I have the F-40 the retirement system and for 15 years now.

Got it. Okay so in terms of where to put this money I mean I with the Social Security survivors benefits obviously I love the fact that that's going to be extra money to you and so I think you need to understand a couple of things. Number one is if you don't know what to expect in terms of your survivors benefits amounts because you as you said you came to the U.S. in your 40s and so you want to know based on how the number of years you've been paying into the Social Security system what your benefits are you can call the Social Security Administration even make an appointment in the local office they'll walk you through that that would be a good starting point. Second I think it's really important to understand what you can expect from the FRS the Florida retirement system when you get to that point I understand you're going to continue to work and that's great because then that gives you the survivors 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 survivors benefits or your own benefits that you might claim down the road if those are enough to cover your needs in retirement then that's great then I'd focus on a making sure you have three to six months in your emergency fund and I'd have that in an online savings account linked to your checking account use the social survivors benefits to fund that first and then second I'd start going after paying off that car I'd love to see recoup that monthly payment for you to do additional savings once the car's paid for and we've got enough going into maintenance and reserves then I think you want to begin attacking that mortgage because I'd love to see you enter the retirement years completely debt-free with Social Security and the FRS at the same time and that'll really put you in a strong position moving forward.

Maria thank you very much appreciate that you've the fact that you got through today after three attempts. Indianapolis, hi David what's your question for Rob? Hi 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 I've got some extra income now that I can either use towards life insurance policies I've got two kids four and two or I also recently started a college savings 529 plan with some inheritance money for them and I didn't know I've got a small amount of life insurance from my employer but does it make sense to rather than take out a separate policy just use that extra income and put it into the 529 monthly or you know take this $80 a month and take out a separate life insurance policy. Yeah I like the second option there I mean obviously 529 plans and permanent life insurance are both ways to create college funds for kids I much prefer the 529 because you can save on a tax-deferred basis withdrawals are tax-free if you use them for qualified educational expenses the permanent life insurance is going to include as you know both the death benefit and the savings account you can borrow against it to pay for college but you know the downside is it comes with costly fees which can make it considerably more expensive each year than a 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 and college so you've 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 hear it quickly. All right I bought a house it's through a private individual I've got 12 years left on my mortgage and I want to refinance because I want to build a barn but my lien holder the previous owner he doesn't like the idea so he says you don't need a barn. I've got a zero percent interest loan with him payment taxes insurance everything is $7.50 a month and I know interest rates are low right now but am I completely stupid to do that to eliminate that problem? Well what about taking a second mortgage to build the barn if you've got zero percent on the first one? Well I don't need the mortgage to build the barn I just I need the right to build the barn because the property is 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 if 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 you know make the improvements you want to make on your property I think that's the key. So this has obviously been 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 zero percent but not too far away. Daniel God bless you sir thanks for so much for your patience and for holding and we hope you have a great weekend and we hope you have a good weekend as well that includes you Rob West Money Wise Live is a partnership between Moody Radio and Money Wise Media drive safely join us again next time for another edition of Money Wise Live.