Home Sale Madness

This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage.

Let's call it the couch cushion dash. This is the moment when you need a tip for the pizza man, a few bucks for your kid's lunch, or you can't say no to the sweet eight-year-old and her Thin Mints. But you've got no cash and no other options but to tear apart the house searching for hidden money. It's Ryan from United Faith Mortgage, and it's funny how we can usually find a way to scrounge together a few bucks hidden around our house. Shame on you if it's from your kid's piggy banks.

For many listeners though, there's enough money sitting inside your home to buy a swimming pool full of Thin Mints. Home values have gone up across the country the last few years, leaving many of us with a good chunk of equity tucked inside our homes that we could cash out to use for life. If you'd like us to help, we are United Faith Mortgage. If you haven't checked the estimated value of your home on Zillow recently, you might be pleasantly surprised by what you see. Home sales have been going through the roof lately, pun intended.

I am Rob West. A year ago home sales fell sharply due to the COVID pandemic. Now it seems buyers are saying pandemic. Mortgage expert Dale Vermilion joins us today to talk about it. Then it's on to your calls and questions. 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, where God's wisdom directs our every financial decision. Well, our good friend Dale Vermilion is author of Navigating the Mortgage Maze, The Simple Truth About Financing Your Home from Moody Publishers, and we'll certainly be talking about mortgages today as well as home sales. Dale, my friend, welcome back to the program. Rob, so good to be with you as always. Thank you so much.

Just blessed to be here with you. Well, looking forward to diving into this really timely topic. And by the way, we'll be taking your calls throughout this first portion of the broadcast specifically on home buying and home mortgages in light of what's going on in the housing market. Dale, an article caught my eye recently about a home that was listed for sale in Washington, DC. Within a few days, get this, 88 offers, 76 of them all cash. They ended up selling it for 70% over the asking price. Now, maybe that was an outlier, although I'm afraid maybe not too much of an outlier.

But there's no question that something's going on with home sales these days. So, I mean, you've been around this space for a long time. How would you describe it?

You know, when I was a kid, Rob, we used to go to these things called trout ponds where I don't think they fed the fish and there was, you know, fish just laying on top of each other and you put in a little pole as a kid with one little bait on it. And they just all attacked that thing. That's what this is. This is a feeding frenzy is what this is. That's the best way I can describe it.

You know, we've got an inventory challenge. We've got a huge millennial market out there that is looking for homes. It is literally the craziest thing I've seen in 38 years in the business. Well, you can spend a lot of money on the way out of those trout ponds if you don't understand that you're going to pay by the pound. And I guess that's true with housing prices as well. You can pay top dollar. In fact, in the case I just mentioned, 70% over asking price.

You've got to be careful. We'll get into that. But you mentioned perhaps one thing. You mentioned the millennials that was causing this strong upward pressure in home sales and prices. Talk a bit more about what is it about the millennials and then any other factors contributing. Well, it's the single largest generation of people that we've seen bigger than the baby boomers, which really created the real estate market that we have today. And, you know, they were a little bit late blooming and buying homes. But now they're in those, you know, early 30s to mid 30s and they are all in this gig economy where they're creating good incomes and you know what they are looking to buy and you add to that the pandemic. We're now people are working from home a lot.

They're wanting to look for places they can live where they would vacation. That's created a whole big surplus of buying behavior. So you combine those things together, plus the fact our inventory is just low nationwide.

You know, we're sitting right now. If you look at the inventory March last year to March this year, it literally the inventory today is 40% less than it was last year. But demand is twice what it was last year. So when you combine all those factors, it creates the market we have right now.

Yeah, no question about it. In just a bit, we'll be taking your calls. Are you thinking about buying a house?

Wondering if this is the right or wrong time? Maybe it's a refinance or securing a mortgage in the midst of all of this. Whatever's on your mind today, mortgage expert Dale Vermillion would love to tackle those issues and questions. The number 800-525-7000. Dale, you mentioned a lack of inventory.

