Pay Off Mortgage or Invest?

A listener told me a funny story the other day. He had bought one of those fancy new exercise bikes and for him it was without a doubt a very special tool to help him get healthier. But the problem was three days went by and then four. And he'd yet to use the bike. And then on night five he's sitting at the kitchen table and he looks down at himself and he couldn't help but just laugh.

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Let's say you come into some cash, maybe you get a raise or an inheritance. Now you have to make a decision, use it to pay down your mortgage or invest it.

Hi, I'm Rob West. It's another one of those questions we get a lot and usually folks are already leaning toward investing, thinking it always gives a better return. I'll talk about that first today, then it's onto your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, where biblical wisdom meets today's financial decisions. All right, so here's the argument for investing the money and not paying down your mortgage. Over any given period of time, the market will give a greater return than your mortgage interest rate and that probably seems especially true over the last dozen years with bull markets and low mortgage rates.

But the folks at MoneyGeek.com decided to put that theory to the test. They compared mortgage rates with the S&P 500 returns over a 43-year period. The findings showed that at times paying down the mortgage actually can give you a better return than investing in the market.

The span of time in the study was 1971 to 2013. It turned out that paying down a mortgage at any given year's average interest rate gave a better return than the S&P 500 in 26 of those 43 years or about 60% of the time. The longer period of time you make extra mortgage payments, the more likely your return will beat the market. But over shorter periods with that 43-year range, the market often wins. Take the last 10 years, the S&P 500's average return of 14.3% is a clear winner over the average 30-year fixed mortgage rate of around 4.25%.

But it all depends upon which period you pick. 1997 to 2007, for example, saw the dot-com bubble burst and the lead up to the Great Recession. In 10 out of 11 of those years, you'd have been better off paying down your mortgage than investing in the market. Crunching the numbers further showed that in any 10-year span, paying down a mortgage beat the market 63% of the time. But in the last few years, another factor has made the mortgage payoff even more attractive, and that's the question of taxes. The Tax Cuts and Jobs Act of 2017 doubled the standard deduction. The result was that 82% of homeowners no longer itemize their deductions and therefore can't take advantage of the mortgage interest deduction.

That essentially made holding a mortgage more expensive and increased the attractiveness of paying it off as soon as you can. Now, you may be thinking, but aren't qualified retirement accounts tax-exempt? Shouldn't that lean things in their favor? And of course, they are tax-exempt. A 401k, traditional IRA, and Roth IRA are all tax-exempt while the money stays in the account. And that definitely tips the scales more in the direction of investing in a qualified account. But those plans have contribution limits and one rather large restriction. You must make your contributions with earned income.

That means an inheritance or other found money would have to be invested in a regular brokerage account that isn't tax-advantaged. In that case, the scales are tipped back toward paying down your mortgage. Of course, there are other considerations that may affect your decision.

Here's a few of them. First of all, if you don't have an adequate emergency fund, that's where your surplus money should go first. I would say you need three to six months living expenses and liquid savings. Once you have that, you can worry about paying down the mortgage or investing. Also, consumer debt pretty much makes the mortgage versus investing debate a moot point. If you're getting hit with 18% or more interest on your credit card balance, paying that off first wins every time. The same may be true if you have a car loan with an interest rate that's a point or two higher than your mortgage. Put your money there first.

But remember, once you pay off a car loan, keep making those payments to yourself into your savings account so that you won't have to borrow as much or anything for your next car. And finally, there's risk tolerance to consider. Investing in the market is often a rollercoaster ride and not necessarily the fun kind. If you can't handle steep declines or your investment horizon is short, say less than five years, ten is better, you shouldn't be in the market. Paying off your mortgage early may not be as thrilling as investing in Bitcoin, but on the plus side, there's absolutely zero risk involved. You're guaranteed a return equal to the interest rate you're paying on your mortgage. So there you have it.

