Is Home Ownership The Best Path For Me? A Biblical Approach

Is Home Ownership The Best Path for Me? A Biblical Approach

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Some biblical, even more practical

What are 5 of your biggest monthly expenses?

Why Biblically Should You Grow Financially?• For some, this is a no brainer. You don’t need the Bible

to realize that it’s a good idea and there is very strong incentives to build wealth. • For others, this one’s not so easy, sometimes due to

ignorance, laziness, mistaken theology, or otherwise.

Spirit of Wisdom and Revelation• Ephesians 1:17-19• I keep asking that the God of our Lord Jesus Christ, the glorious

Father, may give you the Spirit of wisdom and revelation, so that you may know him better. I pray that the eyes of your heart may be enlightened in order that you may know the hope to which he has called you, the riches of his glorious inheritance in his holy people, and his incomparably great power for us who believe…

• How does this relate to finances?

Steward Wealth – Parable of the Talents•Matthew 25:14-30 – who can give me a basic synopsis of this

story?

•What was the servant called who did nothing with his money, just burying it?

"His master replied, 'You wicked, lazy servant!”

Work as unto the Lord, in His will, and watch God bless the work of your hands•Colossians 3:23 Whatever you do, work heartily, as for

the Lord and not for men

•Deuteronomy 5:33 Walk in obedience to all that the LORD your God has commanded you, so that you may live and prosper and prolong your days...

Is your Vision Propelling You to Daily Disciplined Living?•Proverbs 29:18• (ESV) Where there is no prophetic vision the people

cast off restraint, but blessed is he who keeps the law.• (NASB) Where there is no vision, the people are

unrestrained, But happy is he who keeps the law.

Avoid Exhorbitant Costs That are Not Investments•Amos 6:4 You lie on beds adorned with ivory and lounge on your

couches. You dine on choice lambs and fattened calves.

• A house with inlaid marble throughout, like I’ve been in once, is not necessary. • Remember the poor• If you want more money in a house, I suggest getting multiple homes and

renting them out, as that’s a lot better investment then one massive one that you live in.

• Keep in mind as well that renting a home out should not be taken lightly. It does take work on your part or on the part of your property management company. If you don’t inspect a home, no matter how good you think the people are, expect bad things to happen. A family member of someone in this room had a rental that they didn’t inspect regularly. The home was trashed. It was rented by a pastor and his family. This family member did not want to take legal action to pursue the damages. Buying land and waiting for it to appreciate is very risky. Renting homes shrewdly is much less risky, but shrewdness is key.

It’s possible to go overboard here with a poverty spirit• Saving $5 probably isn’t worth an hour of your time if you’re making

minimum wage or more.

I’m not talking about the prosperity gospel• 2 Corinthains 11• 23 I have worked harder, been put in prison more often, been

whipped times without number, and faced death again and again. 24 Five different times the Jewish leaders gave me thirty-nine lashes. 25 Three times I was beaten with rods. Once I was stoned. Three times I was shipwrecked. Once I spent a whole night and a day adrift at sea. 26 I have traveled on many long journeys. I have faced danger from rivers and from robbers. I have faced danger from my own people, the Jews, as well as from the Gentiles…

Continued• I have faced danger in the cities, in the deserts, and on the seas. And I

have faced danger from men who claim to be believers but are not.[c

] 27 I have worked hard and long, enduring many sleepless nights. I have been hungry and thirsty and have often gone without food. I have shivered in the cold, without enough clothing to keep me warm.• 28 Then, besides all this, I have the daily burden of my concern for all

the churches.

Remember Jesus on the cross

• John 16:33 I have told you these things, so that in me you may have peace. In this world you will have trouble. But take heart! I have overcome the world."

I’m talking about being blessed to be a blessing• For your family• 1 Timothy 5:8 • Anyone who does not provide for their relatives, and especially for

their own household, has denied the faith and is worse than an unbeliever.• For the poor and others worldwide – spiritually and physically• Genesis 18:18 • Abraham will surely become a great and powerful nation, and all

nations on earth will be blessed through him.