Just give us a quick synopsis. What does that actually mean? Well, normally what you look for, Rob, in this marketplace is a year's supply of homes. That's pretty standard. We're at a 3.6 month supply at homes right now. That's 45% less than it was last year. And again, you've got this massive demand. Supply and demand is always your problem. Anytime you've got limited supply and major demand, it drives prices right through the roof and that's exactly what's happening. That's why we're seeing 20, 30, and 40 bids on properties. We're seeing homes now selling in 20 days. When they used to take 60 days, everything's accelerated.

Yeah. Well, and obviously that can create a real challenge, especially if you don't have a home to sell that you're going to get top dollar on and you're trying to enter this market. Perhaps you've just outgrown your home looking to make a change. We want to talk about how you can navigate this, what you need to know going into a purchase, and is it even still time to refinance? All that and more with Dale Vermilion just around the corner.

Here's our number 800-525-7000. This is MoneyWise, where God's word intersects with your financial life. Stay with us.

More to come just around the corner. Thanks for being with us on MoneyWise Live. Whenever we want to talk mortgages and the housing market, well, we look for our good friend Dale Vermilion.

He's the author of Navigating the Mortgage Maze, the simple truth about financing your home. We're talking today about this incredible housing market, and Dale, just before the break, you were talking about some of the factors leading toward the strong upward pressure in home sales, the lack of inventory. We've got incredibly low interest rates still. We've got the millennials that are, in many cases, reaching their 30s. They're wanting to settle down. They're having kids, looking for a bit more space, maybe some green space around the house. The trend toward working remote, I suspect, is contributing as well because if you're in a cramped apartment downtown near a big office building, you could move out to the suburbs and work from the backyard, right?

You absolutely can, and as I mentioned earlier, people are looking to live in those markets where they like to vacation because now with all this work from home, and I just read a study yesterday that said that they're anticipating 40% of the workforce in the U.S. will be either full-time, permanent, or hybrid part-time work from home in the coming years. That's a massive number, and that's going to change the real estate market also. Yeah, interesting. Given all these things, do you think the strong seller's market will continue through the year? You know, I don't know that it'll continue all the way through the year. The one thing I've learned, if nothing else, in all these years is that things are always cyclical, whether it's the real estate market or it's the regular Wall Street market or the economy, and what goes up must come down. We know that, but I do believe with rates low like they are, and they're going to be in the low to mid threes we're anticipating this year, I think we're going to continue to see a strong purchase market throughout the year just because of the demand. Well, and just to be clear, this is different than 2006, 2007 because we changed the lending practices.

They're more conservative today. We don't have all the speculative building. In fact, as you said, it's the opposite. We have a lack of inventory. So this is not the bubble that we saw in 2008 based on what we can tell right now, correct?

That is correct. Now, you know, a lot of people are talking about bubbles, and I would say this, you know, 2006 through 8 was a complete anomaly. That was credit quality was the problem that created the 2008 mortgage meltdown. We don't have that happening right now, but I believe we do have some many bubbles happening in markets around the country that have just been exceptionally high in property value increases over the last several years that at some point they're just going to outrun incomes and you're going to have to have a correction.

You have to have that. There's no way around that. But I would tell you that the one thing that I'm most concerned about today is there are markets where people are just bidding so much over asking price that they may never see that value back. You got to be very careful about that in a marketplace like this.

Yeah, that's good advice. All right, let's go to the phones because, Dale, as you said, with these low interest rates continuing, there's still a lot of folks that perhaps are candidates to refinance. They didn't refinance last year.

Connie's in Fort Myers. And, Connie, you're wondering about refinancing. Tell us your situation.

Hi, thank you for taking my call. Hi, I was just wondering, we purchased in 2018 and we are now getting lots of offers to refinance. So we're just wondering if that's a good thing for us to do right now. Since we've only had the home for three years, we borrowed $200,000 and now we're at $181,000 just about with the current APR of 4.75%.

I just wanted to know what you thought about those numbers. Connie, before Dale weighs in, did you say you bought three years ago, was it a 30-year mortgage at the time? Yes, sir. Okay, so you have 27 years left. And do you all see yourself staying in this home for quite a while? We do. We do plan on staying here for quite a while.

