Speaker 1: Welcome to Mortgage Talk with Mark Harriston, the program that
Speaker 1: not only talks about mortgages, taxes, and interest rates, but
Speaker 1: Mark and his guest talk real estate trends and your home.
Speaker 1: He also answers your mortgage questions to help you make
Speaker 1: the right financing or refinancing decisions. Now here's Mark Hairston.
Speaker 2: Happy to everybody, and welcome back to Mortgage Talk with Mark.
Speaker 2: I'm really excited you guys are back on to the
Speaker 2: show with me because I have been out of the
Speaker 2: studio for probably about a month or the holidays, and
Speaker 2: this is actually the first show of twenty twenty five,
Speaker 2: and I'm very very excited to introduce a friend of mine.
Speaker 2: As I usually say when I start, the goal here
Speaker 2: is to bring in subject matter experts on different subjects
Speaker 2: around real estate finance in general.
Speaker 3: And today we have a true what I call experts.
Speaker 2: She's so much of an expert that I've hired her
Speaker 2: for my own personal business.
Speaker 3: So this is a conversation.
Speaker 2: If you're over sixty two you certainly want to listen to,
Speaker 2: or if you have parents that maybe over sixty two,
Speaker 2: you want to listen to about how to leverage equity
Speaker 2: in a property and supplement your retirement income. And I'm
Speaker 2: really happy to introduce my friend, Christina harms Hike. She's
Speaker 2: hails from California. You're not affected by the fires, are you, Christina?
Speaker 4: Luckily? No, not right now?
Speaker 2: Okay, good, good, good. Well that's really a tragedy out there.
Speaker 2: What's going on. But I've known you about four or
Speaker 2: five years now, and I follow you on social media
Speaker 2: and we've talked about my own personal situation here in Austin,
Speaker 2: my wife and I have, so we want you to
Speaker 2: introduce yourself and then we're gonna start getting the meat
Speaker 2: of the subject here.
Speaker 4: Yeah, thank you so much for having me on. It's
Speaker 4: an honor. Good So introduce myself. I'm Christina harms Hika.
Speaker 4: I am a certified reverse mortgage professional. I've been that
Speaker 4: for almost a decade now. I was the youngest to
Speaker 4: achieve that designation, and it's a little known unless you
Speaker 4: talk to somebody who is one. There's only about two
Speaker 4: hundred of us in the country. But that really is
Speaker 4: the highest level of understanding of reverse mortgages. And we
Speaker 4: hold a oath to ethics, so I think that's really
Speaker 4: really important. It's a lovely designation and to get yes.
Speaker 4: But but prior to that I started, People are like,
Speaker 4: how have you been in this industry so long? I
Speaker 4: started my dad's office when I was sixteen, I was
Speaker 4: a mortgage broker, and so I learned the ways of
Speaker 4: mortgage and then I actually sold real estate for some time,
Speaker 4: and then when I closed my first reverse mortgage, my
Speaker 4: life was just absolutely changed.
Speaker 3: She fell in love with it.
Speaker 4: I fell in love with it. It was so weird
Speaker 4: and so customizable and so flexible for we fixed exactly
Speaker 4: what they needed and more, and it would just change
Speaker 4: my life forever.
Speaker 2: Well, it's rare that I find somebody as passionate about
Speaker 2: their business as you, and I just love that. That's
Speaker 2: why I wanted to have you on there and speak
Speaker 2: to the subject that has a lot of myth around
Speaker 2: it misunderstanding too. And so let's start with kind of
Speaker 2: a high level conversation around what exactly is a reverse
Speaker 2: mortgage and how is it different than traditional loans?
Speaker 3: Which did I do?
Speaker 4: Absolutely? A reverse mortgage is a really cool, relatively newer mortgage.
Speaker 4: So it was created in nineteen eighty nine, which is
Speaker 4: pretty young for a mortgage. Right before that, we had
Speaker 4: VA in the forties, and so it's taken some time
Speaker 4: to work out some of the kinks, and so people
Speaker 4: have some idea or they may not understand it at all.
Speaker 4: But over time, the reverse mortgage has changed a lot
Speaker 4: to where we are today, where it's an amazing, amazing loan.
