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Chapter 1: What is the main topic discussed in this episode?
Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving, and storage studios, this is The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Ramsey personality George Campbell, joined by Rachel Cruz, and we are excited to take your calls this hour. 888-825-5225. That's 888-825-5225. Alex is kicking us off in St. Louis.
Alex, welcome to The Ramsey Show.
Hi, good afternoon. Thanks for having me. Absolutely. I'm looking at being a first-time home buyer here at the end of the year, and I'm trying to figure out how to choose the right lender.
And in my search for the right lender, my local credit union gave me a different option I wasn't really expecting, where instead of PMI, they would add interest rate, a small amount of interest, to the interest rate of the mortgage loan. And I'm not really sure if that's worth it.
I don't like the sound of that. Are they talking about mortgage points?
The way they phrased it was instead of having PMI, if you're between 5% and 10% down payment, they would add a quarter point to the interest rate. And if it's 10% to 20% down payment, it would be 0.1% to the interest rate.
Well, are you in a place financially to buy a house?
I am debt-free as of March following Dave Ramsey's financial theories. And since then I've been saving up. I have about $20,000 saved up for closing and down payment costs. It's not quite 20%, but my housing situation is changing early next year. So I figured this would be a good time to accelerate things and just go ahead and bite the bullet.
Okay. Well, the issue with the PMI I'm seeing is PMI would go away once you have enough equity in the home, whereas this added to your interest rate would just be there forever.
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Chapter 2: How do you choose the right mortgage lender?
Shannon, welcome to the show.
Thank you guys so much for taking my call.
Yeah, happy to take it. What's going on?
Um, I have a couple of questions. So I recently became a stay at home mom and, um, I am needing to roll over my 401k from my last employer. Um, I know right now it's the market. You don't, obviously you don't want to take anything out cause it's low.
You want to write it, but I don't know if that counts for waiting on a 401k rollover, if it's going to make any difference if I wait a little bit or, Do I just go with it and just get it rolled over even though it's a lot less than it was six months ago?
Yeah, I would go ahead and roll it over to a traditional IRA, Shannon, out of your company and just have it in there. And yeah, and just and you write it out. So yeah, definitely don't cash it out. And I would not leave it in your company. I would roll it over just to a traditional IRA. So the strings are cut.
It's just you and that money and you're just going to ride the roller coaster for the next few decades.
Yeah. And this was a traditional 401k that you had? It was a Roth.
Okay.
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Chapter 3: What should you do with a 401(k) from a previous employer?
Same income. Well, it'll drop a little bit. The income will drop about $4,000 a year just because of locality.
So what is your monthly expenses? To cover all of the normal bills, maybe a few of the subscriptions, some of those luxuries. What would it take to cover one month?
Yeah, so I figured that out yesterday driving back, and it comes out to about $2,400 a month.
Okay. And do you have, are you married, Bill, kids?
No. I've grown kids and single right now with a great girlfriend.
Okay. Okay. So, yeah, I mean, yeah, it comes out to about, yeah, 6,200.
I would go for six months if I'm in your shoes.
Yeah, I think I'd put probably 10 down because you are single, you don't have kids, all of that.
You have a great income. So if an emergency came up, you could cash flow a lot.
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