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A Home Buyer’s Market?

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
November 15, 2023 5:56 pm

A Home Buyer’s Market?

MoneyWise / Rob West and Steve Moore

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November 15, 2023 5:56 pm

You’ve been sitting on the sidelines, waiting to buy a home until the market improves. And normally, November through February are the slowest months of the year for home sales. So, will it be a buyer’s market again this winter? On today's Faith & Finance Live, host Rob West will welcome Dale Vermillion to give us his take on the housing market and what we can expect in the coming months. Then Rob will answer your financial questions. 

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You've been sitting on the sidelines waiting to buy a home until the market improves. Will it be a buyer's market this winter? Hi, I'm Rob West. Normally, November through February are the slowest months of the year for home sales, and that means buyers have more bargaining power.

Will it happen this year? Dale Vermillion gives us his take on the market today, and then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, we're delighted to have Dale Vermillion with us again today.

He's the author of The Mortgage Maze, the simple truth about financing your home. Dale, great to have you back, my friend. It's great to be here, my dear friend.

Thank you. Absolutely. Dale, interest rates are always a huge factor when folks consider buying a house, of course. We've seen major increases in the past year, but what is the trend right now that you're seeing? Well, I wish I could tell you they're going down, but they continue to be going up as the national average. They've been creeping up for the last almost two months now. Now, the good news is the Mortgage Bankers Association just had their annual conference. My friend and Tony, their chief economist, said that he believes in 2024 we'll see four rate decreases, so hopefully the outlook in 2024 is going to be better than what it is in 2023. Yeah, that would certainly be helpful. Are we seeing Dale a return to assumeable mortgages due to these higher rates?

You're seeing some of that. It's not obviously every mortgage that has that. It's a somewhat uncommon thing to have in today's mortgages, but it's certainly something that if you're buying a home, you want to ask the seller if they have an assumeable mortgage, because if they do, you might be able to tap into those low rates. Remember, you have to qualify for that loan with that lender as if you were the original buyer. You still have to buy out the equity of the seller, and you do want to have an attorney represent you in that because it could be pretty complex.

Okay, yeah, that's helpful. What about home values, Dale? We've, of course, had a lack of inventory, which has propped up prices. Are prices moderating?

Prices are moderating for sure. In this last month, we actually saw a 3.1% increase year-over-year in property values. We're still continuing to see that, but 7% of properties that were listed through the week ending October 22nd actually reported a price drop in that four-week period. So, we're starting to see now certain markets of the country where listings are a little bit longer, values are starting to decline there, they're starting to drop the listing prices, which is a good thing for buyers. Overall, though, for homeowners nationwide, property values continue to go up a little bit this year. We'll probably see a 3% increase over the course of the year.

All right, very good. Dale, could this actually be a good time to buy, given everything you just said? It can, and there's a couple of reasons for that. Number one, obviously, there's a lot less buyer competition, so that's very helpful in being able to get into a contract. We don't see the bidding wars that we used to see, so you can generally get in right around the selling price or a little bit less, which is good. And most importantly, a lot of the contingencies that were being waived when the market was really hot, things like having an appraisal done or an inspection done or having a home that you want to sell to be contingent to buy the home, these are now being accepted again, along with seller concessions. We're seeing over 50% of sales now have seller concessions, and that means you could use that money to buy down your rate a little bit.

These things, combined with the tax benefits of higher interest rates, all actually create a pretty good market for buying if you're in the market. All right, what about going into that purchase from a mortgage perspective? What does someone need to know to be prepared? Number one, make sure that you're talking to at least three different lenders. Number two, do your homework online so you kind of know what to expect from a rate and fee perspective.

And then number three, just really be prepared. Have all your income documentation ready for the lender. They're going to need that to let you know what you qualify for. Make sure that you have figured out your down payment and that you're trying to put that 20% down that we talked about all the time to avoid mortgage insurance.

And just make sure that you have done your homework before you go into that. That really is going to help you to be more successful when you go into that transaction. No doubt about it.