Speaker 4: It's for home owners either fifty five or sixty two
Speaker 4: and up, depending on the program and state. The most
Speaker 4: common one you hear about is the FAHA Heckham Home
Speaker 4: Equity Conversion mortgage, and that is sixty two and up
Speaker 4: in every state, but there are other reverse mortgages for
Speaker 4: some people in some states for fifty five and up. Essentially,
Speaker 4: the main key points you need to live in the
Speaker 4: home as your primary residence. At least one borrower must
Speaker 4: remain or non borrowing spouse. You can pay your taxes
Speaker 4: and insurance. It's owning a home. That's a big thing.
Speaker 4: People have a misconception that, oh, I'm going to make
Speaker 4: all the payments go away. A reverse mortgage allows you
Speaker 4: to choose if you want to make a payment or not.
Speaker 4: Most people choose not, but they still have to pay
Speaker 4: their taxes and insurance. Yeah, it's a it's a mortgage,
Speaker 4: which is a lean on title. The bank does not
Speaker 4: take ownership of the house any more so than they
Speaker 4: do with any other kind of mortgage. The difference is
Speaker 4: there's no required monthly mortgage payments. There's no well, no term.
Speaker 4: The term is the youngest borrowers one hundred and fiftieth birthday,
Speaker 4: so we say no term.
Speaker 3: But yeah, right right, not likely. That's pretty interesting.
Speaker 4: Yeah, and it's really designed to be really flexible. You
Speaker 4: can get a lump sum of cash. Some people need
Speaker 4: to like fix a roof or they've got one of
Speaker 4: the cases. I had a huge i RS debt. Credit
Speaker 4: card debts really common right now. So there's just a
Speaker 4: lot of ways to do this thing. One of them
Speaker 4: is a lump sum. Another is a line of credit
Speaker 4: that actually grows and isn't frozen when the real estate
Speaker 4: market takes a downturn, which which is very unique for
Speaker 4: a line of credit.
Speaker 3: Yes, that's why.
Speaker 2: That's what I love about when you talk to me
Speaker 2: about my own personal situation, you know, because I don't
Speaker 2: think I'm that unusual as far as baby boomers go.
Speaker 2: I turned sixty five in October. My wife has recently
Speaker 2: turned sixty two. So we qualify for this product and
Speaker 2: We have a couple of three homes in Austin. One
Speaker 2: of them has quite a bit of equity in it, okay,
Speaker 2: and we are moving back there to become a homestead.
Speaker 2: And what you showed me was how I could leverage
Speaker 2: that equity and have options to supplement any sort of
Speaker 2: retirement income down the road. Now, I'm not going to
Speaker 2: be doing that now. I don't need the money today
Speaker 2: because I'm still working and that sort of thing, but
Speaker 2: down the road I may. And so it's a sort
Speaker 2: of a safety net in case I do want to
Speaker 2: tap into at my equity and not have to move
Speaker 2: to get it.
Speaker 3: That's the key right there.
Speaker 4: Yeah. Well, and I love your strategy because you're doing
Speaker 4: it while you qualify easily. Right, You've got income, you've
Speaker 4: got good credit, You've not hit any sort of life
Speaker 4: event that could damage those things. So you're putting in
Speaker 4: place now so that if anything happens in the future,
Speaker 4: you already have it. You don't have to qualify at
Speaker 4: that point, which some of my clients come to me.
Speaker 4: At that point when there is a life crisis and
Speaker 4: a financial corit.
Speaker 3: It could be too late.
Speaker 4: Sometimes it is. Yeah, it's often too late because we
Speaker 4: still have credit and income qualifying. It can't be you know,
Speaker 4: two years late on your mortgage and still make this
Speaker 4: thing work. In a lot of cases, sometimes there's magic,
Speaker 4: but in general that's not the greatest plan.
Speaker 2: So let's talk about some regulations of the One of
Speaker 2: the myths around or confusions or misunderstandings around reverse warrants
Speaker 2: is the bank takes title to your property, and that's
Speaker 2: simply not true. So let's go through some of these
Speaker 2: myths that people just don't understand about them.