Psalm 37:21• The wicked borrow and do not repay, but the righteous give

generously.

• You can give a lot more if you do a much better job receiving income, budgeting, and building wealth than the average person your age.

What have you done since this series began to put into practice what we’ve been talking about?

How to Grow Financially in the 21st Century •1. A growing career•2. Good budgeting •3. Investments including home-ownership & itemized

savings

Why is budgeting so important?• If you don’t limit yourself with your budget, no matter

what your income, your financial growth will always be limited.

Save money in the short term that is greater than most people under 30 are making on their investments from one year

Psalm 37:21• The wicked borrow and do not repay, but the

righteous give generously;

•Does your financial good stewardship enable you to give generously? •Do you invest now so that you can give even more

generously later?

Proverbs 22:7• The rich rule over the poor, and the borrower is slave

to the lender.

•A lot of people under 35 are paying high costs for a slow budgeting learning curve, in my opinion even more than due to their income difference

Question•Which gives you more money after 1 year?•A – the interest that you got from your investments

& savings that you put in from one year’s income?•B – the money that you saved with credit cards?

How Credit Cards can Enhance Your investing Substantially• If you are above average for our age (we’re at a pretty dumb age,

obviously), you’re putting 5% into savings and investing. • Let’s say 2.5% in savings account, 2.5% in investing. • Let’s say your savings account is better than most, so it gets 1%

interest. Let’s say your investments are better than most, so they get 10% returns consistently. • Let’s say you spend 95% of the rest, 10% of which cannot go on credit

cards. You have the Citi Double Cash card only, which you use to spend 85% of your income.

• $30,000 income • 5% saved• 2.5% toward savings

& 2.5% toward investments• $750 & $750 saved. • Savings Interest:

$750*.01 = $7.50• Investment interest:• $750*.10 = $75.00• $7.50+$75=$82.50 in

interest

• $30,000 income • 85% spent using 1

credit card (Citi Double)• $30,000*.85 = $25,500• $25,500*.02 = $501

$501>$82.50 (more than 6x greater)

This relates heavily to budgeting• If you don’t live on a budget, no matter how much or how little you

make, you will forever limit what you can do to grow your money. • While you can save a little with credit cards, and more with other

savings like coupons and discounts, you can save a ton with good budgeting

The Savings of Home Ownership are an Excellent Way to fund savings and investments. At the same time, you’re investing into a property. The longer you keep the house, the bigger the investment will be.

Example: income of 30,000, currently paying $900/month for rent

This doesn’t even factor in the equity that you get in a home, which should be greater than the costs of repair. The equity will build over time, while rent never builds. Purchase great warranties and insurance to minimize unforeseen repairs. The savings increase the longer you are in the house.

Investing 5% of one years income Home-ownership where you should pay 10-20% less than renting for the same home

30,000*.05 = $1500 900*.80 = $720/month for mortgage

Let’s say they get a 7% return on their investment, which is better than most

$180 saved each month. Each month you can be adding to savings and investments what one year’s investments could get you.

1500*.07 = $105 earned at the end of the year 180*12=$2160 saved in one year that can be put towards investments

What If I’m only Renting Out a Room Now?• Decent homes are available in decent neighborhoods for mortgages

under $500 a month, especially if you’re coming into it with savings to fix it up or are using a fixer upper mortgage such as a 203k loan. Even without those, you can sometimes find decent homes under $600 or $700 a month. • There are some exceptions where homeownership would still not be

best that we’ll get into later.

• As a homeowner, you can often rent out one or more rooms to help supplement a mortgage. • Best done for additional savings, not as a requirement for being able to afford

it since there may be times when you have a vacant room. • When considering renting out a room or renting out homes, it is best to do

thorough research into potential costs & earnings prior to making a home purchase decision, in addition to research on other matters involved.

Know the Facts About Your Situation• Consult a REALTOR® you trust & a lender. One can refer the other one

if you don’t know one of both that you trust. When speaking to a lender or real estate agent, their integrity is critical. It’s optimal to speak to someone that you are confident would tell you if it was in your best interest to not buy. Buying is NOT always the best decision even if you are able to buy.

