When it comes to wealth, we sometimes hesitate to welcome and enjoy it because the Bible talks about money and the dangers of it becoming an idol in our lives. One of the Scriptures that comes to mind is Luke 16:13 “No servant can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.”

 But the Bible also establishes that wealth comes from God and He gives us the ability to obtain it: Deuteronomy 8:18 says, “But remember the LORD your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your ancestors, as it is today.” God is good, and His promises for us are good too. Wealth is a vehicle that God allows us to steward and He intended for us to enjoy it. Having free will — the freedom of making our own decisions — we can easily steward our wealth in an ungodly way that will harm us and take the joy out of what God intended for us. 

Today, I would like to cover one of the biggest financial purchases you’ll make, which is buying a home. Here you’ll find five things that you need to know before making that decision:

1. Financial Freedom:  It is not wise to buy a house with debt since this will intensify your financial stress and take the joy out of owning a home. The first recommendation is to make an aggressive plan to pay off your debt (credit card, car, student, and personal loans, etc.). Create a five-year plan to save for your new home, with the goal of saving 20% for your down payment.
2. 28% Rule: Your mortgage payment (Principal + Interest) should be no more than 28 percent of your gross income (before payroll taxes & deductions). For example, if your gross income is $6,000, your mortgage payment shouldn’t be more than $1,680 (.28 x 6000). You might find a bank that will be willing to loan you a greater percentage of your gross household income, but it’s prudent to be conservative and stick to a budget that will give you financial freedom and avoid the hamster wheel of living paycheck to paycheck.
3. Avoid the PMI: Sure, you can buy a home with only a 3.5% down payment, but banks will charge you an added fee for the risk associated with a loan that is over 80% of the value of the home. This fee is called Private Mortgage Insurance (PMI). PMI is an insurance premium that protects the bank if you fail to make your mortgage payments. The PMI is inapplicable as long as you put a 20% down payment. If you’re not able to put a 20% down payment, I highly recommend putting a down payment as close to 20% as possible to reduce your PMI fee. 
4. Shop Around: Don’t just stick to the first pre-approval offer that your local bank gives you. Once you found the home and the offer is accepted, add two competing banks or mortgage brokers to the mix so that you can compare rates and closing fees. Compare apples to apples by asking for the same terms, such as a 30-, 20-, or 15-year fixed with a zero-point fee. It’s important to compare the same loan product. Make a chart with the following information:

Bank/Loan Provider

Term (Yr Length) – 

Rate/APR

PMI

Fees (loan origination, appraisal, closing)

Example: Bank of America

30 

2.80% APR

$0 PMI

$395 Loan Origination

$450 Appraisal

$1850 Other Closing

5. Closing: Once you have your mortgage, it’s important to have a reliable and honest attorney that will look to represent you and your interest in the transaction. This is one of the largest and most important purchases of your life and having an attorney with extensive real estate experience is extremely important. The same goes for the home inspection. Unlike making a store purchase, there is no return policy when buying property. Choose a reliable and thorough home inspector that will reveal concerns to be addressed before closing.

I pray that these five simple steps give you practical tools to prepare you for your home-buying search. And remember, God’s plan for you is magnificent. Get under His cloud of covering and don’t get distracted by turning to the left or right, keep moving forward and upward.

Remember Jeremiah 29:11:  “For I know the plans I have for you, declares the Lord, plans for welfare and not for evil, to give you a future and a hope.”

Helpful Resources

Website: Bankrate  https://www.bankrate.com/calculators/mortgages/new-house-calculator.aspx