Speaker 4: You know, clear that up, addressing that. Yeah, so biggest
Speaker 4: myth that the bank takes ownership and people think, oh,
Speaker 4: I'm selling the house of the bank. And I think
Speaker 4: that comes from the idea of a charitable life estate,
Speaker 4: because there is something weird with charities where you can't
Speaker 4: and I don't fully understand it myself, so I'm not
Speaker 4: going to speak to the high level of it. But
Speaker 4: where you can sell the property and then live in
Speaker 4: it for the remaining of your days, that's not a
Speaker 4: reverse mortgage. A reverse mortgage is just a lean on title,
Speaker 4: just like any other mortgage. The difference is that it's
Speaker 4: not a thirty year term. You don't have to make
Speaker 4: required regular monthly payments, and there's a lot of flexibility
Speaker 4: in the ways you can manage the equity. Right the
Speaker 4: line of credit. You can get a monthly payment to
Speaker 4: you if you want, and you can manage that. You
Speaker 4: can pay payments if you want to or not. It's
Speaker 4: fully up to you. I like to think of the
Speaker 4: reverse mortgage as finally being in control of your cash
Speaker 4: flow for your mortgage and your equity.
Speaker 3: I love it.
Speaker 2: I love it because on one of our properties, we
Speaker 2: have what they call a helock with a line of credit.
Speaker 2: And the distinction that you've taught me was there. The
Speaker 2: difference is primarily a line of credit on it, as
Speaker 2: a helock is a fixed term, you know, one hundred
Speaker 2: thousand dollars or one fifty whatever, and you have to
Speaker 2: pay it back, which we're doing currently because we have
Speaker 2: a allline on it. But we were to roll that
Speaker 2: back into a reverse mortgage, you know, not only do
Speaker 2: we have an option of deferring that payment if you will,
Speaker 2: but the line of credit continues to go up over
Speaker 2: the years, which is a lot.
Speaker 3: Of people don't understand that.
Speaker 2: I didn't really understand that either, but the numbers you
Speaker 2: showed me were like, man, this is a this is
Speaker 2: a no brainer.
Speaker 4: It's beautiful. Right. Once people see it, they're like, wait,
Speaker 4: what this this it's too good to be true, And
Speaker 4: then I have to remind them, no, no, no, you're paying
Speaker 4: for some cost to put this in place. It's not
Speaker 4: too good to be true. But it is really good.
Speaker 3: Yeah, exactly.
Speaker 2: So, so let's talk about if we've talked touched on this,
Speaker 2: but senior citizens, if you want baby boomers. I'm a
Speaker 2: senior citizen, which is kind of hard for me to say,
Speaker 2: but I am.
Speaker 4: It's hard to say it. Looking at you, I'm like, no,
Speaker 4: you're not.
Speaker 3: Oh, you're so kind, you're so kind. You know.
Speaker 2: In my in my era, pensions have sort of gone away.
Speaker 2: Most people don't have a pension. Let's they work for
Speaker 2: the state or something like that. But a lot of
Speaker 2: people have four oh one K and you know, investment,
Speaker 2: so they're going to live on social security that sort
Speaker 2: of thing. But how can explain a little bit more
Speaker 2: about how this can supplement people's retirement and how they
Speaker 2: can maybe hold their assets over here and use this
Speaker 2: tax free He says tax free income.
Speaker 3: Correct, Well, we can't call.
Speaker 4: It tax free income, but it is tax free under
Speaker 4: the IRS laws. So it's cash flow. It's your equity.
Speaker 3: Yeah, it's your own money basically.
Speaker 4: Okay, yeah, so we don't call it income, but it
Speaker 4: is cash flow for sure. And I love that you're
Speaker 4: talking about that because the baby boomers all are more creative,
Speaker 4: they're more open in general to figuring this thing out
Speaker 4: and working with the finances the best way that makes sense,
Speaker 4: not some hard fast rule of I need the house
Speaker 4: to be paid off. But if we twist that a
Speaker 4: little bit, the goal of having a house paid off
Speaker 4: is to have no mortgage payment. Right. You want to
Speaker 4: lower your expenses in retirement.
Speaker 3: Sure, well there's.
Speaker 4: Only two ways to do that. Have the house paid off,
Speaker 4: no mortgage payment. No. The other one is a reverse mortgage,
Speaker 4: no mortgage payment. And so it really allows you to
Speaker 4: manage those assets. And I have to say your strategy
Speaker 4: is one of my favorites. Where you have some rentals
Speaker 4: because rental income keeps up with cost of living, it
Speaker 4: keeps spaking. Yeah. So some people will do a reverse mortgage.
Speaker 4: They'll get a big lump sum of cash, and then
Speaker 4: they'll go buy a new property as an investment, and
Speaker 4: they'll remain in the one that they have the reverse
Speaker 4: mortgage on, and then that investment pays rental income.