Okay, Dale, your thoughts? Well, if I heard you right and you said 4.75%, certainly it would make sense for you to refinance. The other question I would ask is, do you have any kind of mortgage insurance on there? Because one of the big benefits of this marketplace is property values have increased so dramatically, so fast, that a lot of people who bought two, three years ago and maybe you had 10% you put down so you had to have mortgage insurance, you may have outrun that in the property value increase and be able to eliminate that as part of your refinance. So that's additional savings you'll create.

And here's my advice. If you've got 27 left, look at a 25-year maximum term when you refinance. A lot of lenders will have that. That way you get the benefit of not just lower payment, lower rate, maybe getting rid of mortgage insurance, but you also cut two years off right away and start to accelerate your principal reduction. Does that make sense, Connie?

Yes, it does. Currently we are not paying PMI. We were able to put the 20% down.

Great. So would you still work with 25 years? Yeah, what I would do is I would have them work up the numbers. I'd be willing to almost bet based on today's rates, which I think today it's 2.96 is the average rate on a 30-year mortgage today and it's like 2.27 on a 15. You look at those rates compared to 4.75 on a $180,000 loan, you're going to be able to create some savings and be able to cut some term while you do it. So I would certainly have them at least put together an offer.

It costs nothing for them to quote you what that loan would look like. Just make sure you keep your costs down on that. Make sure you're not paying a lot of fees on that.

If you do that, you're in good shape. Very good. Connie, thanks for your call today.

On to Tallahassee, Florida, just north a bit. Kelly, what's on your mind? Hi, I appreciate your ministry very much. Thank you.

I have a question. I have a duplex that we bought about seven years ago and with the market as it is today, we were thinking about selling it. We don't have to sell, but again, with the market, that's what our thoughts were. So we looked at some comparables in the neighborhood that were around the same size, same age, that type of thing, and they are listed for about $375,380. We talked to a realtor and he is suggesting that we list for $296,000 and walk with $290,000, which sounded kind of low to me. We paid $150,000 for it seven years ago.

We have $55,000 into it and we figured out our real estate fees and what I believe capital gains would be, we would lose about $44,000 of that. So we're just kind of wondering, timing-wise, if we should list it. Should we go to a different realtor?

Is he realistic? Just a lot of those questions. Yeah, Dale, your thoughts? Well, there's no question in my mind that you should always get a second and third opinion when you're looking at these kind of things, particularly when you've looked at comparable sales that are so much higher than what you're hearing. And look, comparable sales, you've done the right thing because comparable sales are always the first thing and the best thing to look at.

The key is they must literally be comparable and they've got to be as recent as possible, especially in a market changing as quick as this one. So I would definitely make sure that you get a second opinion on that, maybe even a third if you need to, but at least get a second person to take a look at that, put some eyes on it. Because it seems to me like you probably can get more than that based on everything you just told me and that's the route that I would take.

Yeah, I think that's great advice. I would certainly want to know why yours is valued so much lower than a comparable of a similar property type. And I think as Dale said, you need to get a couple of professional opinions, probably two or three, and make sure that you're factoring in what kind of market we're in. Because the last thing you'd want to do would be to underprice it and then get a bidding war going. You want to come in with a solid price, not where it's overinflated, but where it can be backed up based on the data. The good news is that data is available. Every professional has access to the same information and should be able to get you really close to what this is really worth.

And we appreciate your call today. Yeah, one more thing on that, Rob. Sorry, I just want to mention, look at the inventory, too, of those kinds of homes in that market.

If you find there's very few homes listed, that's even a stronger reason why that seems to me that that's under the price you should be offering. And here's a great verse for this, Proverbs 15, 22, plans fail for lack of counsel, but with many advisers they succeed. Remember that.

That's great wisdom, great advice. There's a lot more to cover here as we talk about the housing market, we talk about the mortgage market, we talk about where all this is headed. And what you need to know as you think about buying and selling, refinancing, perhaps how you position yourself to fund a purchase.

