S1: Did you know there's a way to tap into your
S1: home's equity for tax free cash without having to make
S1: monthly payments? It's true. I'm rob West. It's called the
S1: Home Equity Conversion Mortgage, or Hecm. What many of you
S1: know as a reverse mortgage. But today's reverse mortgage isn't
S1: what it used to be. Harlan Alcala is here to
S1: help us unpack how they work and whether one might
S1: be right for you. Then we'll take your calls and questions.
S1: The number 800, 505, 7000. That's 800, 500, 25, 7000.
S1: This is faith and finance. Live biblical wisdom for your
S1: financial decisions. Well, I'm so glad to dive into this
S1: topic today. You know, it's one we talk about frequently here. And,
S1: you know, there are many misconceptions related to reverse mortgages
S1: will dispel those today, many of them at least as
S1: it relates to home equity conversion mortgages. You know, as
S1: I often say here on this program, there's many of
S1: you that want to heed the warnings of Scripture around debt,
S1: get out of debt and stay out of debt. And
S1: I think that's great. We talk about that all the time.
S1: I think there is a difference, though, in understanding the
S1: places where debt can be used. Certainly we always want
S1: to follow the rules for borrowing. Number one, the economic
S1: return is greater than the economic cost. Spousal unity. We're
S1: not denying God an opportunity to work. Uh, and so
S1: I think there are productive uses for debt. And I
S1: think the key here with reverse mortgages is we're talking
S1: about non-recourse debt. So you are not personally obligating yourself.
S1: It is solely your home that then affords the opportunity,
S1: especially for those and more and more entering retirement. Two
S1: thirds of retirees now have a mortgage. Still, that largest
S1: expense in their budget is often really, causing challenges for
S1: them just to maintain their lifestyle. Maybe they haven't saved enough.
S1: So the ability to see home equity as one of
S1: the planning tools, as you look at it, alongside IRAs
S1: and Social Security and other assets, I think is an
S1: often overlooked tool that's tax free. It's often our biggest asset.
S1: And even if we're just replacing an existing mortgage payment,
S1: allowing that to go away and then to be able
S1: to live in your home for the rest of your
S1: life when it's sold, whatever's equity is left after the
S1: mortgage is paid, is passed on to the heirs. That's
S1: a missed opportunity. And I think it often goes back
S1: to some of these misunderstandings about the reverse mortgages of
S1: the past that are much different than those today. And
S1: that's why I'm excited to have Harlan Akela here. He's
S1: a good friend, a regular contributor. He's an expert on
S1: reverse mortgages with Movement Mortgage, an underwriter of this program. And, Harlan,
S1: it's great to have you back with us.
S2: Yeah, great to be here this afternoon. Thanks for the opportunity, Rob.
S1: Absolutely. By the way, Harlan's going to stick around for
S1: the show today. We're going to be looking forward to
S1: taking your calls and questions. If you have them. Specifically
S1: on reverse mortgages, you can call 800 525 7000, something
S1: we're going to do today. Every call on reverse mortgages
S1: is going to get a copy of Harlan's book, Home
S1: Equity and Reverse Mortgages. It'll be our gift from the
S1: team here at Faith fi to you. So after you
S1: ask your question on reverse mortgages, hang on the line
S1: and we'll get your information and get that right out
S1: to you. Uh, Harlan, let's dive into this topic before
S1: we head to the phones here and begin to mix
S1: in these questions. And perhaps you could start by talking
S1: about this idea that I shared that the reverse mortgages
S1: of today aren't what they used to be. How is
S1: the hecm different from those that got such an unfavorable
S1: reputation in the past?
S2: Well, I think the biggest thing is, is that they
S2: are non-recourse, meaning that every other debt you're personally liable for.
S2: When I signed my reverse mortgage. I signed a form
S2: that said Release of Personal Liability. This is really unusual
S2: because a credit card, a car loan, anything like that
S2: you are personally responsible for. If you wreck your car
S2: and don't have insurance, if your house burns or your
S2: house doesn't have insurance or anything else, those debts could
S2: do not go away with the reverse mortgage. You're completely
S2: relieved of the responsibility of that debt, and it has
S2: to be 100% paid for by the House. And yet,
S2: the important thing is you don't give up ownership. Many
S2: people think, well, I worked all my life to get
S2: this house, and now I'm giving it away to the bank.
S2: And you're not. All you're doing is using some of
S2: the money inside and you're protected. That you're guaranteed to
S2: live in the house because of that non-recourse factor until
S2: you pass away or permanently move out of the house.
S2: That guarantee is really important because without it, quite frankly,
S2: Movement Mortgage wouldn't even offer it. But we know that
S2: we can guarantee any senior the ability to live in
S2: their house as long as they want to. Up to
S2: age 150, that is.
S1: And that includes their spouse as well. Right, Harlan?
S2: That is exactly correct. It's not that the wife is
S2: kicked out at the after the husband passes.
S1: Yeah. Very good. Well, this is our topic today. We're
S1: going to continue to unpack it. We're going to cover
S1: a lot of ground today. So you're not going to
S1: want to go anywhere. Harlan Ackley here today every call
S1: and reverse mortgages gets a copy of his book. Call
S1: right now 800 525 7000. We'll be right back.