We hope this makes you feel better about paying off your mortgage early if you decide to go that route because the numbers show, much of the time, it can give you a better return than the market and a lot of freedom to follow the leading of the Lord. All right, your calls are next. 800-525-7000, that's 800-525-7000. I'm Rob West and this is MoneyWise Live, where biblical wisdom meets today's financial decisions.

Welcome back to MoneyWise Live. I'm Rob West. Thanks for joining us today. We'll be taking your calls and questions in just a moment. We have some lines open. Here's the number. 800-525-7000, that's 800-525-7000. We're going to begin today in Miami, Florida. Christian, thank you for your call today. How can I help you? Yeah, hi. Thank you for answering.

God bless everybody there. My question is, I'm planning on purchasing a house, maybe like a $300,000 house for a fixer-upper or something like that. But I'm short on my 20% down payment, right? I'm short about $15,000. So my question is, if I have a vehicle that I'm literally paying $800 monthly payment on that, but the vehicle, if I refinance it, I would boost up and make it to my 20% for the down payment of the house. The vehicle, they give me $30,000 and I'm only $16,000 to pay it off. What would you recommend on that so I will be able to reach my 20% down payment for a mortgage?

Yes. So you'd be refinancing your current home, is that right? No, I would be refinancing my vehicle and right now my monthly payment will be $400 for a three-year term. But I'm getting $30,000 back and I'll be making it for my 20% down payment on a house. Okay, I understand that your payment will change when you refinance that vehicle.

Where I'm losing you is where you get the $30,000. When I refinance it, it's not a refinance, it's a loan. A loan under my vehicle. Okay, so you own your vehicle free and clear and you would be getting a loan to essentially take cash against that with the vehicle as collateral? Yes, vehicle as collateral and my vehicle is worth $30,000 right now and all I owe is $16,000 but with that $30,000 if I get a loan with that $30,000 I'll be able to make it for the 20% down payment and my monthly payment will be $400 instead of $800 now.

Yeah, now Christian I'm not a big fan of this strategy. It's just that you're taking a loan on a vehicle which you already own which is a used vehicle. It's going to be at a higher interest rate which means you're going to be paying a good bit on that loan. It sounds like you'd be upside down if I understand correctly but even if you're not, taking cash out against a vehicle to use as a down payment on an investment property is not something I get terribly excited about.

If you want to refinance the vehicle because it makes sense to reduce the interest rate and as long as you don't extend the term then that's okay but not to get cash out to buy an investment property. You said you were going to pay around $300,000. How much have you saved up? No, right now I have $45,000. Okay, so that's the additional $15,000 you're looking for to get to $60,000 which would be 20% is that right?

Yes. Okay, and how much surplus cash flow do you have on a monthly basis that you could use to continue to save for this property? Well, it will take about six months in order for me to reach with my cash so I was just wondering if I'll be able to do something before, you know, things happen, interest go up or something like that. Well, I would actually encourage you to wait for a couple of reasons number one is I don't think I mean rates are headed higher but not anytime soon. You know the Federal Reserve has said they're going to start thinking about thinking about raising rates in 2022 I don't think we'll see anything this year.

And it could be even the second half of next year. Number two is the housing market has just been going crazy I mean it's red hot especially in South Florida. So I could see a cooling off of the housing market as the inventory nationally increases.

I don't think we're in a bubble situation, but I don't think it's sustainable at these current overpriced levels. So I think you saving for six months at the very least is going to give you an opportunity to buy in probably at the same levels or lower. Which means maybe you get a better deal because there's not so many people's chasing too few properties next fall, which is going to cause prices perhaps to soften just a little bit. And then you're not taking out any additional loans against your car. You've saved for that 20% down payment, but I just want to make sure you've done the math on covering the cash flow of this investment property. And you've got the staying power assuming it's rented, but what about those seasons where it's not rented and you've got a tenant that's moved out unexpectedly.

You've got to take care of some repairs and you don't refill it as quickly as you did. I just want to make sure you don't put the rest of your financial life in jeopardy. Make sure you have enough in the way of reserves to sustain that before you go into this thinking it's just going to work out.

