Reverse Mortgages Explained: with Mike Stanley

Reverse Mortgages Explained: with Mike Stanley Podcast
Looking for reverse mortgage information? Want to know if reverse mortgages are scams or a ripoff? Curious about reverse mortgage pros and cons? Wondering how do reverse mortgages work? Are reverse mortgages worth it?
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[@ronaldcambridge3126]

A very informative presentation in providing an in-depth assessment regarding a HECM, as well having realistic discussions about about the concepts and services that seniors should be aware of when using this product... Thank you.

[@TheMoneyAdvantage]

Thank you for the kind words! We are very grateful that you have found this valuable.

[@sergiosantana4658]

That a non borrowing spouse has the same rights on the reverse mortgage whene the older borrowing spouse passes away is simply not true. The only right that a non borrowing spouse will have is to remain living in the house after the borrowing spouse passes away but all other benefits of the reverse mortgage will be frozen . At this point if the non borrowing spouse is over 62 and there is enough equity in the home they can refinance the reverse mortgage into another reverse mortgage under their name .

[@TheMoneyAdvantage]

Thank you for watching! This video is educational in nature not specific advice, and we are not Reverse Mortgage specialists rather we were interviewing Mike Stanley who is. Unfortunately we were not able to ask Mike to clarify during the interview. When you work with our team we introduce you to the right specialists to implement stragies unique to your situation.

[@stangtrax]

Thank you for this comment . This saved me over 40 minutes watching a video not 100%

[@brucewehner306]

@@stangtrax David how do you know Sergio Santana is an expert? We are going to ask Mike that question on the podcast today.

[@lilianaorozco7908]

We purchased a house 6 months ago...cash...so we dont have mortgage..the value of the house is about 225000..we are both over 62 years old..can we do a reverse mortgage

[@TheMoneyAdvantage]

We at The Money Advantage are not mortgage specialists, however, I would say you meet the requirements. You can find the minimum requirements here: www.consumerfinance.gov/ask-cfpb/can-anyone-apply-for-a-reverse-mortgage-loan-en-227/. Having said that we do not offer advice in KZbin comments, and would not make any recommendations without understanding your full financial picture.

[@paulmccarter312]

Great stuff--Did not mention fees, however.

[@TheMoneyAdvantage]

Thank you for watching! We will have to bring that up next time we discuss this topic again.

[@krehbein]

Why no discussion about what they cost? Does the interest compound every year?

[@TheMoneyAdvantage]

Thank you for asking. We plan on discussing this topic again and when we do we will answer this question. One thing to remember is that these products are not static. Rarely is there one simple answer. It ultimately requires working with competent professionals and tailoring strategies and products to your unique situation.

[@krehbein]

@@TheMoneyAdvantage Thank you for the reply. At first glance I was a little in shock how much it would cost my mother in law to get a reverse mortgage. Around $20k when you factor fha insurance, origination fees, closing costs, etc. But started to realize that when you compare it to other options it’s all relative. For example if she sold and downsized she would pay a real estate agent 6%, pay moving costs, possibly put repair money into something like a condo. Oh yeah then there’s condo fees. Could be hundreds a month.

[@brucewehner306]

@@krehbein There are indeed cost, but if you get what you want compared to the cost, the cost doesn't matter. It comes down to what you want personally.

[@sergiosantana4658]

Even the affluent can take advantage of a reverse mortgage . The reverse mortgage can supply you with the tax free money to do Roth Conversions This will allow you to keep more of your portfolio invested in equity's. The long term growth on the portfolio that was left in equity's due to the utilization of your housing wealth will more than make up for the cost of the reverse mortgage.

[@TheMoneyAdvantage]

Thanks for sharing!

[@krehbein]

I guess as long as you can make more than the interest rate of the reverse mortgage then it’s worth it. How does it help with Roth conversions?

[@sergiosantana4658]

@@krehbein By utilizing housing wealth to pay the tax on the roth conversion you will be able to keep the money that was ging to pay the tax on the conversion invested in equity's. The growth on that money will more offset the cost of the reverse mortgage. Example The opportunity cost on 300k that will go towards the tax on a million dollar roth conversion earning 8% over a 30 year retirement is approximately 3mill. You will need a 600k home to draw the same 300k from a reverse mortgage to pay the tax on the conversion . If the 600k home appreciates at the historical average of 3% over a 30 year period the home would be worth 1.5 mill and due to the none recourse nature of the reverse mortgage that will satisfy the loan. In this example the opportunity cost of not using a reverse mortgage is 1.5 mill

[@krehbein]

@@sergiosantana4658 so if I follow what your saying, instead of eating into the Roth account to pay the taxes, use the HECM to pay the taxes so the interest on the converted account compounds at the full amount?