S3: The opinions offered during this program represent the personal or
S3: professional opinions of the participants, given for informational purposes only.
S3: Any information provided is not intended to replace advice from
S3: a financial, medical, legal, or other professional who understands your
S3: specific situation.
S1: Great to have you with us today on Faith and
S1: finance live here on Moody Radio. Helping you live as
S1: a wise and faithful steward. Manage the money God has
S1: entrusted to you. We're talking today about an often misunderstood, uh,
S1: tool for financial planning in the retirement season of life,
S1: the home equity conversion mortgage. Uh, we've got all the
S1: lines full, Harlan. So we're going to head to those
S1: calls here in just a moment. But first, uh, you know,
S1: one of the questions we often get from folks about
S1: a reverse mortgage is how do I receive the money? Uh,
S1: there are several options, although I know some are more
S1: common than others.
S2: Yes. The most common one is a line of credit,
S2: because we don't encourage people to borrow more money than
S2: what they need or what they're going to use. So
S2: we set up a line of credit of, let's say, $200,000.
S2: If somebody only uses $10,000, then that other amount stays
S2: there and continues to grow. In fact, that there's more
S2: available in the future for whatever is not used. But
S2: you can also get a lump sum, which is typically
S2: used either to buy a house with a reverse mortgage,
S2: or to pay off an existing loan, or to take
S2: care of a large remodel cost or something that is
S2: necessary for the house. The third way, which is the
S2: least common, is getting a monthly check, kind of like
S2: a social security check or an annuity payment just deposited
S2: into your account every month. So some of these are
S2: mixed and matched. They might take out a $50,000 line
S2: of $50,000 big chunk, and then take the rest out
S2: in a line of credit. It just depends on what
S2: situation is we're trying to accomplish. We ask a lot
S2: of questions before we make a recommendation on how to
S2: use it.
S1: Yeah. Very good. That's really helpful. I think the key
S1: to understanding this is to recognize, although you can make
S1: a payment at any time, you're just never required to.
S1: No matter which of these methods you choose. All right.
S1: Let's head to the phones. We'll be going to Chattanooga
S1: here in just a minute. But first, Thomas is in Vermont. Hi, Thomas.
S1: Go ahead.
S4: Hello? Yes. Um. I'm calling my goal being to be
S4: debt free for life. And I'm vigorously considering a reverse mortgage.
S4: I am 83 years old. I'm a male with no
S4: savings or investments, but I have a nice piece of
S4: property that's worth about 180,000, and I have a $45,000 debt,
S4: and I have an income of 4200 a month. That's
S4: where I'm at, sir. And so I'm looking for advice
S4: on this, uh, consideration of reverse mortgage to get out
S4: of debt and retire.
S1: Yeah. Very good. Thomas. Uh, Harlan. Your thoughts?
S2: Yes, I really you are very good at distilling a
S2: lot in a short period of time. You mentioned that
S2: you have no savings and no investments. That is obviously
S2: true in other scenarios, but you have a substantial, as
S2: you just mentioned, substantial savings in your house. You have
S2: $180,000 asset. And in a sense that's a savings account.
S2: So what we would do is replace that debt. You
S2: still have a debt that is taken care of after
S2: you pass, but you're going to be eligible for a
S2: little bit more than half of the value of the house.
S2: So about 80,000. So we would pay off your existing mortgage,
S2: which then takes your mortgage payment to zero. So you
S2: don't have to use any of the $4,200 to make
S2: that payment and then give you an additional 40 or
S2: $50,000 in a line of credit that's available if you
S2: need it, for whatever purposes would be in the future.
S2: You won't need a lot of it, because obviously now
S2: you'll have a zero payment. So the key to being
S2: debt free and the reason why we always push for
S2: that is because we don't want the payment. Well, fortunately
S2: once we get to be 62 You can have a
S2: debt without a payment or with an optional payment, and
S2: that's what this would allow you to do. And so
S2: you could decide every month whether or not you wanted
S2: to write a check for the interest or not. But
S2: quite frankly, most of the time our clients don't because
S2: they can use the money for living, giving and doing
S2: other things in their fourth quarter of life. You brought
S2: up a perfect example, because most people who are over
S2: 62 should not continue to make a mortgage payment if
S2: they don't have to. They're better off giving it to
S2: their children, their church, um, doing some sort of giving
S2: with it instead of just storing it in the house
S2: where it accomplishes nothing. Uh, when you do not have
S2: to make a payment. So, uh, excellent example, Thomas, for, uh,
S2: your call today.
S1: Thanks very much, Thomas. Uh, hang on the line. We'll
S1: get you a copy of the book. And if you
S1: want to connect with Harlan or get more specific information,
S1: just head to Movement.com and let's go to Chattanooga. Hi, Susan.
S1: I think you had a comment or a testimony today.
S1: Go ahead.
S5: Uh, yes. Um. Can you. Can you hear me? Okay.
S1: I sure can, yes, ma'am.