What do you need to know going in in terms of being prequalified and preapproved given this seller's market? All that and more with Dale Vermillion around the corner. Stay with us. We'll be right back on MoneyWise Live. Thanks for joining us today on MoneyWise Live, where God's word intersects with your financial life. In this part of the broadcast, we're talking with mortgage expert Dale Vermillion.

He's a good friend, joins us frequently. He's the author of Navigating the Mortgage Maze, The Simple Truth About Financing Your Home from Moody Publishers. And Dale, as we've been talking, this is a really interesting seller's market that we find ourselves in. As a buyer going into purchase in this kind of market, what do we need to know from a financing standpoint? So you're positioned, assuming you've got the right down payment, we would say 20%, assuming you're not overpaying beyond market value, at least in a reasonable sense, right? And assuming the resulting mortgage is going to fit in your budget, and we typically use 25% of your take-home pay, no more than that for principal interest, taxes, and insurance. But let's say we're checking all those boxes. What do we need to know to be ready from a financing standpoint to be a good candidate to actually get the home?

Yeah, great question, Rob. So one of the things that is the rule of thumb in a marketplace like this is your role is to position yourself as the very best buyer to the seller you can be. Sellers don't sell to the highest bidder. They sell to the strongest buyer. So if you're financing, a couple of things.

Number one, commit some time to be able to do this. Don't just think you're going to go and make an offer and just go about your business. It's almost like being in an auction nowadays. You've got to be there because there could be multiple offers, multiple bidding, competitive bidding.

You might be contacted multiple times. Be prepared. Make sure when you go to your lender, you ask for a pre-approval that is pre-underwritten, not just a pre-qualification. Because the realtors today are only taking those offers in most cases where they verified your income, verified your assets, verified all of your credit and all of those things.

So that's a very important thing to do. And then remember, if you want to buy a home, whatever you are qualified for, don't go in and offer at the maximum qualification because sometimes you need some additional room because you might have to bid a little bit higher. Now, be very judicious about that and wise not to overbid on a property, but leave yourself some room in that and larger down payments and larger earnest monies will put you in a better position than other buyers.

And help you to get a better opportunity for that. And having more down is always a good thing to do anyway if you have the money in the bank. It's always based on making sure you still have plenty of reserves left.

You never want to make yourself thin on that. But if you've got plenty of money in the bank, think about putting a little bit more down and talk to your lender about closing in 25 days versus the traditional 30 or maybe even 20. If they can do that, that also puts you in a good position. Yeah, that's great advice. When Julie and I bought our last home, we may or may not have submitted with the offer a handwritten letter about how excited we were that our kids, we could picture them in the backyard on the swing set. Again, we may or may not have done that. Is that a good idea though?

You know, it is a good idea except for two things. Number one, I don't think a lot of sellers in this market are paying much attention to that because they're getting so much money. My kids are really cute though, Dale. I'm telling you. They are. You're right.

Number two, in some states that actually could be a violation of some of the local regulations and there's a lot of talk about that right now, so you just got to be careful about this thing. Okay, very good. Hey, let's go to Youngstown, Ohio. Ken, thanks for holding, sir. How can we help you? Hi, Ken. Are you there? Alright, it looks like we have lost Ken temporarily. We'll try to get him back on. In the meantime, let's go to Illinois.

Brock, are you with us? I am. Thank you. Great. Go right ahead, sir.

Sure. Yeah, we have been living in our current home for the last seven years. Our home was built in 1915, so it's really old.

We're out in the country. We have a great location. We really want to build a new home.

We've done everything right. We've got this house paid off. We've got the land paid off. We actually want to tear this home down and build exactly in the right spot. However, with the prices of lumber right now, and we were shooting for 2022 to do this, are we better off waiting until the prices of lumber kind of start to go down?

But the interest rates are good. We just kind of would like to hear you guys' thoughts on if we should just continue to move forward with this plan. Yeah. Dale, thoughts? Well, it's kind of a catch-22 because you said something important. By the way, I not only love your question, but I love your name because my oldest son is Brock, so that's a good one.