[@sergiosantana4658]

@@krehbein 100% by using the reverse mortgage you will be spending an asset(home) that historically appreciate at 3% to preserve an asset (equity's)that historically appreciates at 8%

[@bertpainter8385]

I seriously considering getting a reverse mortgage, but I have to disagree with the main concern being about a little less equity for the kids who inherit the home. There's other things to consider too. For ex. if you wanted to rent your existing home that you used for the reverse mortgage and either get another home later so you can rent existing home for more income or maybe move into mother/daughter home while you rent existing, you can't. Scenarios like this should also be considered. As you won't be able to do that ex. So you are limited in being somewhat creative once locked in a HECM down the road. Or maybe you want to refi because rates are much lower in the future, but the value of the house dives way down and you were hoping you could refi that HECM to help as things change all the time. You won't have the equity most likely to do that refi to get a better interest rate and slow down the accrued interests as you age. Or your chose a set amount/month instead of a credit line for the terms in the HECM. There's a number of possibilities that are possible as time moves forward you may want to do, but can't because you're locked in. Some you can do and some you can't do. But to say that the kids getting less money being the main concern is certainly not so. But I'm still looking into it. Especially if I can buy a second home so I can rent the one I live in now out and then live in the new home I buy using a reverse with purchase. I need to find out more if that's what they explained here as a possibility. If anyone has the answer to that, thank you.

[@TheMoneyAdvantage]

Thanks for watching! When we were discussing the main concern, that was a reference to the main concern reported by people who Mike has worked with personally. This video was meant to be a general discussion on the topic and we cannot address everyone 's unique situation. The point of the video was to provide awareness and the fact that it is a legitimate tool, however that does not mean that it makes sense in all scenarios. Many factors have to be considered and that is simply not possible in an 50 minute educational video.

[@krehbein]

Good points Bert, some unique situations but good to know all possible pitfalls.

[@sergiosantana4658]

Have you considered the tax implications in turning your primary home a rental. You will lose the 500k married/250k single of tax free capital gain two years after you turn primary home into a rental . You can always do a reverse for purchase. You will need at least a 50% down payment on the new home and the reverse will pay the other 50%

[@bertpainter8385]

@@sergiosantana4658 Not sure how the 250K tax free captitol gain rule applies to me. I'm not selling the home. Can you explain more? When I do buy my retirement home I do plan on putting at least 50% down payment on it, maybe more depending on how much work I need to put into it. It will be a home needing some work. This is what I do for a living. It may take 6 months before I move in the new home and then I'll will rent my existing for part of my retirement income. I only expected to pay taxes on that rental income which I estimate to be 30K. Taxes on that should be around 15%. I'm in no rush to buy right now. I'm still hoping for housing to go back down to pre COVID prices. Couple years hopefully.

[@sergiosantana4658]

@@bertpainter8385 Yea sorry Bert. I meant to say IF you turn your primary into a rental and then you decide to sell you will lose the primary home exclusion on the cap gains. Between writes off ( property taxes ,insurance, upkeep, depreciation) you should be able to reduce the tax bill on the rental income.

[@akashoncarrom3814]

Nice 👍

[@TheMoneyAdvantage]

Thank you! Cheers!

[@Savannah-ed4rv]

How much equity do i need to qualify? I'll be 62 later this year and I'm very interested in finding out more. Thank you.

[@TheMoneyAdvantage]

Thank you for watching! You can text or call Mike Stanley directly at [phone]

[@Savannah-ed4rv]

@@TheMoneyAdvantage Wow, thank you for your fast reply! I really learned a lot from this interview and I will contact him asap!

[@timlist4173]

99.9% of financial managers in this country advise against the Reverse Mortgage.

[@TheMoneyAdvantage]

Thanks for watching! What data do you have to back that up?

[@seestuff09]

this is changing very quickly. the research done by people like Dr. Wade Pfau has opened a lot of eyes.

[@Savannah-ed4rv]

I know that Dave Ramsey (not a financial manager, but a finance guru) hates them.. He's pretty stubborn and doesn't like to learn new things that could help his followers.

[@krehbein]

Tim List- Don’t you think they have a conflict of interest since since it competes with their potential for income?

[@kimberlyburke7026]

@@Savannah-ed4rv Dave Ramsey gives out more bad advice than anyone else on the planet - He's just a used car salesman , only interested in selling you his products and services

[@manuelencalada3476]

🎨🎨🏃🏃

[@TheMoneyAdvantage]

Thank you for watching

[@islandboy9580]

Too much rambling. Gotta get to the point.

[@TheMoneyAdvantage]

Thank you for watching!