S5: Okay, great. Great. Uh, one year ago. Um, today, actually, today,
S5: I did the reverse mortgage. I'm 81 years old when
S5: I did it, and it has been fantastic for me. And, uh,
S5: the follow up is what I wanted to mention. I
S5: had any little question. It was George that helped me out.
S5: And he said, no matter what the question is, you
S5: call me, I'll help you. And he has. My question
S5: is on the line of credit, does the interest change
S5: that you that we accumulate on our line of credit?
S1: Excellent, Susan, thank you for that testimony. And, Harlan, that's
S1: a testimony to your team there at, uh, movement. But, uh,
S1: go ahead with your thoughts.
S2: Yeah. We're, uh, very glad to hear that. Uh, sure. Glad.
S2: And I hear that a lot about George and the
S2: rest of our team that, uh, they care about you
S2: after they get done, not just during the process. Um,
S2: the only interest that's charged is on the amount that
S2: you owe, um, and that you've used the line of
S2: credit portion, uh, continues to go up at the same
S2: rate of interest, giving you more money available to borrow
S2: at any time that you want to in the future.
S2: You are never charged interest on the amount of money
S2: that you're not using, but your line of credit that
S2: you're not using does continue to go up at the
S2: current rate of interest, which is right now between 6
S2: and 7%. And we're so glad that your client of ours,
S2: and we're glad that we can make, uh, your fourth
S2: quarter of life just a bit easier.
S1: Susan, is that helpful?
S5: Yeah. Very helpful. I didn't know what what the interest
S5: was that went on the line of credit. So that's
S5: very helpful.
S1: Excellent. Well, thanks for your call. And thanks for sharing
S1: that story. Uh, about the movement team. We're going to
S1: stay in Chattanooga. Percy, how can we help you?
S6: Uh. Yes, sir. Um, I retired at 66 and I'm
S6: now 73 years old and I do not owe anything
S6: on my mortgage. My house is paid for. But I
S6: was wondering, uh, if, uh, a reverse mortgage, if I,
S6: if it's possible to get a reverse mortgage for my
S6: house and how would that all work out? I'm not
S6: quite sure.
S1: Yeah. Harlan, we've got about a minute left till our
S1: next break. Go ahead.
S2: Okay, so real quick for people that have a mortgage payment,
S2: obviously that's eliminated for the people that don't have a mortgage. Well,
S2: then we set you up with a line of credit.
S2: So the answer is yes. You can get that. We
S2: set up a line of credit and then you can
S2: use whatever is available. So let's say that you're eligible for, uh, $200,000.
S2: We give you that line of credit. You don't pay
S2: interest on anything except for what's used and what's needed
S2: as you go through, uh, the remaining part of your life.
S2: And you never have to worry about making a payment back.
S2: It's simply money that's available. So think about it as
S2: a savings account. You put money into your house over
S2: the years. Now you're just taking some of it out.
S2: Not all of it, but some of it. And it's
S2: about 40 to 50% that would be available to you
S2: of the value of your house.
S1: Excellent. So, Percy, that could be a line of credit.
S1: Use it as you need it. It could be a
S1: monthly income stream for life. Either would be an option.
S1: And again it's non-recourse debt. So the only thing that
S1: would ever be needed to satisfy whatever balance is owed
S1: at your death or when you move is the equity
S1: in the home. Once it's paid from the home sale,
S1: then the rest goes to your heirs. If you want
S1: to check out more movement.com, hold the line. Percy and
S1: Susan as well. I know you're still there. I'd like
S1: to get both of you a copy of Harlan's book
S1: as our gift to you, so our team will get
S1: your information. This is faith and finance live. We'll be
S1: right back. Great to have you with us today on
S1: Faith and finance live here on Moody Radio, I'm Rob West.
S1: You know, each day on this program, we dedicate this
S1: hour to coming alongside you to be an encouragement to
S1: help you live as a wise and faithful steward, recognizing
S1: money as a good gift from God. It's not evil,
S1: it's just that the love of money is evil. But
S1: when we put it in its proper place as a
S1: tool to accomplish God's purposes, it becomes a powerful force
S1: for good. And as we work out our money decisions,
S1: it's one of the key ways God shapes our spiritual
S1: journey as well. It's one of those tangible evidences every
S1: day throughout the day of what we value and where
S1: we place our trust. And we know you have very
S1: practical questions and decisions you're making. And so each day
S1: we want to come alongside you in that effort and
S1: help you glorify God through the management of the resources
S1: entrusted to you. Today, we're focusing on a specific aspect
S1: of that your home equity, and perhaps dispelling some myths
S1: around the old reverse mortgages of, uh, of the past.
S1: And what is, uh, the new form of that which
S1: is called a home equity conversion mortgage and often overlooked
S1: planning tool in the fourth quarter of life. Harlan is
S1: here today, our friend and reverse mortgage expert with movement,
S1: mortgage and underwriter of this program. And if you want
S1: to learn more from Harlan or his team, just go
S1: to movement.com. We're taking your phone calls today as well
S1: on this topic, every line full. So we'll move as
S1: quickly as we can through these calls. Next to Warren, Ohio. Hi, Ellen.
S1: Go ahead.
S5: Hi.
S7: I have a I, um, a kind of strange question.