Speaker 3: Yeah. I love this, It's beautiful. Yeah.
Speaker 2: I'm talking to a friend of mine about that right now.
Speaker 2: He's got a home free and clear. It's worth a
Speaker 2: little over a million dollars, I said, David, you could
Speaker 2: probably get you know, reverse mortgage for maybe four hundred
Speaker 2: thousand dollars or something like that, you know, and you
Speaker 2: could go buy a property for cash, rent it out
Speaker 2: and have additional income or use that income to pay
Speaker 2: down the pay down the loan, you know.
Speaker 4: Yeah, and depending on his age, so yeah, by age
Speaker 4: sixty seven, okay, sixty it probably closer to like three
Speaker 4: hundred thousand in day's market, but still absolutely amazing.
Speaker 2: Yeah, in that line of credit again goes up. So
Speaker 2: when he's seventy, seventy five, eighty years old, it could
Speaker 2: be worth half million dollars.
Speaker 4: You know. Yeah, can I address why that happens real quick?
Speaker 3: Absolutely? You're here, my guess you're the expert.
Speaker 4: Well, it's really cool because they designed it's cool and
Speaker 4: it's a little silly, but it works in our favor,
Speaker 4: I think, as consumers. So they designed the line of
Speaker 4: credit and they said, Okay, if somebody's like sixty two
Speaker 4: and they're qualifying for the reverse mortgage, now, we don't
Speaker 4: want them to have to refinance all the time as
Speaker 4: their equity goes up because their property appreciates. So they
Speaker 4: added this feature onto this line of credit where it's
Speaker 4: a growth feature. So say you start with the line
Speaker 4: of credit of one hundred thousand. Right now, the growth
Speaker 4: rate is a little less than seven percent, So in
Speaker 4: a year, it's going to be one hundred and seven,
Speaker 4: in two years it'll be one hundred and fourteen and
Speaker 4: a little bit more. Right in three years one hundred
Speaker 4: and twenty one. That just naturally happens so that you
Speaker 4: don't have to refinance all the time to get access
Speaker 4: to more of that equity because in those three years,
Speaker 4: your property appreciated and you're going to want to get
Speaker 4: access to that equity and you're going to need it. Generally,
Speaker 4: most people want it, so why not have it there?
Speaker 4: And if you don't use it, it just is just
Speaker 4: home equity. Right, So if you sell that line of
Speaker 4: credit as part of your proceeds in.
Speaker 2: The line of credit eventually kind of grows exponentially, you know,
Speaker 2: because of the compounding compounding effect it does, it's amazing.
Speaker 2: The other beauty of it, my opinion, is, you can
Speaker 2: do anything you want with the money. You could buy property,
Speaker 2: you could go on a vacation, you could pay off
Speaker 2: the debt that you have, you could pay off credit cards,
Speaker 2: whatever it is.
Speaker 3: You know.
Speaker 4: Yeah, it's your equity.
Speaker 3: It's your money, you know. And you could keep your
Speaker 3: assets over here.
Speaker 2: Let's say you have several hundred thousand or million dollars
Speaker 2: in four to one K money and you don't want
Speaker 2: to touch that, you want to let that grow.
Speaker 3: You could access this to help you live.
Speaker 4: It's a beautiful strategy. Right. People don't realize if it's
Speaker 4: you know, two thousand bucks a month for their mortgage payment,
Speaker 4: what that two thousand dollars a month could grow to
Speaker 4: if it was left in other retirement accounts.
Speaker 3: Right, that's right, that's right.
Speaker 2: So can The other question that people get confused about
Speaker 2: is can they outlive the benefits? You said one hundred
Speaker 2: and fifty years old? But you know what happens is
Speaker 2: something if you have a couple then one of them
Speaker 2: passes away. Can the spouse continue to live in the property.
Speaker 4: Absolutely? So, really good protections built in today, you cannot
Speaker 4: get a reverse mortgage in just your name if you
Speaker 4: are married, so we can in.
Speaker 2: Any state or just community property states like Texas state,
Speaker 2: all states.
Speaker 4: Okay, guys, there are some exceptions for some of the
Speaker 4: non FAHA programs, so I'm just speaking to FAHA right now.