So I would push the pause button. Let's see what happens in the real estate market. Revisit this in six months with your down payment and don't borrow a dime more against that car. That's my best advice today and I appreciate your call very much. Let's go to Dallas, Texas. Sue, thank you for your call.

How can I help you? Hi, I was wondering if you could tell me your opinion on reverse mortgage for a single retired lady that doesn't have any savings. Yeah, Sue, reverse mortgage in my view is a last resort if you need the income.

These mortgages generally have higher interest rates and fees and more restrictions than conventional mortgages. It requires you to stay in the home, which you may be planning to do anyway. And if at any point you had to move out for some sort of assisted living, you would have to satisfy the note.

Or if it was transferred to heirs, they would have to satisfy it as well. So I think, you know, I don't like funding lifestyle with debt. I realize you're sitting on a huge probably amount of equity that you could convert to an income stream. And if that was the only option apart from, you know, selling it and downsizing or trimming your lifestyle, then it's certainly a way to go for some people. It's just not my first choice because there's a lot of fees and an embedded interest rate in that that's going to add up quickly. And I'd just rather you fund lifestyle other ways than a reverse mortgage. If you decide it is the way to go, I'd really do your homework.

They're not all created equal. So find somebody to help you navigate that who's got some expertise and can guide you in that. But we appreciate your call today. We'll ask the Lord to give you some wisdom as you make this decision.

I know that's not an easy one on a fixed income. So thanks for your call. Well, we're just getting started here on Money Wise Live.

Still a lot more to come. In just a moment, we're going to be talking with Denise about her husband's desire to refinance the house to pay off vehicles. We'll talk about charitable donations with Ted from an IRA. And Cynthia is wondering about her mortgage and how quickly she should pay that off.

That and your questions coming up just around the corner. Here's the number 800-525-7000. Stay with us. Thanks for tuning in to Money Wise Live, biblical wisdom for your financial journey. We've got a few lines open today. 800-525-7000. Our team is standing by to take your call. 800-525-7000. Hey, would you like a financial professional who can help you align your financial decisions with your biblical values? Well, we trust the Certified Kingdom Advisor designation for this program. You can find a CKA right there in your city when you visit our website.

Just go to MoneyWiseLive.org and click find a CKA. Let's head back to the phones. In Minnesota is Terry today. Terry, how can I help you? Yeah, this is Terry Dowell from Longville. I heard your little blip on paying your mortgage off and I really want to say that is a good deal.

And I enjoy her so, so much and giving good advice to all the Christians. Well, thank you, Terry. Anyway, you can jockey them numbers all you want to with the percentage and stuff, but paying off your mortgage is the best thing you can do if we ever have a depression or whatever we have.

Nobody can take your home away. Yeah. Well, I like that, you know, and it's interesting that this research we referenced in the opening segment of the program today actually looked at each of these time periods and, you know, more often than not, it actually made sense financially. But so often we get fixated on just the financial side because there are times where the market does better, clearly.

But when you take away that deduction, which 82 percent of people won't take away, because they take the standard deduction, you realize that it's not as beneficial and there's the non-financial side. You know, the peace of mind, Terry, that I hear in your voice, knowing that your home is paid off, free and clear, and you've got the freedom and flexibility to follow the leading of the Lord. It's not that debt is a sin.

Certainly it can make some sense when we're buying assets that are appreciating and if we do it in a way that makes sense for our financial life and we can afford it. But when we can get out from under it, there are real blessings there, and I think Scripture clearly supports that. So Terry, I appreciate your encouragement.

You obviously are living this, and so your testimony is one that I know will be an encouragement to many of the folks that are listening today. So thank you, sir, for your call very much. God bless you. I'm sorry, were you going to say one more thing?

No, that's it. All right, all right. You take care, sir, and may the Lord bless you. To Miami, Florida, Marie, thank you for calling. How can I help you?