S7: Me and my sister are living in a home that
S7: my mom and dad, my dad built it. And both
S7: of them have deceased. And I was wondering, how do
S7: you get a reverse mortgage when the home is left
S7: to your siblings? There's three of us left, and all
S7: of us are senior citizens.
S1: Okay, so the home was left to you. Um. Each
S1: of you equally as a part of the estate?
S7: Yes, sir.
S1: Okay. Has it been retitled in the name? Equally of
S1: of the three children joint tenants with right of survivorship.
S1: Or how is it titled deed deeded? Okay.
S7: Each one of us.
S1: All right. Harlan, a little more complex situation. Your thoughts?
S2: Yes. Um, we've actually done several of those scenarios where
S2: two sisters or, uh, we did once with, um, three
S2: brothers that were living together in the farm home that
S2: they received from their parents. Um, uh, now, did you
S2: say that it's left to three of you children. Uh, Ellen.
S2: But is there only two of you living there, or
S2: are all three living there?
S7: Right. Two of us are living here.
S2: Okay.
S7: Um, the other one and the other one is not
S7: living here is executor of everything. The will.
S2: Okay. So, um, when it comes down to is reverse.
S2: Mortgage can be done on any property that you own
S2: when you're over 62 and when you live there. So
S2: it doesn't matter if there's other people on the title,
S2: it's just that your other sibling would have to be
S2: okay with, uh, you doing a reverse mortgage to keep
S2: you and your sister in the house. Uh, what also
S2: happens in many cases is some money is taken out
S2: of the reverse mortgage to pay any of the siblings
S2: who are not going to benefit from living in the house.
S2: So it depends on your arrangement. A little bit more complex,
S2: but the the quick answer is it certainly can be done.
S2: And we've done that many times before. It just has
S2: to be worked out in accordance with what the Will says.
S2: And with, uh, all three of the people that now
S2: own the house. Um, but I would certainly be happy
S2: to discuss that further. Um, as, uh, Rob mentioned, if
S2: you go to Movement.com and, uh, will call and just
S2: kind of sort out how that could be done and
S2: how it would be fair to everyone that is involved.
S2: But that isn't anything that, um, is not something that
S2: can't be done, even though it's a little bit unusual. Um,
S2: it doesn't have to be a husband and wife that
S2: live there. It's anybody that's over 62, sometimes a mother
S2: and daughter. Uh, do a reverse mortgage or, in your situation,
S2: two sisters. Uh. That's fine. It just has to be
S2: the age requirement of over 62.
S1: Yeah, and it sounds like just getting permission from all
S1: three since there's three on the deed. Does that make sense, Ellen?
S7: Yes, it does, but what if the one that, um,
S7: end up dying last or whatever don't want the home?
S2: Well, we encourage people to make plans, whether it's going
S2: to a church, whether it's going to another relative. Um,
S2: we don't determine that whatever is left at the end
S2: goes to whoever your heirs are. So we encourage you
S2: to put something in place just like your parents did.
S2: Saying this is who gets the house when we pass.
S2: And then when the last person passes away, we follow
S2: those instructions based on what was left behind.
S7: And they would pay for everything that's left behind.
S2: Well, whatever is used, let's go ahead and say the
S2: house is worth. Let's say the house is worth 400,000
S2: and you've used 200,000. Well, the remaining 200,000 is going
S2: to go to whoever inherits the house at the end,
S2: whether it's a church, a foundation, a relative, whatever that
S2: situation is. Then if they sell the house, they would
S2: just pay the difference and then receive whatever is left over.
S2: But they would have no obligation to pay the debt.
S2: They could only gain, not lose, if it's left to
S2: a relative or a church.
S7: Okay, I appreciate that.
S1: You're welcome. Thanks for your call. Hang on the line.
S1: We'll get you a copy of Harlan's book, just as
S1: a way of saying thanks for calling today. Let's go
S1: to Florida. Hi, Scott. How can we help, sir?
S8: Hey, Harlan. Hey, Rob. I appreciate you taking my call. Sure.
S8: I just got a quick question for you. Um, so
S8: my parents, it's similar to the previous caller, but my parents, um,
S8: have just got a reverse mortgage. About a year ago,
S8: and they, uh, just, you know, to help them with
S8: their retirement. And I know that, um, well, they're in
S8: their 80s, and I know that when they pass, I mean,
S8: I'm hoping they live to be over 100, but when
S8: they pass, they're going to pass that house on to
S8: me and my sister. And so, um, I was wondering
S8: how that works when there's a reverse mortgage, because it's
S8: basically just a home equity line of credit that needs
S8: to be paid off at some point. So would we
S8: both share that debt? How would that work?
S1: Yeah. Harlan. Just 30s. Go ahead.
S2: Okay. Yes. Uh, you're not responsible for the debt. Whatever's
S2: left comes to you, and you have about a year
S2: to work that out after mom and dad are gone,
S2: so it's not complicated. You inherit the house. We talk
S2: to you about how that's going to be handled and
S2: when you're going to sell it, or if you're going
S2: to refinance the mortgage into your name. But it's good.
S2: The money belongs to you. If it's bad, FHA pays
S2: the bill.
S1: Yeah. The bottom line is it's just like a forward mortgage.