Well, that's encouraging information, Dale, for folks who've been waiting on the sidelines ready to purchase that home and just been afraid this was not the time to do it. Hey, thanks for stopping by. We always appreciate your insights. Appreciate you, my friend. God bless. All right. That's Dale Vermilion, author of The Mortgage Maze, the simple truth about financing your home.

You can pick up a copy wherever you buy books. Now, if you need a mortgage and you want to learn more from a partner that shares your values, check out Movement Mortgage at movement.com slash faith. Your calls are next. Stick around. We'll be right back. Well, I'm glad you joined us today on Faith and Finance Live. I'm Rob West.

All right. It's time to take those calls and questions, whatever you're thinking about financially today. Let's tackle it together. The number to call is 800-525-7000. That's 800-525-7000. We'll look forward to having you with us today. In fact, we've got lines open. Our team is standing by and you can get through right now.

800-525-7000. Coming up tomorrow on the broadcast. I'm excited about this. Dr. Gary Chapman stops by and we talk about how money can actually be an asset to your marriage.

That's right. You know Dr. Chapman well from the five love languages and all the incredible speaking and writing that he's done over many years and tomorrow we're going to dial into that money topic and he's going to help you make money actually a tool in your marriage. So be sure to tune in tomorrow afternoon for the broadcast.

All right. We're going to dive into your questions today. Again, lines are open. You can call right now.

800-525-7000 with your financial questions. Let's go to Maine. Joe, you'll be our first caller. Go ahead. Hi. Thanks for taking my call.

Thank you. So my husband and I are looking to buy a house in the next few months here and we're buying it from a family member so we kind of have a timeline here and I was wondering I don't have a credit score. My husband has a credit score and I was just wondering how we should go about getting a mortgage. Yeah. So you're buying it from a family member but you're going to go out and get a conventional mortgage.

It's not seller financing or anything like that, right? Correct. Okay. And is your income going to be a part of the equation?

Are you working and will that income be necessary to qualify for the loan? Yes. Okay. Yeah.

So this could be problematic. I mean, have you pulled your credit score? I mean, you have a credit score.

It's probably just low because of a lack of credit but do you know what it is? I do not. Okay.

All right. So that would be a good starting point is just to kind of figure out what is your baseline. If you all have a credit card that you use for budgeted items, a lot of credit cards these days offer your credit score free. You could go to creditkarma.com. They offer free credit scores. It's not going to affect your score if you pull it for your own personal information. If you authorize a lender to do it, which you will at some point when you go shop for that loan, that's a hard inquiry that will actually drop your credit score temporarily but you can go check it as much as you want.

So I'd find out what it is. We want to get it up to 720. It's going to probably take some time if you don't have much credit but 720 and higher is generally that threshold, Joe, where you will be able to qualify for the very best rates and terms. Now, because you don't have a credit score and obviously you're trying to move ahead with this transaction or your credit score perhaps is low, then that may be problematic.

Hopefully your husband has a good credit score but it may result in you all paying a premium over what's already high interest rates, which may or may not affect your home affordability and whether or not you can actually go through with the transaction. The things to do to build that credit score are going to take some time but you might as well get started. So for instance, if you don't have a credit card in your name, you could get either a secured or an unsecured card. You'd want it in your name and that would allow you to start building some credit so you could perhaps put an automatic recurring transaction on there for a budgeted item. Maybe it's one of your utilities that automatically gets paid by that every month and then you all pay it off. Could just be literally one transaction a month but it's going to be then reported to the bureau with you as an on-time payer. The other thing you could do is if your husband has a card that you all use again for budgeted items and it's in his name, you could be added as an authorized user. That would allow that credit history to start to pass over to your account, your credit file and that would start to establish some positive credit history.

Another option might be you could look at one of these services. I know Experian offers one which is one of the three bureaus where you can sign up to actually have your utilities be reported to the credit file which is another way to help boost your score. You could also look into something called a credit booster loan which is essentially a loan that you take out where you pay interest to yourself and the idea is that the whole purpose of it is to be reported to your credit file to build positive credit history. And so you would just do a search for credit builder loan.