Speaker 4: So the FAHA heckham. If you are married, you have
Speaker 4: to include your spouse in some capacity. If that spouse
Speaker 4: lives in the home, then they're a full blown borrower.
Speaker 4: If they're age eligible, then their barrow. If they're not
Speaker 4: age eligible, we have something called the non Borrowing Spouse
Speaker 4: Protection and it actually protects that spouse. So the way
Speaker 4: it'll work, so two people, let's say they're both age
Speaker 4: eligible goole sixty seven, and one of them passes. As
Speaker 4: long as they were both borrowers, nothing happens to the mortgage.
Speaker 4: That the mortgage will continue on until that second person
Speaker 4: passes or decides to sell or moves out permanently, or
Speaker 4: defaults on their taxes and insurance. Those are kind of
Speaker 4: the triggers for when the more excuse me, when the
Speaker 4: mortgage is due. Okay, But let's say instead that there's
Speaker 4: one spouse who's sixty seven and one spouse who's fifty nine. Well,
Speaker 4: we have what's called a non borrowing spouse protection where
Speaker 4: that fifty nine year old isn't a full blown borrower.
Speaker 4: But let's say the sixty seven year old does pass first,
Speaker 4: the fifty nine year old is called a non borrowing
Speaker 4: spouse and they can apply for a deferral for the
Speaker 4: loan repayment, and often they're granted it. There's some paperwork,
Speaker 4: it should be pretty seamless. They have to make sure
Speaker 4: that they were married at the time that they did
Speaker 4: the mortgage and it was disclosed. They were disclosed as
Speaker 4: a non bar spouse. So spouses who get married later
Speaker 4: on they're not protected. If like a single guy gets
Speaker 4: a reverse and then gets married later, that new spouse
Speaker 4: isn't protected. Okay, So a good strategy is refinance are
Speaker 4: onto the loan. But the numbering spouse protection is a
Speaker 4: really nice thing because now that younger spouse can live
Speaker 4: out their days and the mortgage isn't due until they
Speaker 4: pass away, sell or move out permanently, or default on
Speaker 4: taxes and insurance.
Speaker 2: Okay, now I've been doing forward loans. If you will
Speaker 2: purchase loans and refinance for forty years. So I'm very
Speaker 2: familiar with how that structure works in how people can qualify.
Speaker 2: Tell us a little bit more about the qualifications of
Speaker 2: how a reverse might work, because there's some people that
Speaker 2: it's in my opinion, there's like three categories. There's people
Speaker 2: who really need the money now, there may be people
Speaker 2: like myself who don't need the money now but maybe
Speaker 2: wanted to have access in the future. And there could
Speaker 2: be just people who are rich and don't need the
Speaker 2: money at all. Okay, but it still could be a
Speaker 2: benefit for them. So put on your council hat and
Speaker 2: share with us a bit a little bit about how
Speaker 2: reverse may work for pretty much any senior and how
Speaker 2: people could qualify for that.
Speaker 4: I love it. So let's start with the last example.
Speaker 4: So the wealthy. There was a loan after I interviewed
Speaker 4: not too long ago, and he said, you know, this
Speaker 4: client had fourteen million assets, he still did a reverse mortgage.
Speaker 4: And so what we talked about was, well, why because
Speaker 4: the wealthy don't view their money the same. The wealthy
Speaker 4: view this is a smart strategy. Why would I tie
Speaker 4: up all my equity and not have it working for me?
Speaker 4: And so wealthy will still do this and it's a beautiful,
Speaker 4: beautiful thing. I actually find you and your situation kind
Speaker 4: of the middle ground between wealthy and needs based a
Speaker 4: beautiful I wish more people in your situation did this.
Speaker 4: I think this is a saving grace of the American
Speaker 4: retirement because just like you, you're like I may not
Speaker 4: need this money, but it's ready and available if you
Speaker 4: do so, you're not going to get into a situation
Speaker 4: where you're not paying your credit cards on time, you're
Speaker 4: not paying any other mortgage or property taxes. That's right.
Speaker 4: Keeping yourself afloat on those things put you in a
Speaker 4: better financial situation for all credit, including the reverse mortgage,
Speaker 4: and it protects you. I mean, that line of credit
Speaker 4: can grow so big. It can pay for care when
Speaker 4: you're in your nineties if should you need it, or
Speaker 4: a new roof, or you know, people joke about the vacation,
Speaker 4: but that's not typically what I see.