S1: Whatever balance is owed would be paid by either selling
S1: it or refinancing it. And you get what's left. Hang
S1: on the line, Scott. We'll be right back on faith
S1: and finance live. This is faith in finance. Live. I'm
S1: Rob West boy. A great opportunity over the next week
S1: if you become a faith VI partner before the end
S1: of the month. Those are men and women who support
S1: the ministry. At $35 a month or more, you will
S1: get not only the current partner package, which includes our
S1: 21 day devotional, look at the sparrows and issue one
S1: of faithful steward with the theme living Rich toward God.
S1: But then you'll turn around and get the second package
S1: that's going to start going out in the month of May,
S1: which is our brand new study, wisdom Over Wealth 12
S1: Lessons on Money from the Book of Ecclesiastes. A deep
S1: dive into that incredible book in God's Word. Uh, also
S1: issue two of Faithful Steward, uh, The Pursuit of Wisdom
S1: with some incredible articles that I think will really be
S1: an encouragement to you. Two issues of the magazine and two, well,
S1: one study and one devotional. Uh, when you become a
S1: partner before August the 30th. So go ahead and do
S1: that today. If you love the ministry, you've been helped
S1: by the broadcast and you want to, uh, become one
S1: of the key pieces of helping us to fund this
S1: listener supported work, you just head to faith. Com and
S1: click give Faith Philly.com and click give right there at
S1: the top of the page. Uh, with us today, Harlan Aguilar,
S1: our good friend. He's a reverse mortgage expert. Every call
S1: today on reverse mortgages gets a copy of Harlan's book.
S1: It's just our way of saying thanks for being on
S1: the broadcast today. Let's head right back to the phones.
S1: Indiana is where we're headed next. Hi, Melvin. How can
S1: we help, sir?
S9: Hey, how are you guys doing? Thank you so much
S9: for what you do. Thank you. Uh, I, I filed
S9: for bankruptcy about three years ago. My house was worth
S9: about 125,000. And so I'm wondering how that will affect
S9: me trying to get a reverse mortgage.
S1: Yeah. Harlan. Not just, uh, right down the middle today.
S1: Some a little more challenging questions. Go ahead with this one.
S2: Yes. Um, well, the good thing is, is that, uh,
S2: unlike a regular mortgage, uh, reverse mortgages do not evaluate
S2: bankruptcies and credit in the same way. In fact, we
S2: don't even look at your credit score. Uh, we really
S2: give you, uh, immediate, fresh chance and a fresh start. Um,
S2: some companies require a two year wait. We we do not.
S2: We go through the factors to make sure that we
S2: can help you. that this isn't going to create a
S2: problem for you again in the future, and that you're
S2: not going to have any problem paying your taxes and
S2: your insurance, because that's still required. You still own your house. But, um, the, uh,
S2: the very, uh, short answer is yes, you would be eligible. Um,
S2: there are some requirements if you're buying a house with
S2: a reverse mortgage where, uh, you're not eligible for at
S2: least two years, but when you are staying in your
S2: current house, you would be eligible, um, as soon as
S2: your bankruptcy was cleared and was discharged. So, um, you know,
S2: we don't look at you differently. You don't pay a
S2: higher rate of interest, you don't get less money. You're
S2: treated just the same as other people. And, uh, we
S2: can certainly work through this with you, because sometimes people
S2: go bankrupt because they don't have enough income. And we
S2: can make sure that it never happens again. And we
S2: work together with a lot of people that have run
S2: into some rough patches in the road and fell in
S2: the ditch and get them out and make sure that
S2: they're on the highway to a better situation. So, um,
S2: thank you for calling in that, Melvin. Uh, we are
S2: help to you, and we do not look at your
S2: credit score, and we we wipe away that, uh, that
S2: tarnish on your credit.
S1: Excellent. Melvin Movement.com is where you can learn more. Stay
S1: on the line. We'll send you a copy of Harlan's book.
S1: Just a small way of saying thanks for being on
S1: the broadcast today. Uh. Let's see. To Illinois. Rhonda. Go ahead.
S10: Hi, Rob. Thank you guys real quick. Yes, ma'am. My question.
S10: I have two questions. I think you answered one because
S10: I heard you say that 62 is the age that
S10: you need to be to get a reverse mortgage. Is
S10: that correct?
S1: Yes. That's right.
S11: Well, that's that's true. Well, go ahead, Harlan.
S2: We do have mortgages in Illinois, not in all states,
S2: but Illinois is one of the states that we do
S2: where we can go down to the age of 55
S2: with some special, uh, mortgages. They're not available in every state,
S2: but they are in Illinois. But 62 is the most
S2: common age. Yes, ma'am.
S10: Okay, well, that's good because I'm 62. My husband is
S10: about a couple of years younger. Both of our names
S10: are on the house. We don't have any children, and
S10: we do need to, um. We've been in the house.
S10: The second question was, how long do we need to
S10: be in the house in order to apply for a
S10: reverse mortgage? Is that a factor?
S2: It is not. If you, uh, sometimes people inherit the
S2: house or, uh, if they've just purchased a house with
S2: cash or whatever, you're eligible. If you're the house for
S2: one day, there is no seasoning requirement like there are
S2: some mortgages.
