Family and Finances: Episode 5, Part 3

So let's talk about financing a home and the different kinds of mortgages. When we look at it, there's really, I guess, a handful of options to finance a home. By the way, about 50% of Americans live without a mortgage. And they either were able to pay cash for the house they're in or they were able to get it paid off, and they are completely mortgage-free, which is great. You wouldn't think it would be that high, but it still is that high that people live mortgage-free. So there's a long-term mortgage. That's usually 30 years in our country. Fortunately, we don't have the Japanese mortgages, which go up to 90 years. We have 30-year mortgages. There's the short-term, which is 20, 15, or 10-year mortgages. Then there's the variable or the adjustable rate mortgages, where you get a rate for three to five years. And then there's the interest-only mortgage. Well, and we've always—no, we haven't always done fixed rates. What about that first house we bought? First house, we had adjustable-rate mortgage, because mortgage rates were 18% at that time. Can you imagine? And today, they're at a historic low. I think you can get a mortgage for under 3%, which is just phenomenal. It's the reason that the real estate market is so red-hot right now. Yes, and if people are paying a high interest on a home, they really should consider refinancing right now. Yeah, it's a great time to refinance. So we recommend that you take a 30-year mortgage. And the reason that I've always said that, 20% down, 30-year mortgage, is it gives you flexibility to have a lower payment, but then to double up on your payments and get out of it as quickly as possible. And that gives you a low payment and an opportunity to pay it off quickly.

Now, if you can afford a 10-year or 15-year mortgage going in, by all means do that. But if you can't, then do the 30-year. And there's a couple of methods that we've used to reduce our mortgage quickly, Ann. Well, make an extra payment per year, whether that's a certain amount per month or just one lump sum at the end of the year. Paying twice a month instead of a one-month, one payment per month method. What else? Well, and then if you get a bonus or some extra money, you contact your mortgage lender and say, please apply this towards the principal. And so your principal amount gets reduced and you can re-amortize your note. And that eliminates so much of the interest that you're going to pay long-term. And so in our case, we have a 30-year mortgage, and our goal is to cut it in half and to get it paid for in 15. And we're using a variety of means to accomplish that, but mostly just having a goal which allows us to deny ourselves some of the other things we want, like driving a new car and taking some of the less expensive choices in other areas of our life. We make choices where we save money on what we buy and how we spend it. So we can apply it towards one day being completely mortgage-free. We actually looked at a zero-lot line home several weeks ago thinking, well, let's just cash out, you know, sell this house, buy something cheaper. And then we found out how much our home had appreciated and thought, well, maybe we ought to stay put. Well, and even the cost of moving would not be good for us right now, and we could save the cost of moving and repairing and remodeling something else. And so I think many experts call it the friction cost of a move, the money that just sort of evaporates. We decided to avoid that and to stay put and to just continue to stay the course of getting mortgage-free. Well, one thing we haven't addressed is having a budget, a plan, you know, to eliminate debt. And Crown offers numerous things.

Should we go over those? Well, let's talk about some of the tools that we do have available. One of the ones that I like is we have a little short video course that's helped so many people. One of our staff members actually produced it and told their own story about learning to become debt-free. I highly recommend that course. It's available for free online. Well, and then we've got the Easy Guide to a Budget You Love. Which is a wonderful way to just get unified with your spouse, it takes you through a series of questions and helps you to make decisions on areas where you can save money and make a plan. Right. Five steps to debt-free living. That's the one I was talking about. Oh, how about the easy guide to the budget you love? Yes. Just learning how to budget and realize it's a tool just to help you. It's not a hardship, it's actually a great benefit. We've got the Money Life program you already recommended. Christian Credit Counselors. Yes. So for people who this is an area of pain in their life, I just want to give them a little bit of hope, Ann. You and I really went from being way under the pile of debt to the point that it looked like an impossible situation. And God brought us through that and we worked our way through it, we learned our lessons the hard way, the painful way, and now we're living with just a little bit more to go on our mortgage and we're done. And we don't want to enter our senior years or retirement years with any debt whatsoever. And we're on course to achieve that.

Right. So I think working together as a couple, praying through it, asking God for wisdom and discernment, and just really committing to educate yourselves on debt and just learning to be a wise steward. And I think something on my heart is to mention that becoming debt free can become an idol. And I've seen people on the sort of flip side of this become debt free and believe that they now can do whatever they want to do financially or with money. And that's really not true at all. I think we're all responsible as stewards for how we spend every dollar, whether we have debt or not. And it's certainly better to be out of debt than to be in debt. But the Bible emphasizes our faithfulness to God with generosity and with preparation for the future and taking care of our family. And we came to the conclusion that debt did not help us achieve any of that. It wasn't good for us, especially for me, that I lacked self-control over it. I wanted to use debt to leverage and take risks. And I had to learn the hard way that it can really become a form of slavery. So we started out as a poster child of what not to do. And by God's grace today, we're in a position to help people to say, if we can do it, anybody can do it. Because we had so much that we did wrong. And we had to pull out of a major, major hole. And that's why I think I have such compassion for people who are hurting in this area of their life. And I would never condemn them. I would never try to use shame or guilt for the mistakes they've made. Because I've made all of them. And at the same time, I would never think that it's hopeless for anybody. No, I think it's very important to have a mentor. I wish, looking back, if we'd had somebody we could have gone to to just ask questions. What's the best thing, best practice?

What should we avoid? You know, just simple things. We could have really learned a lot and saved ourselves from a lot of pain. Well, we've always talked about, especially for single moms, to have a financial advisory board, people from church who are not trying to sell them anything, who have no conflict of interest, who've demonstrated wisdom with their finances. And just once a quarter, meet with them and review your finances and get their counsel. We have a friend that calls her group that she uses for that, her ironing board. She meets with the ironing board to iron out the problems in her life. And so I think that's a really good practice. The Bible says that our plans succeed if we seek counsel. Well, and you know how valuable you feel when the boys come to you with questions. So I think going to parents, wise parents, is always a good option, too. Well, even your own mom and dad, to ask them for their advice and what they've done in their life that worked or didn't work, and to get their advice for how they would see a decision that you're trying to make. I love to talk to my dad about these things. I think we've covered it. Well, to those who are with us, I hope that we've encouraged you to know that you are not alone. There are resources. is out there for you. God can intervene and help you in any circumstance that you may find yourself in. So, Ann, I just thank God for where we are today, and we're available to help couples. We've written a book on some of our mistakes, and we want to see them go through this journey and come out the other side the way we have. Look forward to talking about the next topic. Yeah, we're going to talk about children next time, which is another big, big topic. All righty. Thank you, Ann.