We love that. Yeah, the catch-22 is you're right. Rates are really low right now, and we don't know what rates are going to do, and we don't know what lumber is going to do. I mean, the projection is lumber costs should go down in the coming years, but nobody really knows that. What I would say is if you can get top dollar for your property today, which you can right now, and you know that, and you can start the process moving forward and get those low rates, those two things are totally in your favor and you know about those. That would tell me this may be a good time to continue moving forward. I'd get the pricing set up, and maybe it might work out that by the time you actually start building, those lumber costs actually did drop. I think you're in a good position right now to make that move.

Yeah, I think that's exactly right. Great advice, and certainly what we're seeing right now, most folks think is temporary in terms of specifically some of these building materials. You referenced lumber. That's one of them that has gone through the roof. We've seen a ton of renovations, Dale, haven't we, and additions, especially as people have been home more over the last year. They haven't been traveling and vacationing, so they've been putting money into the family house, haven't they? They have, and the one good thing is coronavirus has been a big factor in lumber costs.

That's gotten much better recently, so that should go down pretty quickly. Very good. All right, well, I've twisted Dale's arm and asked him to stay around for one more segment. He's agreed to do it, so we're going to pause just for a moment. When we come back, we're going to continue to unpack all that's going on in this housing market, talk about how we can apply God's truth to your situation as you finance and buy and ultimately get completely out of debt and everything you need to know, plus your questions.

Here's the number, 800-525-7000. This is MoneyWise Live. We'll be back in just a moment. Stay with us. As we think about managing God's money, the largest purchase that most of us will make in our lives is our home.

How do we handle that, especially in a market like we're in today, and what does God's word say about how we should think about debt? Let's go back to the phones as we continue to be joined by our friend Dale Vermillion, author of Navigating the Mortgage Maze, our good friend and resident mortgage expert. We're going to go to Northwest Georgia. Tina, thank you for your patience today. How can we help you?

Hi. My husband and I don't have any debt. We have three properties we own. We're looking at perhaps selling one of them, but we want to buy another one on the lake near us. We recently bought a small boat, so we want to be able to use that. But we're 66 and 70, and a 30-year mortgage doesn't sound like what we need because when we buy another house, we're probably going to sell it within the next 10 years, and the boat too.

So we're looking at something for the next 10 years. We started out on a 30-year mortgage. We both have credit scores over 800.

We're in good shape. We've got $65,000 put down on our next house. We're thinking that a HELOC would serve our purposes better than the 30-year mortgage, but my real question is since I talked to my bank about the HELOC, and there's one that suggested instead of a 30-year mortgage with closing costs of over $7,000, the HELOC is at 2.5%, and the closing costs are right over $1,000. So that seems the way to go, but during this whole conversation I've been having with them for over a month now about the HELOC, their introductory rate for one year for people with good credit is 2.5%, and I thought, oh, well, that's great. But now in this whole month when rates continue to go down, it hasn't changed, and they can't seem to tell me why. Interesting. Well, thanks for that description.

Dale, your thoughts? Well, that's why they call it introductory, because what you've got is that's the rate you're coming in at. Look, I would not recommend the HELOC, to be honest with you. You could do a HELO, or you could do a 15-year mortgage that's going to get your rates down in even below 2.5% on a fixed-rate basis. The problem with any kind of a home equity line of credit is that you've got an open-ended balance, you've got an adjustable rate on that thing, and it isn't integrated, and rates are projected to go up, not down.

This year, so I would really recommend looking at a fixed-rate, fixed-term loan, 15-year maximum, if you can afford that. Sounds like you can. You guys are in a great financial situation. We all want to be you guys. That's a great job you've done. That's the approach that I would take with it, and that would be, I think, a much, much wiser move for you guys. Tina, does that make sense?

It does make sense. This has been such a frustrating process. We've been through two offers and contracts falling through because the inspections went so badly and such, so it's been gut-wrenching.

Yeah, I can imagine. Be sure you shop it around, though, to get those closing costs down. Dale and I would love it if you'd stay at under 2% of the mortgage value in closing costs. So you'll want to go to bankrate.com. You can check with your local bank, but at least go to bankrate.com and get a couple of offers from whoever has the best loan programs right now with the lowest rates for a 15-year fixed with the lowest closing costs. Don't let somebody talk you into buying that rate down.

