Mortgage 411 with Dale Vermillion

The Fed is scheduled to meet next week. Will it lower interest rates again? 

With one rate cut already on the books and perhaps two more coming before the end of the year…folks are wondering what effect all this will have on mortgages and home sales. Dale Vermillion joins us today to talk about it.

Dale Vermillion is the author of Navigating the Mortgage Maze: The Simple Truth About Financing Your Home. This book covers everything you need to know about securing a mortgage—all from a biblical perspective.

Current Mortgage Rate Trends

With recent shifts in the economy, many are wondering about mortgage rates and how decisions from the Federal Reserve impact them. While the Fed recently lowered interest rates by half a percent, the market already anticipated this move. Mortgage rates dropped nearly a full percent before the Fed’s decision, but they’ve since started to climb back up. Currently, the national average for mortgage rates sits between 6.30% and 6.40%, and experts predict that they will remain in the low to mid-6% range for the rest of the year.

For those hoping rates drop below 5%, it’s unlikely to happen anytime soon. Leading analysts say we likely won’t see those numbers until 2025 or later.

Despite the changes in interest rates, home sales have remained relatively flat. While there has been a slight increase in home purchases, with mortgage locks up by 8% from last year, the real activity may come from new construction. Existing homeowners are holding on to their properties due to the so-called "rate lock effect," where people are reluctant to sell because they have locked in low mortgage rates. However, once rates drop, we’ll most likely see a surge in home sales around 2025 and 2026.

Should You Buy or Refinance Now?

For those trying to decide whether to buy a home or refinance, there are pros and cons in every market, but several factors are working in favor of buyers right now:

1. Lower Rates: While mortgage rates aren’t at historic lows, they are lower than they’ve been in recent years.
2. Less Competition: With fewer buyers in the market, now is an opportune time to find a home without the fierce competition of a booming market.

If you’re renting, it may be a good time to buy as long as you can afford the monthly payments. Buying a home builds equity and provides tax benefits, making it a financially sound decision for many.

When it comes to refinancing, do not refinance if it means extending the term of your mortgage. Extending your loan term will wipe out any savings you gain from a lower rate, costing you tens of thousands of dollars in the long run. Only refinance if you can lower your payment while keeping or shortening your mortgage term.

Seeking Wisdom in Home Financing

Biblical principles should guide all of our financial decisions, including home financing. Romans 13:8 tells us, "Owe no one anything except to love each other." This verse reminds us that as stewards of God’s resources, we should aim to live debt-free and manage our finances responsibly.

Navigating the mortgage market can be challenging, but by staying informed and grounded in biblical principles, you can make wise decisions that honor God and secure your financial future. Whether buying your first home or considering a refinance, start with a budget and avoid taking on unnecessary debt. Always ensure your financial decisions align with God’s Word and your long-term financial goals.

For more insights on mortgage financing and faith-based financial wisdom, you can explore Dale’s book, Navigating the Mortgage Maze: The Simple Truth About Financing Your Home, and continue to seek guidance on making informed, biblically sound decisions in your financial life.

On Today’s Program, Rob Answers Listener Questions:

• I need to change investment companies from Vanguard, as they are becoming more digital-focused. I'm looking for a company that offers a directed beneficiary program where I can designate beneficiaries per account and a simple process for Qualified Charitable Distributions (QCD) where I can call and request a check be sent directly to the charity.
• I have existing investments and a financial advisor. I heard you discuss investing in companies aligned with biblical values. Can you provide a resource or recommendation for identifying companies or funds that match those values if I still need to be invested in them?
• I have two insurance policies, and they are burial policies for my wife and I. They're about $200 between the two monthly and $25,000 each. I'm questioning whether I would be better off just adding that money to my investments or keeping my insurance. I'm 63, my wife is 65, and we're in pretty good health, but I hope we have quite a few more years before that would be necessary.
• We're at the point in our lives where we need to downsize, so I was wondering if we need to tithe on our sale before investing in another primary residence when we sell our primary home and purchase another one.

Resources Mentioned:

• Navigating the Mortgage Maze: The Simple Truth About Financing Your Home by Dale Vermillion
• List of Faith-Based Investment Funds
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App

Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network and American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community and give as we expand our outreach.