So those would be the steps. Unfortunately none of them are an overnight fix so if you have just a real lack of credit because you just don't have a lot of accounts in your name so you've not been able to demonstrate your credit worthiness by being an on-time payer, that lack of credit is going to hurt you in the near term and it's really going to take some time to build that up. So I think you all perhaps going through the process, finding a great lender, you know if you don't have one I'd definitely check at least one of your sources with our friends at Movement Mortgage, movement.com slash faith. Get some folks to look at the income that you and your husband are bringing to the table.

Look at his credit score, your credit score and let's hope that there's enough there with the ratios right in terms of the debt that you have outstanding, his credit file, maybe he's bringing the majority of the income. I mean let's let them look at the whole package and then they'll come back and say okay here's what we can offer you and it could be that you get a loan initially that's not as favorable and then a couple of years down the road you refinance once your credit is higher and hopefully at that point interest rates will be lower anyway so you could really improve your situation two or three years down the road. Does that make sense? Yes it does, thank you. Good, you're welcome Joe.

Listen there's a lot of steps there but you can do this, it's just going to take some time but congratulations to you both on that upcoming home purchase, I'm sure you're pretty excited about that. If we can help further along the way don't hesitate to reach out, may the Lord bless you. 800-525-7000 is the number to call, again that's 800-525-7000 you can call right now. To Florida, Lissette, how can I help? Hi Rob, good afternoon, how are you doing? I'm doing great.

Thank you for taking my call, so happy listening to your program only God knows for how long. So quick question, so okay I have pretty much six student loans, three of them are at zero percent interest and then three of them are what you consider as a fine loan plus at 8.5. I was trying to apply for income duty repayment plan which they said I'm not qualified unless I consolidate the fine loan costs. Okay are all of them federal loans or are some of them private? Some of them probably private.

Okay, yeah you're just going to want to make sure, I'm sorry go ahead. The price loss loan is at 8.5, it comes up to $63,000 so when I add everything it comes to $64,000 because it's been on what you call deferment. Yeah sure, well here's the thing, when it comes to consolidation you want to keep those federal loans separate from the private loans, you don't want to refinance them all to new private loans because as you probably know the federal loans are the only ones offering the income based repayment. So if you consolidate those use the federal loan consolidation program, that's just going to simplify things with one payment, you're going to keep the interest rates essentially the same. And then look to refinance the private loans with new private loans.

The challenge is with rates high you're probably going to want to wait until rates come down but let's not mix them all because you want to keep those federal loans in the federal loan program so you keep the income based repayment options if you need it now or in the future. Thanks for listening Lisette, we appreciate you being on the program. We'll be right back, stay with us. Well thanks for joining us today on Faith and Finance Live, I'm Rob West. We're taking your calls and questions today with a few lines open, 800-525-7000. Coming up a little later in today's broadcast we'll dive into some mail that has come in recently. By the way, if you'd like to send us a question rather than calling in being on the program you can do that at moodyradio.org slash finance, that's moodyradio.org slash finance. You can listen to broadcast archives but you can also send a question along. Amy Rios, my producer will join me on the air a little bit later and we'll tackle several of the questions that have come in recently so we'll look forward to that. Alright let's head back to the phones though, we do have a few lines open with your questions today at 800-525-7000.

Let's go to Arizona. Hi Lisa, go right ahead. Hi, how are you today? I'm doing great, thanks.

Great. I was just wondering, originally we went from no credit cards at all and they say, you know, you have to have credit cards to build credit and all that but now I feel like, you know, maybe we have too many so I'm wondering what is the, is it beneficial or detrimental to move, you know, basically all the cards onto transfer balances to one card and just go with that? Not necessarily, that could actually work against you because one of the key factors in determining your credit score is something called credit utilization.