Thank you for taking my call. I just sold a business, and after paying my debt, I have $100,000 to invest, but I'm pending for my retirement because I'm 59. But I really don't know where to put it. Yes. So you sold a business.

Talk to me about this money. You're not planning on going into another business, and you don't have it earmarked for any specific purpose, other than to grow between now and when you might need it down the road in retirement? Yes.

Okay, very good. And you said you're 59, so you think that's five years or more down the road? Yes, I mean, 70. I mean, I'm a nurse, so yeah, 70.

Maybe around 70. Okay, so you think you have more than 10 years for this money to grow, which is great. You know what I would do is I would connect with an investment professional.

I mean, this is a lot of money, Marie. You've worked hard for it, and I think it is not something you should just put on autopilot, especially if you don't have the expertise, perhaps the time or the training to invest it. There are more options than ever for you to do it yourself, and if that's what you wanted to do, you certainly could head over to soundmindinvesting.org, and the Sound Mind Investing newsletter could give you some great options for mutual funds. But I think once you get over $100,000, having an investment professional that has significant expertise and training that can take over this and invest it based on your objectives makes a lot of sense. So I would do one of those two things.

Either go to our website, moneywiselive.org, and find a CKA, a Certified Kingdom Advisor in Miami that could manage this for you, or I would go to soundmindinvesting.org, and if you wanted to do it yourself, the Sound Mind Investing newsletter could help you with that. I think one of those two will be exactly what you're looking for. Does that make sense? Yes.

Yes, it does. Thank you. Okay. Very good, Marie. God bless you, and congratulations on selling that business.

That's really exciting. To Twin Pines, Florida. Margie, where is Twin Pines? Is that in the middle of the state? It's Pembroke Pines. Oh, Pembroke Pines. Okay, I know exactly where that is, because I'm from Fort Lauderdale, so Pembroke Pines was just down the street.

I had not heard of Twin Pines, though, so that's our mistake. How can I help you today? Well, we're looking at possibly refinancing our home. We've paid on it for 12 years. We owe like $116,000, I think, and we're looking at refinancing to lower the interest rate, which is at 5.5%. Okay. But we're not sure which way to go, being that we're only looking to stay another couple of years.

Ah, yes. But the interest rate is so high, I can't put so much on it to get the principal down, and I figured if I get it down lower, then I would be paying more on the principal. Yes. Well, I think, I mean, if you would have told me you were going to be there five years or longer, I would have said it probably makes sense to look at refinancing, because you may be able to save a couple of points, but at a couple of years, anything less than five years, it's just not going to be worth the hassle, Margie, because even though you'd get that interest rate down, you're going to spend, depending on how big this mortgage is, probably several thousand dollars, I would expect 2% of the loan value or more in the form of expenses, fees associated with refinancing, and you're going to barely, if at all, make that up with saved interest between now and when you sell, which just defeats the purpose of it. So I think, unfortunately, as much as we'd like to see a lower rate, historically, we go back, you know, if we go back several decades, 5.5% is still a really good rate, even though we're more accustomed these days to the threes or even below.

But I think just given the timeline here, you're probably better off just to continue to pay on this as much as you can, and then once you sell and buy something else, hopefully you'll be able to still enjoy low rates, probably something even lower than you have now. Does that make sense? Yes, it does.

That's what I wanted to know. All right. Well, listen, all the best to you there in Pembroke Pines, and we appreciate your call today. God bless you. We're going to head next to, well, you know what?

We don't have a whole lot of time, so I want to save Denise's call and Ted's and Joe's for the next segment. Let me take this opportunity just to remind you before we head into this next break coming up, the importance of prayerfully considering supporting this radio ministry. We count on all of you, our listeners, the MoneyWise community, to help us do what we do every day, on the air, on the web, in the app. It happens because of your generous support. There's not one organization or one family or one anything that supports this ministry to fund what we do. It takes all of you, all of us together to say, you know what? We want to know God's heart as it relates to managing our money, and MoneyWise has been a key part of helping me do that.