You should be able to qualify for the very best programs with that stellar credit score and all the assets that you have. So I'm excited for you, and that little boat sounds lovely this time of year in northwest Georgia, so we appreciate your call today very much. Let's head way north of northwest Georgia to Chicago, Illinois. Tony, how can we help you, sir? Hi, hi. Thank you for taking my call. The reason why I'm calling is because I'm one of the house owners that has their house on the market.

It's been about a week now. And my plan is eventually to, with the monies left over after, you know, paying everything off, going completely debt-free, I'll still have between $50,000 to $60,000 left. What should I do with that monies to save it but still have it work for me? Because eventually I do want to get kind of a rental property, starting off with like a four-unit or something like that, but I don't feel this is the appropriate market to purchase that. Yeah, the key, Tony, is the timeline on that. I mean, how quickly do you think you'd want to be able to redeploy this money? Less than five years? It may be because I think the market will be, you know, favorable by that time.

And the only option I had now was with one of my credit unions. You know, they do pay monthly dividends on it, so it's making very little, but I feel, you know, I can make it work for me a little bit more than that. Yeah, my only concern is we're in an investment market that's just been incredibly on the tear on the upside the last 12 years, especially the last, you know, couple of years. And, you know, I see the returns beginning to soften even though we're, you know, coming out of the pandemic with incredible growth economically. We have strong earnings. I think the market's a bit ahead of itself, and if your timeline is less than five years, I wouldn't even go into bonds because as interest rates head up, bond prices are going to fall. You may not love this idea, but I'm going to suggest you go into an FDIC-insured online high-yield savings account so that way you have the money ready when you want to deploy it and you don't find yourself in a position where the market heads up for the next year, and then we get into a prolonged downturn and you're having to sell at a loss and you don't have your principal available. So that's going to be my best advice for you, Tony, just given the timeline of what we're talking about here and how this market has just been incredibly high and probably somewhat overvalued, just given inflation and a few of the other headwinds we have coming our way.

So hopefully that's helpful to you. Let's quickly go to Miami, Florida. Stephanie, what's on your mind today?

How can we help you? Hi. I'm moving to Tallahassee for grad school, and I'm only going to be there for five years. Do you recommend to buy when you are only going to be there for a short time?

Ah, yes. Dale, buy something five years or less in Tallahassee, Florida. Yeah, you know, that could be a little tricky right now because, again, you know, Florida, the market's been crazy, so you're going to pay top dollar. We're not sure how much longer those prices are going to hold. You know, you'd like to say yes, it's going to go up, but in the next two years, I'm expecting a correction in the marketplace. So if you can buy at a very affordable amount that is less than what you would rent, then I'd say yes, it's a good decision because you're going to make some investment return. You're going to get some growth out of that property.

It might flatten out or even go down a little bit in the next couple of years, but you should still be okay as long as you're buying right from the start. Very good. Stephanie, thanks for your call. Let me ask Ronnie's question.

He's been holding an Akron. I don't think we'll have time to get to it, but he wants to know, he's been approved for a VA loan, Dale, of up to $125,000. He's saying, should I go ahead and get the full amount? What's your advice to somebody in that situation?

Well, if he's approved for $125,000 and he can afford it in his budget and it's a VA loan, he's a veteran, then it's probably the right decision for him to make. Okay. And even if he doesn't have any equity in it? Help me understand. I'm sorry, I missed that. Could it be, he's asking, should I get 100% financing if I qualify for it?

Oh, I'm sorry. I thought you said dollars. I am not a fan of 100% financing.

We've talked about this so many times. We want to see our customers put some money into that property and I know the VA program does offer that. What I would do is I would try to get some money down on that house, but again, market being so good, it's going to grow pretty quick and you'll build equity fast. Very good.

Hopefully that's helpful to you. Go ahead and take up to that full $125,000, Ronnie, if it fits into your budget, but make sure you have a down payment. We'd recommend 20%. Dale, any final thoughts for somebody who's looking to buy a home right now?