S10: Okay. So that's it's sounding good. I wanted to also, uh, Harlan,
S10: thanks for his call because his situation is somewhat similar
S10: to my husband's and I's. He just got discharged, and
S10: I'll be discharged in a couple of months, so I
S10: was wondering if that would be a factor as well.
S10: And you said it was not. So if we were
S10: to reach out to the website, then that would be
S10: how we get help. And then would you just take
S10: our mortgage from our credit union? How does that work?
S2: We would. Yes. Uh, the the we have to be
S2: in first position. We have to be the only mortgage. Um,
S2: and so we take a look at eliminating that other payment. Um,
S2: because obviously that was reaffirmed in the bankruptcy, we'd have
S2: to make sure that the percentages is high enough to
S2: be able to do that. But we'll be able to
S2: help you with that if you just reach out to
S2: Movement.com and take a look and do the calculation.
S1: Rhonda, thanks for your call today. Stay on the line.
S1: We'll also send you a copy of the book just
S1: as an encouragement to you. Thanks for being on the broadcast. Uh,
S1: we're going to stay in Illinois. Northbrook. Hi, Paula. Go ahead.
S12: Hi, Rob. Thank you for your program. I love it,
S12: and I've been listening for a long, long time, and
S12: I feel like it's wonderful. Um. I'm happy you're talking
S12: about this today. I brought this up to my daughter. Um,
S12: I'm a widow, and I work, um, some side jobs,
S12: like taking care of dogs and elderly. I kind of
S12: help give people rides and that kind of stuff. But
S12: I'm retired, and my retirement and my Social security does
S12: not cover a lot of the things. Like, I need
S12: a new car, I need rug, I need a new
S12: carpet or whatever. But I'm living in a house that's
S12: been paid for for a long time, 11 years. So
S12: I my daughter doesn't seem to all. She just doesn't
S12: seem to have a good, um, she hasn't gotten enough information,
S12: I think because it seems like reverse mortgage. You say
S12: that and your loved ones say, well, no, I don't
S12: think that's for you. Well, she's got her own home,
S12: and it's. She doesn't need mine, and she'll have insurance, um,
S12: when I die. Life insurance. So I don't understand why
S12: she has such a negative, you know, thing about this,
S12: but how can I help her to see that it
S12: would be a good thing?
S2: Well, I'm so glad you asked that question, because 20
S2: years ago, I was one of those people that said, no,
S2: they're bad, don't get one. They're awful because I didn't
S2: know any better. I was simply ignorant of some of
S2: the facts. I didn't understand it and I was helped
S2: by the facts. Almost always, we do a call with
S2: you and your children, you and your daughter. We want
S2: them to know what's going on because she's just looking
S2: out for you. She's just concerned because she's heard bad
S2: things about reverse mortgages. A lot of people have. And
S2: and they just don't understand what's there. And usually when
S2: we explain all of those answers, when they care about you,
S2: I mean, obviously there's some people that just care about
S2: themselves and they want a big inheritance from their parents.
S2: But I don't think that's your daughter. She's just trying
S2: to protect you. And so uh, we have, uh, a common, uh,
S2: goal to just work with you and your daughter so
S2: that she understands exactly what's going on. And she's right
S2: to be asking questions and being concerned about helping you.
S2: And she can, of course, read my book, but it
S2: might be quicker just to have a phone call and
S2: for us to talk together.
S1: Yeah. Very good. And, Rhonda, you know, to our point earlier,
S1: there are a lot of misconceptions around these loans. And
S1: in particular, it's for good reason, because the loans in
S1: the past were much different than those today. As Harlan said,
S1: if he was dealing with the loans of the past,
S1: he wouldn't touch him. Stay on the line. We'll get
S1: you a copy of this book. Go to movement.com as
S1: well if you want to talk further. We'll be right back.
S1: Thanks for joining us today on Faith in finance live
S1: here on Moody Radio. I'm Rob West. We're taking your
S1: calls and questions today. The lines have been all jammed up.
S1: There's a lot of questions on this topic of reverse mortgages,
S1: which is why we're delighted to have our good friend
S1: Harlan Akula with us today. He's an expert on the
S1: topic with movement mortgage and underwriter of this program. And, Harlan,
S1: you know, I think these questions just really surface where
S1: we started today, this idea that there are just so
S1: many misconceptions, we want to head back to the phones.
S1: But what do you think is is top of that
S1: list in terms of the misconceptions about these types of loans?
S2: The thing is that people just think that they're going
S2: to lose their house. They've worked their whole life, they
S2: own the house, and now the bank takes the house.
S2: I've heard that hundreds of times. And it's they need
S2: to look at it just like they do with the IRA.
S2: They've got a $300,000 IRA, and they're going to use
S2: some of it. And if they don't use it all,
S2: they still have it. They can still give it to
S2: their children or the church or whatever their plans are.
S2: And they don't lose ownership. They don't lose control. They're
S2: guaranteed to live in their house for the rest of
S2: their life. And that is a thing that is the
S2: peace of mind that I have that my wife has.