If that's you, would you consider a gift? Just head over to MoneyWiseLive.org and click the donate button, and we would certainly be grateful. It's a privilege to be invited into your stories each day as you ask questions and share testimonies, just like the testimony we heard from Terry today about the joy of paying off his house.

We're going to hear more of those questions and testimonies just around the corner, so don't go anywhere. We'll be right back. Here's the number, 800-525-7000. Thanks for tuning in to MoneyWise Live. I want to say thank you to my amazing team today that's helping us do what we do.

We couldn't do it without Jim and Deb and Erin and Gabby and Amy. Each day we lock arms and serve you, our listeners, and if you call in today, you'll be able to talk to our team. Here's the number, 800-525-7000. That's 800-525-7000. We're going to head next to Davenport, Florida. Denise, thank you for your patience today.

How can I help you? Oh, you're very welcome. My husband is interested in refinancing our home by paying off two vehicles and two motorcycles.

He is the only income that we have, and right now we owe about $148,000 to mortgage, and we would be adding on an additional $70,000. Okay. Your thoughts on that?

Yeah, I'm not particularly excited about that. What is your interest rate on your home? On the home, I believe it's $3.89.

Okay. Yeah, that's a pretty good rate, and you're going to spend a good bit of money to refinance it. You may be able to save a quarter point, maybe a half a point, depending on how good your credit score is and so forth, but I think that, just to be able to pay off the vehicles, I'd rather you just stay focused on paying that mortgage, the monthly amount that you have. That's still a very good rate, and then take and go back to your spending plan, Denise, and really dial into that spending plan to see what opportunities you have to trim and cut to free up margin, so that you can, over and above that monthly payment to those cars, send extra, probably snowball it. Start with the, you know, pay the, obviously the car payment on both, but whatever margin you have, assuming you don't have credit card debt and you've already got an emergency fund, let's take that margin and put 100% of the extra against the smallest balanced car until it's paid off, but don't stop. Then take that whole monthly payment plus that margin and roll it to the next one, but using the house to fund that secures that debt to the house, so now if for some reason you couldn't make the payment, you lose your house instead of the car. I realize that's a worst case scenario, but that's a big deal because you're collateralizing it against your home, your domicile. Number two, the expense, as I said, can be really significant. I mean, you know, you're going to be spending at least 2% on that additional $70,000 in the form of a refinance, which is, you know, $1,400 right off the top at a minimum, just in expenses for the refi.

So I'd leave the mortgage alone, given that interest rate, and let's focus in on paying extra toward those vehicles and getting those paid off, okay? Oh, excellent, excellent information. That is exactly what I told him, so hopefully he'll get to hear this and it will convince him not to do it. All right.

Well, when you tell him that Rob said I was right, just do it with a smile on your face and be really sweet to him, okay? I will. Thank you very much. You're welcome, Denise. God bless you.

To Fort Myers, Florida. Ted, thank you for your call today, sir. How can I help you? Well, thank you.

I've been listening to you for several years, and I really appreciate what you do. I am 89 years old, and I have had to take an IRA withdrawal every year since 7, what, 75 and a half. And I heard about giving to a charitable organization directly from my IRA without it going through my hands. So I asked my broker last year to do it.

Everything went fine. This year, I had two churches I wanted to give a donation to. And even though I expressed that I don't like my taxes taken out of any of my activities, so I'll pay it at the end of the year.

I also knew that they'd done it the year before. So they sent the money directly from from my account to the churches. But they took out the taxes and each church is shorted by about one hundred and sixty eight dollars. And I mentioned this to my broker, who's a brother in Christ, and he didn't know what to do about it. He asked his the parent company.

They didn't know what they didn't. I don't know what they decided, but nothing happened. And I know that the secretary that did it, her husband's going through cancer, and I know it's just a mistake, but I don't know what to do. I want to give that money to those churches and they didn't get it. Well, so was it was a qualified charitable distribution done? There should have been paperwork that named what happened here a QCD. Do you know if that occurred that way? I don't know that.