We've got about 30 seconds. Just remember the old saying, beggars can't be choosers in this marketplace. Don't look for the home. Look for a home in the price range you want, the location you want, that has the things you want and find four or five that you can look at and start making offers on them so you can get a contract on one you really like.

But if you wait for the perfect home, you might wait too long and miss out. Excellent. Dale, thanks for being with us. His book is Navigating the Mortgage Maze, The Simple Truth About Financing Your Home. Stay with us. More to come on MoneyWise Live. Glad to have you with us today on MoneyWise Live as we apply biblical wisdom to your financial decisions. Hey, MoneyWise Live is listener supported, and this is a great opportunity for me to encourage you to prayerfully consider coming alongside as a partner of our ministry. We can't do what we do here on the radio with our coaches, through the MoneyWise app, on the web, any of it without your generous support.

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This would be a professional who can bring you competent financial advice from a biblical perspective. We have some phone lines open today, 800-525-7000. In just a moment, we're going to head to Fort Lauderdale and talk to Winston. But first, Chattanooga, Tennessee. Dan, thanks for being patient today.

How can we help you, sir? Yes. I was wondering if you'd explain the Windfall Elimination penalty for Social Security. The Windfall Elimination. So this affects about 3% of Social Security beneficiaries. And essentially what it is, is a recognition that you are receiving a pension from a job in which you didn't pay Social Security taxes. And so if you're receiving, you know, if you have that kind of non-covered pension, which typically come from a state or a local government agency that doesn't withhold FICA payroll taxes, then if you collect such a pension, the Windfall Elimination reduces your Social Security benefit by up to half of the amount of your pension.

But it's proportional. So the more years that you had substantial earnings from Social Security covered work where FICA taxes were paid, the less the provision cuts into your benefit. But again, if you are one of these 1.9 million Americans who have that type of pension as at least a portion of what you're receiving, that's where that's going to reduce the size of your Social Security retirement benefit. The best place to go to calculate the impact of that is the Social Security Administration's website, SSA.gov. They have a Windfall Elimination Provision Calculator that will help you determine the impact it may have on your benefit.

So I'd head over to their website if you haven't used that already. But that's essentially how it works. And, you know, again, you would just need to put in your information to determine how that might affect you. Does that make sense, Dan? It does. I just was not sure because it has three factors you've got to multiply by.

Yes. Well, yeah, there's a number of factors that play into that. That's why I would use that calculator just so you can understand based on your situation what you know, how long you've been paying into the system, what types of income you had and what portion was a non-covered versus a covered type of work will determine ultimately kind of how that that payout that you're getting from that pension will cut into your benefit. So I'd head over there. And if it's unclear to you or you have additional questions, go ahead and schedule a virtual meeting with somebody from SSA. They're really easy to work with.

And I think they can give you exactly the information you're looking for. We appreciate your call today. Let's head south to Fort Lauderdale. Winston, thank you for your patience.

How can we help you, sir? Yeah, we have lived in this house now for 34 years and we're looking to downsize. So how do I go about buying and selling as we try to downsize?

Yeah. Well, I like the idea, Winston, of you downsizing in this season of your life. You perhaps have more than you need from an upkeep standpoint. And you can take some money off the table. If you still have debt, you could pay it off.

If not, you just reduce the overall expenses that you're going to have to fund during retirement. You know, the best way to go is to first of all, I think, begin to think and pray about where the Lord would take you, both in terms of what location, what size home you need or townhouse and what you would want to spend, what fits into your budget. Because remember, you know, if you've been looking over the last several years, just kind of thinking about this loosely, things have changed quite a bit because we're in a seller's market with low inventory and housing prices at their peak. So you want to kind of take a fresh look at that just in terms of what it's actually going to cost you to get this smaller home that you're looking for. Doing some of that research ahead of time will put you in a really good position so that when you take the next step, which is to get a couple of realtors to come in, some professionals to find the one you want to work with, you can be real clear about what you're ultimately looking for. Then you'll want to have, you know, find someone that can represent you, help you determine what the asking price is for the sale of the home that you're in now. You'll want to go ahead and list it and keep in mind, you know, you're probably, especially in this market, going to want to make sure you sell this property first before you go out and look for the next one.