S2: If something happens to me. And that's what we really
S2: want to share with everyone that's listening to this, is
S2: that you're not in danger. Some debt is very dangerous.
S2: And what's really dangerous is having a mortgage payment until
S2: you're 95 years old. This takes the danger and creates safety.
S2: That you can live in your house without having to
S2: worry about making a payment. Other than, of course, your
S2: taxes and insurance, which are going to be required even
S2: if you have your house paid off.
S1: Yeah, that's exactly right. That's really helpful. All right. Let's
S1: get to as many questions as we can between now
S1: and the end of the program. Uh, to West Palm Beach. Hi, Grace.
S1: How can we help?
S13: Hi. Good afternoon, Rob and Harley. My question is, I.
S13: We just finished paying off the house, and I'm interested
S13: very much in the reverse mortgage. And I was wondering,
S13: how does that work?
S11: Yeah.
S1: Very good. Harlan, a quick overview.
S2: Uh, sure. So just think about this. What you did
S2: is you deposited a whole bunch of money in an
S2: account that's called your house account. It's inside of your house.
S2: It's in in the form of equity. So you know
S2: that you have home equity and whatever your house is worth,
S2: let's just say it's worth $400,000, $400,000 deposited in that account.
S2: We will give you a line of credit or a
S2: monthly check, whichever makes the most sense for you, that
S2: allows you to access some of the money that's literally
S2: sitting in your living room. And if you take out
S2: so much a month for life, you could set it
S2: up that way. Just kind of like a Social Security check.
S2: Or you can just set up a line of credit
S2: that when you need a car, you need to get
S2: a new water heater or something else comes along. We
S2: just create that money availability because you've already paid it
S2: in to your house. We just make it available for
S2: you to take it back out, which is like any
S2: other account. We just create a savings account, so to speak,
S2: that you can draw on that can be deposited into
S2: your checking account whenever you need it, whenever you asked
S2: for it within five days. It's really, quite frankly, that simple.
S2: And a lot of people just kind of get all
S2: nervous about it, like they're selling their house. You're not.
S2: You are 100% owning your house. We're just giving you
S2: some of that money. And it's usually between 30 to 50%
S2: of the value of your house, depending upon your age.
S2: But you're always going to get at least 30%, sometimes
S2: 50 or 60%, based on your age.
S11: Yeah. Very good.
S13: I'm sorry. And I can also take and use that
S13: to remodel the house to rent it out.
S2: Absolutely. Sometimes people remodel the house and they get more
S2: of a value out of the house than what it
S2: was even worth beforehand. And sometimes you can put $20,000
S2: into the house and it goes up in value, $30,000,
S2: depending upon where you put the money. But whether your
S2: house goes up in value or not, that's not an issue.
S2: It just makes sense to use your house to pay
S2: for your house. Some people use the money to pay
S2: for some of their taxes. Uh, and certainly they use
S2: it for, um. For repairs, for remodels, uh, new siding,
S2: whatever it is that, uh, the house needs so that
S2: you don't have to worry about that. Especially big things
S2: like roof, uh, getting a roof or, um, doing, uh,
S2: something that is just really expensive. That's not going to
S2: be a easy to take care of out of a
S2: Social Security or your regular budget. So that's a very
S2: wise use of your funds to be using it for that.
S1: Is that helpful, grace?
S13: More than you ever know. Thank you so much I
S13: appreciate you.
S1: All right. Stay on the line, Grace. We'll send you
S1: a copy of this book. Uh, I think it'll answer
S1: any additional questions you might have. Uh, let's see. West
S1: Virginia is where we're headed next. Hi, Linda. Go ahead.
S14: Thank you. I had questions about if you did a
S14: reverse mortgage, um, and you were, um, then on Medicaid
S14: or Medicare And what would happen with that reverse mortgage?
S14: And then what would happen to that reverse mortgage if
S14: you did die?
S1: Yeah.
S11: Harlan.
S2: Yeah. So I guess we could probably spend an hour.
S2: I actually did an hour for some elder law attorney groups.
S2: There's about 200 elder law attorneys, and we talked for
S2: an hour about Medicaid and reverse mortgages a few years ago.
S2: The fact is, is that to make it really simple,
S2: this protects you to be able to use money without
S2: disqualifying you for Medicaid, as long as you don't take
S2: out a lump sum and put it into the account.
S2: It is not called due. It protects you to be
S2: able to use that income to have that income, especially
S2: if a spouse goes into a nursing home and you
S2: are back in the house. It prevents liens from being
S2: placed on the house that takes away the house or
S2: the use of the money from the community spouse that's
S2: left in the home. So if there is most people
S2: don't want to go to a nursing home. Some people
S2: use money to be able to stay in their house
S2: so they don't have to worry about that. Um, the
S2: second question is, when you pass away, whatever plans you
S2: have for the house, it goes to your children, goes
S2: to a church, goes to a relative. Whatever the situation is,
S2: they simply need to pay off the amount of the
S2: loan when they sell the house. But, uh, it's something
S2: that they can never owe more money than what the
S2: house is worth. If they're selling it at a bad
S2: time or things don't go well, uh, when they're selling
S2: the home. But usually there's more than enough money left
S2: to whoever you've left behind. So some great questions. But
S2: when it comes to long term care, huge subject. And
S2: you may have some more questions that relate to your
S2: personal situation. I just talked to somebody that he's been
S2: diagnosed with Alzheimer's, um, and early onset. And there I
S2: spent an hour going over with them what their options are.