It's the highest percentage actually of the five factors. Credit utilization is 35% of your score and what that simply means is, what is the balance you have versus the limit on any one card and then it also looks at credit utilization across all the accounts you have and the total amount outstanding. So the challenge would be if you're carrying balances on several cards and you move them all to one and now that balance that you're carrying on that one card is above 30% of the limit, that's going to pull your score down. But if you have it spread across multiple accounts and they're all below 30%, that's actually going to help you. Now, credit score is one thing, the other thing is just our need to get out of debt and stop paying these high interest rates so, you know, the next question is how do we go about beginning to pay those off and I think the key there is, you know, if you have less than $4,000 in total debt, not the amount that you're charging and paying off every month but the amount you're keeping month to month, you know, and maybe you're paying the minimum payment or something, if you have less than $4,000 then you'd want to try to snowball it, smallest to largest balance, pay the minimums on all of them and then attack the one with the smallest balance with whatever margin you can free up in your budget and the idea is that you pay it off in a few months and then you move to the next one and that kind of win psychologically is going to give you the encouragement to keep going. If you have more than $4,000, I recommend debt management because that'll get the interest rates down and, you know, you can pay that off on average about 80% faster but back to your original question, we probably don't want to move balances to one account. Now, once you were to start paying them off, I think it does make sense to start closing them.

I'd close one to two accounts every six months and the goal would be where you'd have maybe one or two cards at the most. A lot of times folks will have one debit card, one credit card and then if you have maybe a business account for a small business or a corporate business card, maybe that's your third and the idea is that you just, you know, only use those for budgeted items, pay them off at the end of the month but the big thing as far as your credit score goes is not only that credit utilization, keeping that down but then the other factor is credit mix and so you're actually rewarded for having different types of credit. So, those credit cards are all the same type of account. They're called revolving accounts so that's credit cards, retail store cards, HELOCs, a home equity line of credit, those are all revolving.

The way you improve your credit is by having the other type of account there which is installment loans and that would be an auto loan, a student loan or a mortgage and having, you know, both types of accounts is really going to be the key thing with that credit utilization low more so than having, you know, five credit cards if that makes sense. Do you follow all that? Yeah, yep, got it. Okay, good.

Hopefully that helps you Lisa and if you need help getting those debts paid off and you have more than 4,000, our friends at christiancreditcounselors.org can help. Thanks for calling today. If we can serve you further in the future, let us know. Let's go to Huntley, Illinois. Hi Joseph, go right ahead.

How you doing? I have a relative that I'm going to want to borrow a large sum of money to and I like to know how to structure it where the government will not look at it as a gift from my estate. Okay, and so did you say you're going to loan it out? Yeah, I'm going to lend it, yes.

Okay, yeah. So, you know, I think the key there is you just want to have a contract that spells out the terms and conditions of the loan. You generally want to have that notarized and a signed agreement. Now, I know that can seem impersonal but having things in writing can prevent misunderstandings and frustrations. It can also help you in the event that you ever had to document it before the IRS because, you know, normally if you were to make a $100,000 gift to a family member, you would have to report that because it's over the $17,000 exemption threshold that you have annually and so you'd have to fill out the gift tax form where you wouldn't pay any taxes on it and the recipient wouldn't either but it would eat away at your lifetime gift exclusion of $12,000,000.

So you'd have to inform them that it happened but in this case it's not a gift, it's a loan and so we just need to document it so that everybody, first of all, there's no misunderstanding that could damage the relationship between you and the family member but secondly so that you can show, you know, before the IRS that you've, you know, actually have terms and there is a repayment plan and, you know, the amount that is borrowed and how it will be used, you know, the payment amounts, the frequency, when it will be paid in full, the loan's interest rate and by the way, the IRS sets an applicable federal rate each month which is the minimum interest rate allowed for private loans over $10,000 so you could check the IRS's website for that and then whether or not, you know, there'll be any penalty if the loan's repaid early and what are the consequences if the borrower stops paying so you could look online and get some templates for that but I think the documentation, Joseph, is really the key to making this above board and something that you can defend if there's ever a question about it. Hey, thanks for your call today. We appreciate it. Folks, we're going to take a quick break. When we come back, much more here on Faith and Finance Live, taking more of your questions, 800-525-7000.