Speaker 2: I know, I know, But it could be to maintain
Speaker 2: your property. I mean, let's say it, Yes, absolutely, hvac's
Speaker 2: ten thousand dollars. Yeah, just to maintain your property or
Speaker 2: update your property. Things like that too.
Speaker 4: Yeah. I had a lady who who redid her reverse
Speaker 4: mortgage every now and then we can refinance them and
Speaker 4: when rates drop we often do. And that was her thing.
Speaker 4: She goes, I just need ten thousand dollars because my
Speaker 4: water heater went out right, right, That's like, that's ten
Speaker 4: thousand bucks for the water heater.
Speaker 3: Yeah. Crazy.
Speaker 4: So we've got that middle ground that I wish everybody
Speaker 4: in that middle ground would do this. It is such
Speaker 4: a smart thing.
Speaker 2: And I heard a stat that I don't know how
Speaker 2: accurate is, but it came from financial news source I forget.
Speaker 2: But in the senior market, let's say, in the baby
Speaker 2: boomer over sixty two, there's about seven trillion dollars of
Speaker 2: equity in the in the country.
Speaker 3: Is that Is that somewhat accurate?
Speaker 4: At thirteen trillion is the most recent.
Speaker 2: Thirteen trillion dollars, and only about four or five percent
Speaker 2: of seniors actually taking advantage of this?
Speaker 3: Is that correct?
Speaker 4: Our market penetration is somewhere between two and four percent.
Speaker 4: You're right, it's but it's partially because it's misunderstood, it's unknown,
Speaker 4: and it's weird. People are just in the habit of
Speaker 4: paying a mortgage. When I tell them you don't have
Speaker 4: to pay it anymore, they go they just psychologically. It's
Speaker 4: like they can't quite get themselves there.
Speaker 3: Well I got there pretty easy, right.
Speaker 4: Some people are like, oh heck, yeah.
Speaker 2: Yeah, I like that option. It's nice to have flexibilion options.
Speaker 2: I mean, let's face it, I don't care what you
Speaker 2: you know. Well something my kids always ask me, Dad,
Speaker 2: why do you drive right down the middle street?
Speaker 3: Because I said, I like to have options. You know
Speaker 3: which way I'm going to go.
Speaker 4: Well, that brings me to the third group of people.
Speaker 4: You were talking about, the needs based yes, which a
Speaker 4: lot of my clients still are. And here's kind of what.
Speaker 3: What do you mean by needs based? Define that a
Speaker 3: little bit.
Speaker 4: More needs based. So the common thing in financial planning,
Speaker 4: which I'm not a financial planner, but a common thing
Speaker 4: that has been of the past is use everything and
Speaker 4: then do the reverse mortgage.
Speaker 3: As your last got it.
Speaker 4: So that's what I mean as needs based. It's often
Speaker 4: an adult child in their fifties or sixties themselves coming
Speaker 4: and saying, okay, mom and dad or mom or dad
Speaker 4: or you know, in their nineties. I don't want to
Speaker 4: move them to a care facility. We all know how
Speaker 4: there's some problems there and they don't want to go.
Speaker 4: It's their home. They should be able to pass in
Speaker 4: the dignity of their own home. But it's expensive. I
Speaker 4: just talked to somebody that care is twelve thousand a
Speaker 4: month just for twelve hours a day, seven days a week. Wow.
Speaker 4: But the reverse mortgage is coming in and paying for
Speaker 4: that care. So unlike your situation where you're going to
Speaker 4: have more than enough giant line of credit when you
Speaker 4: do the reverse marriage, when you wait like that, the
Speaker 4: line of credit doesn't have time to grow, so they're
Speaker 4: limited in the amount. And it just is like I
Speaker 4: wish I could grab these families and be like, do
Speaker 4: this twenty years ago, you'll have double. I can't say
Speaker 4: for sure double, but you might have a lot lot
Speaker 4: more available if you do this early rather than waiting.