S2: So there can be very specific individual things. Be happy
S2: to cover that more in detail with anyone that's listening,
S2: because that's one of the biggest fears, biggest concerns, biggest
S2: expenses is long term care that can happen at the
S2: end of life.
S1: Is that helpful for you?
S14: Yes. Um, may I ask this question?
S11: Sure.
S14: What if you wanted the house to stay in the
S14: family and not sell it?
S2: That's always an option at the end. Uh, some people
S2: refinance the loan to a regular mortgage. Uh, some kids
S2: turn it into an Airbnb. Sometimes a grandchild wants to
S2: buy it. We always go to your executor. Uh, whoever
S2: is the person that's taking care of things and said,
S2: what do you want to do? Do you want to
S2: keep the house? Do you want to sell it? We
S2: do not get the house at the end. Everybody thinks
S2: the bank takes the house at the end. We simply
S2: have a lien on the property and we help whoever
S2: the survivors are, whoever the heirs are, to decide what
S2: they want to do with the house. And then the
S2: decision is made from there based on your will and
S2: based on, uh, the what the executor is carrying out
S2: at the end of your life.
S14: Perfect. Thank you very much for that information.
S11: All right.
S1: Thank you for your call today, Linda. We appreciate you
S1: being on the program. Uh, let's see, we're going to
S1: finish up today in Alabama. Penny. Go right ahead.
S15: What are the costs associated with the reverse mortgage?
S11: Yeah.
S1: Great question Harlan.
S2: Yeah, that's an important thing because, uh, a reverse mortgage
S2: has two costs. It's two simple costs. One is the initial, uh,
S2: closing costs. Uh, and the second thing is the ongoing interest, uh,
S2: which you always have the option to pay if you wish.
S2: Most people don't because they're doing this for cash flow. Um, but, uh,
S2: just think about normal interest. You get a statement every month.
S2: Let's say you have $50,000 and the interest rate is 7%,
S2: which is higher than what it is right now. But
S2: let's just say it's 7%. Well, that's $3,500 a month,
S2: or roughly somewhere around 250 to $300 a month. Um,
S2: and then you make the decision on that, but you
S2: don't have to pay it until the end, but you
S2: always know where you're at. So that's one cost that is, uh, interest.
S2: That is like any other loan. It's just that you
S2: don't have to pay it until a year after you're dead,
S2: which is obviously some unusual terms. The other cost is
S2: the upfront cost, which is the same as any other mortgage,
S2: except for one thing. Uh, you'll have the normal cost
S2: of mortgage. Um, you know, your, uh, title insurance, your
S2: appraisal and so on. But there's one other cost that
S2: is a guarantee fee insurance, mortgage insurance premium which guarantees
S2: that you can live in the house till you're 150.
S2: Never can there be anything that is owed, um, by
S2: your heirs over and above the value of the house.
S2: And that is a 2% fee. That is a one
S2: time cost. All of the rest of the costs are
S2: added into the interest rate at the end. There is
S2: no monthly fee or anything else. Um, but realize I'm
S2: really glad you asked that question, because every form of
S2: retirement income has a cost. Uh, annuities cost money. Life
S2: insurance cost money. It costs money to manage money. Um,
S2: and this is pretty much on par with any of
S2: those things. There's that extra guarantee fee to make sure
S2: that you never have to worry about moving, and you
S2: never have to worry about leaving a debt behind for
S2: your children.
S11: Hmm.
S1: Does that cover it for you, penny?
S15: Yes.
S1: Okay. Thank you for calling today. Stay on the line.
S1: We'll get you a copy of Harlan's book. And I
S1: think that might answer any further questions you have. Harlan,
S1: we're about out of time today. Tie a bow on
S1: this for us. What do we need to finish with?
S2: Well, yes, I'm glad that that we kind of ended
S2: up in a cost, because that's one thing that I
S2: want everybody to know is that we answer these questions
S2: very quickly within a few minutes, but we always spend
S2: at least an hour with our clients, and even the
S2: first initial call before we ever agree to do a
S2: reverse mortgage for someone, we ask a lot of questions
S2: to make sure that it fits in, that it's going
S2: to help them, that it's not going to cost them.
S2: And we do a lot of analysis before we ever
S2: go to any direction. So they don't have to be
S2: afraid of us just trying to sell them something. But
S2: we do a lot of consultation beforehand. So thanks so
S2: much for the opportunity to shed some light on this
S2: very important subject.
S1: Absolutely. Thanks for being here, my friend. God bless you.
S1: We'll have you back again real soon. That's Harlan Accola
S1: with Movement Mortgage and underwriter of this program. To learn more,
S1: go to movement.com. That's COVID-19. Back with another edition tomorrow.
S1: Hope you'll join us then. Faith and finance a partnership
S1: between Moody Radio and Faith fi. Have a great night.
S1: Bye bye.