Stick around. We're glad to have you with us today on Faith and Finance Live. I'm Rob West.

We're taking your calls and questions today on anything financial, helping you apply biblical wisdom to your decisions and choices as you manage God's money. Let's head right back to the phones to Indianapolis we go. Hi, Alan. Thanks for calling. Go ahead.

Hi, Rob. Thanks for taking my call. I have a transfer on death deed question. All right.

My father recently passed away a couple months ago and before he passed, he executed a transfer on death deed and had it filed with the county. It was his personal residence where he lived for probably 35 years or so. All right. So that's all taken care of. We've decided to go ahead and put the house on the market. And I'm just wondering, I understand by doing that, there's a lot of advantages to the value of the home in terms of capital gains. Is there anything we need to do to establish the new value of the home or will that just kind of happen naturally as the house gets appraised and sells?

Yeah. I mean, if you turn around and sell it right away, essentially by selling it, you're determining the fair market value. I think it would probably not be a bad idea to go ahead and get an appraisal just so you've got that documentation to establish the basis. But essentially, by selling it relatively quickly, you are establishing the cost basis for this based on the true market value, which is what somebody who's willing to pay for it with an arm's length transaction. So I think to be completely covered, you would get an appraisal.

But again, the process of selling it, as long as there's not a period of time that passes, is really establishing that true market value. Okay. Okay. Well, that makes sense. I just kind of wanted to be sure we had all our bases covered.

Yeah. I'm delighted to hear it. I'm sorry to hear about your dad's passing, but grateful to have you on the program today, sir.

Let us know if we can help you further in the future. Let's go to Lake Worth, Florida. Hi, Richard. Go ahead, sir. Hello.

Hi. Yes, I have an ESOP planned with my employer, and it's a stock purchase. And I turn the age where I have to take it out. And I'm wondering where to put that money as far as investment for later on. And I've had somebody tell me to just cash it into an IRA at the bank. I've had another guy come over and talk to me about the index where I would get $1,600 a month.

And I just don't know nothing. I've heard about annuities, but I don't. There's do's and don'ts about it. And an IRA seems risky as far as you can deplete it before you know you depleted it. Well, it really comes down to what investments you select inside the IRA. So the IRA is nothing more than just the account type, which is a tax deferred environment.

So with the ESOP, that went in pretax. And so you have the ability to roll it out to an IRA or a qualified annuity. But with either of them, you're keeping it in the tax deferred environment. So you're not creating a taxable event when you move the money, which is important.

And that way it can continue to grow and it can grow however you want. And you can take as little or as much risk as you want. So for instance, once that ESOP gets into the IRA, you could put it all in CDs inside the IRA if you wanted to. So then you'd get a essentially a guaranteed rate of return as long as you had FDIC insurance on it. You know, there's no risk there. You could also invest it in stocks and bonds, and those have the ability to grow, but they also have the ability to lose value.

So it really is up to you as to what your investment strategy is. You're 62. Are you fully retired now, Richard?

No, I'm on disability work and part time. Okay. And what is the value of the ESOP today? Do you know?

It's a little over a quarter million dollars. Okay. Yeah. I mean, so I think the best option for you would be to hire an advisor who could really manage this for you. I would prefer for you to roll it into the IRA.

And here's why. Again, you'd have complete control over how it's invested. This is a significant sum of money that you've saved during your working years.

That's great. And now I think, you know, having somebody who can give oversight to it is probably the best course of action. That person would work with you to understand what are your goals and objectives, what are your values as a believer? How are you planning to cover your bills in retirement? How long are you planning to continue to work part time?