You shouldn’t pay your buyer’s agent• One of the best parts about being a buyer is that you usually don’t

pay your real estate agent a penny! He gets paid by the seller’s cost of sale. • Some real estate agents charge the buyer the difference if the home

has a low (sub 3%) commission for its sale. Ask any real estate agent you’re considering about this factor.

Reasons to buy• You can generally get more bang for your buck buying versus renting in

the amount that you pay monthly with homes priced between 70k-400k in Hampton Roads. If you’re paying over $500/month for rent, buying might be cheaper per month for the same house. • Every year of being a home owner, you invest more money into your

house, unlike being a renter where there is no investment. • Down payments can be eliminated sometimes or dramatically reduced to

be the same or less than the value of a security deposit for a new rental. • If you make less than 70k, you might be eligible for a number of

assistance programs for home ownership, especially if you’re a first time buyer.

Reasons why you might not be able to buy• You have been in your job field for less than 2 years or there have been gaps

of more than a month in the past 2 years where you haven’t worked. (There are some exceptions to this rule)• Your credit score is below 580 (I know lenders who can help you raise it for

free in preparation for a future mortgage, whether in a month or 5 years from now)• You have past due taxes owed or other judgments that need to be paid.

(While many debts don’t have to be paid in full, if it’s to the government, they do need to be paid prior to a home purchase)• You plan on moving in the next 5 years and don’t want a property manager

to rent out the property.

Reasons why you might not want to buy• You are living at home with parents who charge rent cheaper than you can

get anywhere else, you don’t want to rent out a room at your new house, & you prefer living with your parents. (At the same time that you continue living with your parents, remember that they won’t always be there, so prepare for the future now by budgeting well and maximizing savings and investments. Saving for a large down payment can dramatically decrease your monthly mortgage payment.)• You plan on moving in the next 3 or 4 years & don’t want to rent out your

home once you move. • You don’t want the responsibility of home-ownership• You are unable to grow a decent savings account prior to a home purchase

Best Practices When Buying• Don’t buy in an inflated market• Don’t buy & quickly sell unless your initial purchase is well below the

worth of the home or unless major renovations greatly increase the value of the home by far more than the renovations’ cost. Remember that you generally lose 10% of the sales prices when you resell a house. It’s better to stay in a home for at least ten years, then sell, or stay in a home for 6 months or longer prior to renting it out & purchasing or renting another.

More Best Practices• As a homeowner, you can often rent out one or more rooms to help

supplement a mortgage. • Best done for additional savings, not as a requirement for being able to afford

it since there may be times when you have a vacant room. • When considering renting out a room or renting out homes, it is best to do

thorough research into potential costs & earnings prior to making a home purchase decision, in addition to research on other matters involved.

Look for incentives to buy• VHDA’s 3% Down Payment Assistance Grant – Expiring in a few months

• VHDA Mortgage Credit Certificates – 20% of the interest on your home gets to be credited back to you at the end of a year, which can easily mean $1000’s of dollars each year, in addition to the usual tax breaks on the remaining 80%, for the life of the loan (with the amount saved going down as the loan is paid off and interest decreases each year)

• Information on these can be found on the “Mortgages & Financing” page of www.AdamGarrett.realtor

The Impact of Credit• Build your credit to save Money In the Short Term and Long Term

through homeownership & all other loans like car loans, business loans, etc.

How to check your credit•www.AdamGarrett.Realtor •Click on “Credit’s Impact & How to Build it”• Suggestions for Creditkarma.com and Credit.com,

which credit cards to get, loans to consider, the full report from FICO that included the previous slide, etc.

Build your credit for free•We have lenders with offices at Greg Garrett Realty

who can help you build your credit for free prior to a home purchase, even if it’ll be years from now.

Much better loans and Cheaper rates with high credit

Questions?

Ways to learn more• www.adamgarrett.realtor – has links to my Youtube channel with

educational playlists, Facebook page with new tips every week, etc. • Talk to me here or set up an appointment• 757 879 9651• [email protected]