But you're going to need to deal with that kind of gap in the middle. Do you need to rent something for a period of time? Is there another family member you could stay with while you're looking for that next property? Or do you have the financial position to actually go ahead and make that purchase once you go under contract with the sale?

I think all of that you have to determine, but I'd start with your homework on determining exactly what you're looking for, what it's going to cost, then find that professional who can represent you, get this house sold, and then you'd make the move and look for that next purchase. Does that all make sense to you, though? Yeah, that's exactly what I thought. So you have actually strengthened what I thought the process in going forward.

Good. Well, look for somebody in your area, perhaps a godly realtor who specializes in your neighborhood or at least your part of town there in Fort Lauderdale. You could start at your local church and ask for a referral, or you could just drive around the neighborhoods around you and see who has the most signs because that's probably the person who does the most business in your area and could help you get this sold quickly and for the most value.

That's not the only criteria, but that's at least one criteria to consider, and then ultimately you want to have somebody you feel really comfortable working with. But all the best to you in the days ahead. I'm excited about what God's doing in this new chapter of your life as you downsize and ask him what's next, and we certainly appreciate your call today. On to Birmingham, Alabama. Aaron, thanks for your patience.

How can we help you? Yes, I'm a veteran with a current VA mortgage, and I've been getting a lot of calls to refinance under an IRRL, and it definitely will reduce my rate lease by 1%. So I'm thinking, is that the right thing to do at this time? Yeah, you know, it's not a bad thing at all because they're easier to navigate than the regular VA loans. I mean, basically this is what's called an interest rate reduction refinance loan, and it's a VA streamlined refinance. So it's a simplified loan with relaxed qualifications for service members and veterans.

It doesn't always require a VA appraisal or to go through a typical VA lender underwriting process, which saves everybody time and saves you paperwork and fees. So you use this to refinance one VA loan into another, and it's going to be, if it goes through and makes sense, it would be an improvement on your old VA loan. So you'd get the lower rate, the lower payment, or both, and you can also move from an adjustable rate loan, if you have one, to a fixed rate loan. So it's a win-win.

I would just compare what they're going to be moving you into versus what you have now. And remember, we don't want to extend that term no matter what happens. So it's not just about the rate and the payment. We want to make sure that we're shortening the overall payback period.

But this is a good thing, and so I would definitely check it out. We have time for just one more. Louise, how can we help you today? Oh, hello.

Thank you for taking my call. We were talking earlier with the producers about the guests you had last week. We were talking about couples and how they need to be honest about their finances, their spending, and things of that matter. And I realized, after being divorced 10 years, that a lot of the things they were talking about in a negative manner, I was guilty of those things, which I realized was the cause of the breakup of my marriage. So I guess my question is, how do you recover and go forward after being so destructive in a relationship with finances?

Yes. Well, keep in mind, we all are saved by the blood of Jesus Christ. We're all sinners, and we're all going to make a lot of mistakes, and that includes this area of money and includes marriage. But I think it's all about first placing our trust in Jesus, accepting his forgiveness of our sins, and then turning and making a change, a 180-degree turn as we repent from whatever it is we have in our lives. And I think first is just recognizing, Lord, here's an area where I've fallen short, and I want to be found faithful moving forward. And so I need your wisdom, and I'm going to submit myself to your lordship in this particular area of my life and make a change and commit to being completely honest and above board, recognizing, I think, first that God owns it all, which places you in this role of steward or manager of God's resources. And then money becomes a tool to accomplish his purposes.

And I think the extent to which we've bought into a false sense of identity that our things define us, or we need to have certain possessions or spend money in a certain way to maintain a proper status or to feel good about ourselves, means we've misplaced where our value ultimately comes from, and that's from the Lord. So that's the starting point. So I just ask the Lord to be with you as you try to move forward, and we appreciate your calling and your transparency today, Louise. That means a lot. That's going to do it for us today. Thanks for calling and listening.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thanks to Jim, Amy, and Dan for their assistance today. Thank you for being here. We'll look for you tomorrow. Come on back and join us. God bless you.