Speaker 4: But in any case, somebody in their nineties gets a
Speaker 4: decent size loan amount and so their needs based where
Speaker 4: their credit might already start be getting damaged. They might
Speaker 4: be low on income, which reverse mortgage is easier to
Speaker 4: qualify for because there's no mortgage payment required, So we
Speaker 4: don't need as much income, but we still need some Sure,
Speaker 4: we got to prove you can pay your taxes, insurance,
Speaker 4: get the lights on, and so it just kind of
Speaker 4: puts those things in jeopardy. The people who wait and
Speaker 4: wait and wait, and it's a lot of shame and
Speaker 4: guilt and fear that stops them. And it's like, Okay,
Speaker 4: I get that the unknown can be scary, and for
Speaker 4: whatever reason, they think, Oh, if I have to look
Speaker 4: at the home equity, I've failed somehow. And it's like,
Speaker 4: but that's the biggest investment, the best investment you've ever made.
Speaker 4: That's right, You're not going to touch it.
Speaker 2: Yeah, And I would suspect for most people, most seniors,
Speaker 2: that their real estate is probably the largest portion of
Speaker 2: their net worth.
Speaker 4: You know it is from the numbers I've seen.
Speaker 2: And they've made good decisions around that in the past,
Speaker 2: So why not take advantage of it while you can.
Speaker 2: That's that's my opinion on that for sure. So uh So,
Speaker 2: let's talk about if you're giving advice to seenor which
Speaker 2: you are right now you're giving You've given me great
Speaker 2: counsel around my own situation, and I'm on board with
Speaker 2: the deal for sure, But in general, how do you
Speaker 2: speak to seniors around that? How do you give them
Speaker 2: good counsel and alleviate some of their fears around that.
Speaker 4: The best I can do is try to stand in
Speaker 4: their shoes. So my process is to ask a bunch
Speaker 4: of questions, some informational, some just tactical, like is your
Speaker 4: home safe for you to be able to stay there?
Speaker 4: Are you comfortable? And sometimes these conversations, well, you know
Speaker 4: there are three set flights of stairs and the driveway
Speaker 4: is eight miles long hill. Yeah, so sometimes it's like,
Speaker 4: should we be looking at the reverse for purchase and
Speaker 4: maybe get you into a home that's better suited for
Speaker 4: your needs. But my job is really to do my
Speaker 4: best to stand in their shoes, and sometimes like handing
Speaker 4: a holding hands with their family or their kids, and so, okay,
Speaker 4: what's the best solution in this case? And I'll present
Speaker 4: the best reverse mortgage. You know, if they have some debt,
Speaker 4: let's get that paid off. If you need some extra
Speaker 4: income cash flow every month, let's figure that out. If
Speaker 4: let's leave a line of credit as a safety. I
Speaker 4: like to do the mix and match. We can do it,
Speaker 4: so why not make it super customizable?
Speaker 3: Yeah?
Speaker 4: And then honestly, most of the time the feedback is,
Speaker 4: oh my gosh, this just took so much worry off
Speaker 4: my life. I had somebody who said that she beat
Speaker 4: cancer because it took the financial strain.
Speaker 3: Wow, now that's a testimony right there, for sure. And
Speaker 3: you brought up a point I want to hit and
Speaker 3: a fail to do so the far. But we got
Speaker 3: a few minutes left.
Speaker 2: Let's talk about reverse mortgage for purchase as well, because
Speaker 2: most people think about it. I'm in a house and
Speaker 2: I'm going to refinance it and get a line of credit.
Speaker 2: But they could also, like you, sell that if the
Speaker 2: property doesn't suit them anymore, the master bedrooms or whatever
Speaker 2: upstairs and they need to move for whatever reason, they
Speaker 2: could take that equally, sell that property and take that
Speaker 2: and mine on the property, you know, So talk about that.
Speaker 4: Yeah, so it works similarly, you're going to have the
Speaker 4: same loan amount whether you're whether you're changing houses or not.
Speaker 4: So like if it's an LTV loan to value, which
Speaker 4: we don't speak in LTV terms, but it'll be the
Speaker 4: same number. So let's say you can get a loan
Speaker 4: for a reverse mortgage for about thirty percent, which shocker,
Speaker 4: the numbers are lower because we want you to have equity.
Speaker 4: We want them to be equity for your errors to
Speaker 4: inherit and generally.
Speaker 2: There are well that's penal age too, so sixty five
Speaker 2: there seenty five.