OK. All right. I would call the broker and just say, you know, so the way once you reach age, which you are where you have to take a required minimum distribution, then you can do what's called a qualified charitable distribution. And any custodian will have the paperwork to do that, whereby you complete the paperwork. The amount is sent directly from the IRA to the charity, not to you. And in doing so, they get the full amount. You don't pay any income tax because you don't get the money. In fact, if you itemize, you get the deduction.

Well, even if you don't itemize, you get the deduction and you satisfy the RMD. But it has to be set up as a qualified charitable distribution, which is what triggers it to not be a distribution to you, which is a taxable event. And so if that was done incorrectly, meaning it was taken out inadvertently, but it was handled properly in terms of the money being sent direct to the charity, then your CPA should help you straighten that out. The money could be put back into the account and, you know, because there would be no tax owed. So it would have been taken out inadvertently. So first thing I would do is call the broker or the brokerage firm and just say, was this properly set up as a qualified charitable distribution?

And then depending on what they tell you, call your CPA and say, I need you to help me sort this out because tax was withheld. And based on my understanding of how this was done, it should not have been. So how do we right this ship and and, you know, have this handled properly? Does that make sense? So I would call the home office, which would be Edward Jones.

Yes. Just say, was this, in fact, set up as a qualified charitable distribution? Because if it was, I don't know why taxes are withheld and get them to tell you exactly how it was done. And then take that information to your CPA and say, what should I do? And perhaps maybe you get a call with your CPA and Edward Jones to sort this out because there's a way to put this back together properly.

It just needs to be done the right way so that it doesn't trigger a taxable event. OK. Very good. Thank you so much.

OK, Ted. Absolutely. I appreciate your generous heart and wanting to try to get more money to charity. I think that's a good thing for sure. And doing that in a way that's wise, where you don't pay any more tax than you have to. And we get more money into the kingdom because that money is not being paid any tax on it by you.

That's a phenomenal thing. By the way, if you don't know about a qualified charitable distribution, head over to our friends at the National Christian Foundation's website, ncfgiving.com. They've got plenty of information and resources there that you could avail yourself of to understand exactly what it looks like to make a qualified charitable distribution. If you're not of age to have a required minimum on an IRA, there are other ways to give assets. You can give gifts of appreciated stock. You can give your business away prior to a sale and get a lot of money into the kingdom and save a ton in taxes.

You can give away real estate. There are so many ways to give from our balance sheet, which is where most of our wealth is held. You know, we so often give out of cash. Well, guess what? Ninety percent of gifts happen in the form of cash.

Only 10 percent of assets are held as cash. So the balance sheet is where the opportunity is. ncfgiving.com. Hey, stay with us. We'll be right back on MoneyWise Live. Thanks for tuning in to MoneyWise Live, where biblical wisdom intersects with today's financial decisions and choices. You know, there's 2350 verses found in God's word.

How do we know? Well, the former host of this program, our friend Howard Dayton, in a men's Bible study 30 years ago actually sat down and said, we're going to find out how many verses on money exist in the Bible. And over many weeks, as they met together weekly, they cut out with scissor every passage of the Bible that dealt with money and possessions, and they stacked them up by category. And 2350 verses later, they said, I think we have our number. That's a lot in God's word. It's more than just about any other topic.

Why is that? Well, I believe it's because money is the chief competitor to lordship. If something's going to compete with our heart for first place, or excuse me, compete with God for first place in our hearts, it's most often going to be money and the things that money can buy. So we want to know what God has for us in this area.

How can we hold it loosely and have God not be a competitor, put him in his rightful place and let money be a tool to accomplish his purposes? Well, that's what this program is all about. Let's head back to the phones today.

In Chicago, Illinois, is Joe and Joe's been waiting patiently. How can I help you, sir? Rob, thank you for taking my call.