How long does the disability last? And what role does this quarter of a million dollars play in your future lifestyle needs in terms of being able to generate income? And after you all spend a good bit of time kind of fleshing that out, he or she would come up with an investment strategy that would really dictate how this money is then invested. The benefit of keeping it in the IRA is that you would continue to have access to the money if you needed it. Whereas if you put it into the annuity, you're going to lock it up, at least for a period of time. And if you needed to get to it for something unforeseen, you know, you would have some surrender penalties and there's a lot of fees and expenses.

They can also be fairly complicated. You're also giving up some upside potential in exchange for downside protection. So, you know, is there a role for an annuity if it would give you greater peace of mind to know that you're transferring that risk away from yourself to an insurance company?

Sure. But again, I think you should at least explore your options. The key is you don't have to go it alone. You can hire an advisor to help you whether you choose to put it into an insurance product like an annuity or you give it, you know, over to an advisor to manage on your behalf.

Does that make sense? When you say advisor, you mean somebody at the bank or? No, I would probably go with a wealth manager, an investment advisor. So we recommend the Certified Kingdom Advisor designation. So you would head to our website, faithfi.com. That's faithfi.com.

Click find a CKA and you could do a zip code search right there in Lake Worth. So these would be advisors. They could be at Merrill Lynch or Morgan Stanley or Ameriprise or they may have their own independent firm, but they've met high standards in character and competence. They've met significant experience requirements.

They've been trained to bring a biblical worldview, but they've also had pastor and client references. And this would be somebody that you would hire. You would typically pay this person a percentage of the assets under management annually.

So probably somewhere around one to one and a quarter percent a year. And that person would then have a fiduciary responsibility to you to put your best interests first and to select the investments that align with your goals and objectives as the money is then invested. Does that make sense? Yeah, that makes sense. So it's like a company like Primerica as well? It could be. Sure.

Yeah. I mean, the key, I think, is that you find somebody who shares your values, who's got significant experience. Primerica tends to use more insurance products, you know, typically. And again, those are not my first choice, but doesn't mean there aren't some great advisors at Primerica. I think the key is you find somebody who you have a good rapport with, who you can trust, who's then going to put your best interest at heart in selecting the investments that are chosen moving forward. So my recommendation, Richard, is to head to faithfi.com, faithfi.com, click find a CKA and maybe interview two or three advisors in your area and then find the one that's the best fit.

And then once you make that selection, if that's the direction you go, then that person would open the IRA for you and then help you transfer or roll the ESOP over into the IRA so that it could be managed. Hey, all the best to you, my friend. Thanks for being on the program today. We appreciate it. Back with more questions plus our mail right around the corner.

Great to have you with us today on Faith and Finance Live. Hey, before we head back to the phones, we know you have questions. We have answers.

And some of those questions come into us by, well, email. Essentially, you go to money wise, not money wise. That's the old radio program.

Amy, I just said money wise. I heard you say that. I'm glad I'm not the only one that makes that mistake. Wow. It's been a while since I've done that.

It's been a whole year almost. Now that's the voice of Amy Rios, my producer. And the reason she's on with me right now is not because I'm saying the wrong name of the program. It's because we're about to tackle your mail. And when you go to moodyradio.org slash finance, you can send us your questions. We collect those. And each Wednesday, if not more often than that, we take a time to get a few of those read on the air. And I understand, Amy, you have a few of them in front of you, right? I've got about five, so we need to kind of hurry through them here.

Let's do it. Okay. First off, Lou writes, with so many scams going on now, I'm concerned about using my checking account. Each check contains my name, address, my account number and bank name on it. Is it still safe to use checks, especially online or in person?

Yeah, I've got a I got a question for you first, Amy. In the last year, how many physical checks have you written? Probably about four. About four. Yeah, I think I'm at zero, unfortunately.

Now, Julie's maybe written a couple. But yeah, it seems like less and less we we write checks. But here's the thing. Even if we're not the one writing them, even if you use an online bill pay, like with your bank there, in many cases, cutting a physical check and it's still going through the mail. So it it still could be compromised. Generally, say checks are safe to use. So here's what I would do.