Speaker 4: Yeah, so a sixty five year old can't get as
Speaker 4: large of a loan amount as a seventy five year old,
Speaker 4: who can't get as large of a loan amount as
Speaker 4: eighty five year old. Same thing as a ninety five
Speaker 4: year old. But it pales in comparison to that line
Speaker 4: credit growth rate. So some people say, oh, I'll just wait,
Speaker 4: that's not the right strategy. But if you are older,
Speaker 4: you will get a larger loan amount at the time
Speaker 4: you put this in place. So talk about purchase. I
Speaker 4: have a client right now, exactly what you said. House
Speaker 4: is about a million. She's got a two hundred thousand
Speaker 4: dollars mortgage that she'll pay off, so she's going to
Speaker 4: come away with eight hundred thousand cash. She wants to
Speaker 4: buy a house for about six hundred thousand. And now
Speaker 4: these are California prices. I get they might be high,
Speaker 4: but so she wants to buy a house for about
Speaker 4: six hundred thousand. If she were to do that with
Speaker 4: just cash, she would have about two hundred thousand left, right,
Speaker 4: But that's all she has. This is the rest of
Speaker 4: her retirement. Everything was in the equity the home, and
Speaker 4: so with the reverse mortgage. Now the reverse mortgage is
Speaker 4: coming in to finance two hundred thousand of that new purchase. Okay,
Speaker 4: so she's got to bring in four hundred thousand. The
Speaker 4: reverse mortgage is going to cover two hundred thousand. That
Speaker 4: gets us to the six hundred thousand. But what just
Speaker 4: happened to her cash flow? That turned in from two
Speaker 4: hundred thousand to four hundred thousand in her assets and
Speaker 4: retirement accounts that will continue to grow and protect her.
Speaker 4: So rather than sinking all the cash in, she's doing
Speaker 4: the reverse purchase and she's meetings in goals. No new
Speaker 4: mortgage payment, right, that was the big key. Still has
Speaker 4: to pay taxes and insurance and live there as a
Speaker 4: primary residence. But that's what she was going to do anyways.
Speaker 3: Right.
Speaker 2: Yeah, it's people just need to That's why I had
Speaker 2: you on because people need to know this. This is
Speaker 2: really really important stuff. You know, we've only got about
Speaker 2: a minute left. Talk about it a little bit about
Speaker 2: the downside. Are there any negatives people need to know
Speaker 2: about or the cars?
Speaker 4: Yeah, it's a financial tool, so there's always pros and cons.
Speaker 4: Some of the cons are you have to live in
Speaker 4: the home as your primary residence, so you can't move out,
Speaker 4: and sometimes.
Speaker 3: You can't rent it out.
Speaker 4: You can't rent it out, Yeah, and you need to
Speaker 4: if your plan is to go into assisted care, maybe
Speaker 4: a reverse mortgage isn't the best plan unless that's a
Speaker 4: long ways away. Sometimes it's the stop gap, right, keep
Speaker 4: me in my home until I can't stay anything longer. Okay,
Speaker 4: But also if in markets that don't appreciate very well,
Speaker 4: I don't like doing reverse mortgages unless they really really
Speaker 4: have a good case for it, and sometimes they do.
Speaker 4: But I like to be able to meet three goals.
Speaker 4: What do you need now? What do you need through retirement?
Speaker 4: And let's leave your air something at the end, and
Speaker 4: the way we constructure that works the best in markets
Speaker 4: that actually experience some appreciation. It doesn't have to be
Speaker 4: crazy high, but something.
Speaker 3: Well, we could keep talking for another hour or.
Speaker 2: Two, but the show is running out, man, and I
Speaker 2: really appreciate your time, Christina, and your expertise and your passion,
Speaker 2: and I can't wait to close my deal with you
Speaker 2: here in the next few months.
Speaker 4: Thank you, Mark. It's been an honor to be on
Speaker 4: and Thank you for helping getting the word out. This
Speaker 4: is an amazing financial tool. It can be used for
Speaker 4: good or bad, and I like to use it for good.
Speaker 3: Amen. All right, well, you take care, we'll talk soon.
Speaker 1: This has been Mortgage Talk with Mark Hairston. Mark is
Speaker 1: a mortgage advocate with Texas Mortgage Source LLC, offering personalized
Speaker 1: mortgage solutions, fast customized quotes, great rates and service with integrity.
Speaker 1: Contact Mark at Markhirston dot com. Mark Hairston dot com.
Speaker 1: You can call our text Mark at five one two
Speaker 1: seven eight nine sixty nine sixty seven. That's five one
Speaker 1: two seven eight nine sixty nine sixty seven and come
Speaker 1: back next week for more mortgage talk