I appreciate it. I'm trying to help a friend do a loan modification. It's the same bank gave him a call and said that they could reduce his rate. So I'm not quite sure if it's a refire or just a modification, but the rate is good. He went from a five one to a three point two five and the fees are just a little bit higher than I'd like.

It's a little over two percent plus a five hundred dollar FHA loan fee. So that all seems fairly well. He has he has a bank revenue. That was six and a half years ago. It'll expire. Well, almost almost seven. It'll expire in May of next year.

It'll drop off. It'll be seven years in May for the bankruptcy. But as it stands right now, he has a seven twenty five credit score. So I'm not sure if the bankruptcy, the bankruptcy must be factored into the credit score. Is there something saying that just because you have the bankruptcy. Even though you have a seven twenty five credit score, you know, you don't get a good rate. I'm not quite sure why he can't just go out and apply for a conventional loan.

Yeah, well, he can. You know, your friend is doing well with a score of seven twenty five. And I'm not terribly surprised because as things get further and further in the past and he's pretty close to this rolling off at six at seven years and he's six years in.

I think you said it's having less of an impact on the score clearly now than it did, you know, in the years past. You know, from a for a conventional loan, it's generally four years from the discharge date. Now, each lender can determine what their own terms and conditions are. But, you know, at the end of the day, you know, the fact that he's got the good credit score, he's beyond that four year mark. He should be able to qualify, maybe not for the best terms and rates and maybe not by every lender, but at least have plenty of options out there as long as he's got the income that he can document. And, you know, his repayment history has been good, which I suspect that it has because, you know, his credit score is so high. So he should just go out and shop it at this point, you know, with whatever lenders he can find. But there's nothing preventing him at this point from getting that refi just because of the bankruptcy, because of how long it's been since it happened.

Do you follow? Yes, two different guys that I don't particularly trust that well told him that, oh, no, you have to wait seven years. Oh, no, seven years. And I said, but but he has 725.

I mean, it's got to be something. You don't have to wait seven years. The key is just finding the lender that will do it for a conventional mortgage. It is four years. I mean, the only situation we could be running into is that the discharge date isn't conforming to the seven year period on the credit report.

So you may want to just check that. But if the discharge date was more than four years ago, then he absolutely can qualify. But he's going to have to find the lender who will do it with the terms and rates that he's happy with. So give him that information and I appreciate you checking in with us on his behalf. To Sunrise, Florida, Antonio, how can I help you?

How are you doing? Several years I've been blessed enough to save enough money in our savings account when my wife and I are just about to pay off our mortgage. But then unexpectedly, my mother in law, my wife's mother passed away. So to keep things short, my question is, should I use that money to pay off my mortgage? Or should I use it to buy out the other beneficiary of her house so that I could have that house rent free? I mean, have that house mortgage free, then use it as a rental property. Yeah. So you've been saving up money to pay off your own mortgage.

You've not been sending it to the mortgage company and you've built that up in savings. Is that right? Yes.

Yes, correct. Okay. And how much have you saved? About $150. Okay.

And what is the other beneficiary's portion of the house? How much would that cost you? It'll be about that much.

The house becomes in the area about $270. Okay. All right.

Very good. And do you want to get into the real estate business? I mean, are you wanting to become a landlord? You know, my father was for years and there's pros and cons. And I think it would be a good fit for my wife and I. We are on the same page on a lot of things. And, you know, I have had a front row seat to some horror stories, but also, you know, it's almost 20 years in the making for my dad.

Yeah. Well, I guess the only thing unless there's some, you know, something that you want to hang on to this house because it has some sentimental value. It's been a part of your family. Odds are that the home you've inherited isn't necessarily the very best one for you to turn into a business, a rental property. So I think, you know, one option is you say, well, there is some sentimental value. I'd really like to hang on to this, keep it in the family and and get it paid off. And I would say, yeah, because you have the option with cash to go in and buy out this asset and then convert it into an income stream without any debt service, that's going to put you in a really strong position. But I guess the second question I would ask is, if you want to, you know, get into the real estate business, don't get into a binary trap, which is two competing alternatives or limiting your choices to just to keep the home and buy the person out or pay down the mortgage. What if we were to consider you getting out of this home so you add another hundred and fifty to it because the other beneficiary buys you out or you all just sell it and split it.