A couple of things. Number one is contact your bank to find out its policy regarding fraudulent transactions, because they can vary from bank to bank. There will be a procedure for stopping payment or refunding your money. And that's why you want to stay on top of your financial accounts. So if a check doesn't get cashed in a timely basis, you can address it. By the way, if you use a credit card, you can only be held responsible for the first $50 of a fraudulent transaction. And most credit card companies don't even don't even require you to cover the first 50. So that might give you a more a bit more peace of mind to go that route. But the bottom line is, generally, I think checks are safe.

That's good to know. Okay, next, Patty has a question about if we want to open an educational savings account for our grandchildren, what would be our best option? Yeah, my preferred option to save for college is the 529 education savings plan.

You can choose one in any state and use it at any school in any state. Also beginning in 2024, a lot of folks are concerned about, well, what if there's money left over that doesn't get used for college? And one of the new features of these 529 plans is that up to $35,000 of unused 529 money can be rolled over to the beneficiaries Roth IRA, as long as the money's been in there 15 years and it's subject to the annual limits. But over time, you could get up to $35,000 in, which is an encouragement to those folks setting up these accounts and concern that they may not be used. If you want to find out the best states plan for you, go to savingforcollege.com.

Okay, next is Nancy. Our daughter has saved up several thousand dollars to use for college. We'd like to tell her the best place to earn interest and keep the money accessible.

What would you advise? Yeah, I would advise an online savings account where she can get around 5% right now. She could have access to it with a debit card. As you know, Amy Gen Z is very comfortable with online banking. I mean, they grew up with smartphones in their hands, so I'd help her select an online bank with FDIC insurance and one that's highly rated at bankrate.com.

Yeah, definitely a great route to go is bankrate.com. Okay, Linda. Years ago, I purchased identity insurance after hearing about it on a different radio station. Did I hear you say that it isn't necessary? Yeah, we don't think subscription services that claim to, quote, lock your identity are worth the money. Essentially, you can do everything yourself for free. You can freeze your credit at all three bureaus individually and get a PIN number.

You can unfreeze them at any time if you need to. And if one of your accounts is compromised and someone else, perhaps the vendor offers to pay for your identity insurance, well, by all means, take it. But if you're the one paying the bill, I think it's an unnecessary expense. Okay, so finally, Norman writes, I received a $700,000 inheritance from my mother. It's in stocks and cash in a regular stock market now. Can I move this to a Roth account without paying tax? Do I need to talk to an advisor?

I would absolutely recommend an advisor. I mean, that's a lot of money, $700,000. So we'd recommend you find a CKA at faithfi.com. But to your question, no, you wouldn't be able to slide that into a Roth.

You'd only be able to put it into a Roth up to the annual contribution limits, which for 2023, $6500 a year, if you're under age 50, $7500 at 50 and older. So that covers it for today. Amy, if they want to send us a question, where do they go?

They go to moodyradio.org forward slash finance, and there's a form they can fill out that says ask Rob West a financial question. That sounds great. Amy, always appreciate you joining me. This is fun. It is. I look forward to having you next week. Thanks, Rob. All right. That's Amy Rios, producer here at Faith and Finance Live. Let's finish out the broadcast today with your questions.

We're going to head south to Sarasota, warm Sarasota. Tina, how can I help? Thank you for taking my call. If you have multiple credit cards, low balances or not, is it best to close those credit cards or keep them open, but maybe cut them up and not use them at all?

Yeah. Well, you do want to close them eventually because cutting them up will help. That means nobody's going to use the physical card, but that doesn't mean somebody couldn't still compromise the account and charge it fraudulently.

Let's say you had saved it, that account number somewhere on a company's website that you do business with, and then they get hacked and that information gets out. So you do still need to review those accounts monthly, even if you're not using them actively. Now, what about your credit score and closing them? It will have an impact on your score if you close them. So two thoughts. One is, if you're planning to go out and buy a car where you're going to qualify for a car loan or you're looking to buy a house and you need to qualify for a mortgage anytime in the next six months, I'd say don't do anything.