And then now you've got three hundred thousand to say, what is the very best property for us to buy that would allow us to, you know, begin to earn some income through real estate? You know, the only reason you may want to keep this one other than sentimental reasons is you're not having to buy it in a very hot real estate market where you're going to pay a premium. So if that's the reason and you look at it and you do the comps and you talk to some professionals and you think this really could be an excellent rental property, then I would say go for it. There's no reason not to as long as you and your wife don't have a conviction around being debt free with your primary residence. You know, if you and she are on the same page about hanging on to your mortgage and using this hundred and fifty thousand to, you know, convert this inheritance into an income stream, then I'd say that makes a lot of sense if this property is conducive to that. But if you guys are not on the same page and you're like, honey, look what we could do with this house.

And she says, I just want to own my home. I wouldn't gloss over that. I would take that into account. But I've thrown a lot at you, Antonio.

Give me your thoughts. No, that's brilliant. You're actually confirming things both ways because we were extraordinarily excited and grateful that we were in a position to buy our house out and, you know, be being mortgage free.

And then that unexpectedly happened. So I said, hey, honey, what do you think about this? And she's like, well, I'm kind of on the fence because of sentimental reasons.

But also, you know, we've been licking our chops for all these years of getting an opportunity to get out from under a mortgage. So, I mean, it's definitely OK. Well, here here's what I'd like you to do, because it sounds like you guys could go either way. And I don't think you can make a wrong decision here. I want you all to just say we're not going to do anything for two weeks. And I want you all commit to on your own praying about this for two weeks and ask the Lord to give you some wisdom.

And then I want you to come together and I want you guys to talk about it. And what you're trying to determine is, do we really have a conviction to be debt free? And if so, don't think twice about paying off that mortgage.

You do it. But if you all come back together and say, you know what, I think the Lord has released us from that. We're OK with this mortgage. And we think this is a blessing. We want this home to stay in the family.

And we think becoming landlords is something we'd actually be excited about doing. That's a great option. But I want you two to be on the same page. And I want you to hear from the Lord in the process of making the decision. So push the pause button a week or two, commit to praying about it every morning on your own. And then you guys come together and talk about what the Lord has shared with you and you guys make a decision. How does that sound?

That sounds brilliant. I really appreciate it. All right. Once you get to the end of that, Antonia, you got to call us back and tell us what you decided. OK, my friend? Yes, sir. OK. Thanks very much. Quickly to Alabama. Elaine, I wish I had a lot of time.

I only got about a minute. Tell me what you're trying to accomplish here and how can I help? I have a BlackRock mutual fund in my IRA and I want to sell it and get into some Christian backed mutual fund.

OK. Well, I like that idea because you're 94 and you're still investing and you're wanting to align your values with your investments. And this is fabulous. This is great.

So I'm going to give you a couple of fun family names. We're actually working on a Web page on our new Web site that comes out next month. That's going to have a big long listing of all the faith based investing mutual funds or many of them.

That would be exactly what you're looking for. But in the meantime, I want you to check out Eventide. E-V-E-N-T-I-D-E, Praxis Mutual Funds, P-R-A-X-I-S, and Inspire Funds, I-N-S-P-I-R-E, Eventide, Praxis and Inspire.

You can't go wrong with any of those three. And stay tuned. We'll have more on faith based investing down the road. All the best to you, Elaine. Thank you for your call. What a great way to end the program.

Hey, MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. I want to say thank you to Deb Solomon, Amy Rios, Jim Henry, Gabby T, and Aaron who was supporting us today as well. Thank you for being here. Stay tuned for another episode tomorrow. Come back and join us. We'll look for you then. God bless you.