If you're not, then I'd close one to two every six months, but not more than that. Okay? Great. Thank you so much. Appreciate it. All right. Absolutely, Mike. Last question today is in Alabama. Mike, how can I help?

All right, real quick. My son inherited a barn on half an acre from his grandfather, my father-in-law at his passing. And my mother-in-law's passing, which was later, my sister-in-law inherited their original house that they lived in.

The utility infrastructure for the barn comes from that house. So I'm buying the barn from my son at a lower than assessed value. Is he going to have any kind of tax implications on that since he's selling it to me?

Well, to the extent it is below market value. Now, if there's a reason for that that you can justify, then you could try to document that and defend it if you were ever questioned about it. At the end of the day, though, it's really not a big deal because, you know, whatever portion he's essentially gifting to you by way of selling it to you at a discount, then he would just need to report that to the IRS as a gift and he can give up to $12 million over his lifetime before anybody pays any gift tax on it.

So there's really not any concern there. It would just eat away at his lifetime exemption, which is anything beyond $17,000 a year currently. So I think in this case, you know, either you document it that it is fair market value because of the infrastructure issues that you mentioned, or he files the gift tax form and just lets the IRS know.

But in either case, it's not taxable. Okay, so gifting can work both ways from my son to me or me to my son? Absolutely.

Yeah. Any everybody can gift to another person. Okay, so I could actually gift my son the money for the barn, which is below the $17,000. And he could gift the barn to me and we'd just have to fill out the proper paperwork, correct? No, because to do that, well, not really, because that's I mean, that's a, that's the definition of a transaction. I mean, somebody pays for something and they get something, you know, real property in return.

So you know, you can't make them both a gift. It's a sale, regardless of whether you call it a gift or a sale. The question is just are you selling it at market value or below market value?

I think just given some of the complexities here, I might talk to either a real estate attorney or your CPA just to make sure you're documenting this correctly. Okay, all right. That's what we'll do because we want to make sure we get everything right. Absolutely.

Cross our T's and daughter I's. Never a bad idea, Mike. Always appreciate your call. Thank you for being on. All right, one more real quick Hammond, Indiana.

Hi, Sarah, what can I do for you? Hi, I'm looking at to do some renovations. And I want to take out either a home equity or a HELOC loan. And I possibly want to pay off my car, which I just acquired. It's at like 7.2%. The HELOC at the bank I checked is about nine. But for the variable one, I was wondering if it would be wiser to go with the variable because rates are supposed to drop late next year, last year, next year. Yeah, I wouldn't, Sarah, because right now the only thing that is collateralizing that car loan is the car itself. As soon as you put it on the HELOC, now your home is at risk if for some reason you had a problem.

Secondly, you're at, you know, we're not below that. I mean, you're actually talking about paying more in interest with the HELOC than the car loan. And I realize you're saying, yeah, but it might come down later. It might.

Well, it will at some point, but that's not today and that's probably not in the next year. So I would say I'd leave that car loan right where it is and just try to pay that off as quick as you can. Are you looking to do some renovations beyond the car loan? Oh, yeah, we want to do some home renovations. Okay. My car or my house is paid off too. Okay.

Yeah. So I think the key with the home equity line of credit, the upside is, yes, you could ride that interest rate down. The downside is a lot of times you just pay interest only.

So there's not an incentive. And because they'll give you a line much more than you actually need, the tendency is to borrow more than you would have if you got the home equity loan with a specific amount of money. So just be careful not to, you know, put more on the house than you were planning just because it's available. Thanks for your call, Sarah. We appreciate it. By the way, folks, if you're looking to get a mortgage anytime soon, check out movement.com slash faith faith and finance.

Live is a partnership between Moody radio and faith five. Thank you to Laura, Dan, Amy, and Jim. Couldn't go without them. See you tomorrow. Bye bye.
Whisper: medium.en / 2023-11-15 19:10:37 / 2023-11-15 19:27:43 / 17

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