Reverse Mortgages for More Retirement Income - Dr. Wade Pfau

[@MrWaterbugdesign]

I'd considered a reverse mortgage months ago and not sure why I passed on it. The other day it clicked. I totally understand it's a problem if the money is spent on crap or gambled away. However people who do those types of things are also the same people who aren't going to listen. I'm 66, single, own my $520k house, no heirs. I don't really need the money, but that $520k just sitting there and when I kick I guess the state get's that equity or more some relative I don't even know makes me wonder about options. I have been having a hard time switching my brain from accumulating to spending. It's weird. I don't want to take SS until 70 since I like the 8% interest and compounding COLA. That's a sweet deal imo. $2800 today, $3600 at 70 (of course will be higher with COLAs). I want to stay in my house, love my garden. I have a 1/1 apartment as part of my house. I'll rent out the main house for $2000-2500/mo and get an initial $220k line of credit from the reverse mortgage which equates to about $1000/mo additional income if I wanted it. And I get to live in my home. Fees are high, but I have no plan to sell so I never see that bill. Worse case I have to go into a nursing home so my home would be sold. My part of the sale would go to the nursing home, run out and I go onto Medicaid. The reverse mortgage would only reduce the time before going on Medicaid. Not a big problem imo.

[@TheMoneyAdvantage]

Thank you for watching and sharing! Yes depending on you financial picture and stewardship it can be a great asset to leverage.

[@benton-benton]

Can't rent the house out if you have a hecm, or not supposed to anyway :-). Maybe you could rent the 1/1 out just to stay on the safe side.

[@marknewton6984]

Good points. 😮

[@dberry256]

I really appreciate the information presented today!

[@TheMoneyAdvantage]

Glad it was helpful!

[@sunlite9759]

"Reverse Mortgages for More Retirement Income -" You are apparently referring to the income from partial withdrawal's not from the investments of those withdrawals. My RM is used for 3 things 1-To put a floor on the value of the property. 2- Provide a pension for my younger DW. 3-Use this RM in lieu of life insurance. Currently the Credit line is growing at the rate of $3000/mth. In view of all that we may never tap ( and never have) into it but makes a nice umbrella.

[@sunlite9759]

What color is the umbrella. 🤪

[@TheMoneyAdvantage]

Thank you for watching! We do not sell Reverse Mortgages. It is also important to understand that its just a strategy and it does not work for everyone at all times. Having said that a Reverse Mortgage can increase retirement income in multiple ways. The most obvious being no monthly mortgage payment. In addition to that, we have known people who purchased multiple rental properties using the credit line.

[@RogerZoul]

Very helpful video!

[@TheMoneyAdvantage]

Glad you think so! Thanks for watching!

[@dailstancill720]

Seems like it is just paying for your house for the 3rd & 4th time? The 1st time is principal & the second time is 30 ys of interest. Excellent guest - you guys really do set the standard for podcast high quality content for viewers! 👍

[@TheMoneyAdvantage]

Thanks for watching! Glad to hear you are finding our content valuable.

[@Savannah-ed4rv]

I never thought of it that way, but you have a point. I think one major reason people use them is so they can stay in their homes and use the loans to pay for hone upgrades and even home medical care.

[@benton-benton]

@@Savannah-ed4rv And as high as property tax is, possibly to pay it.

[@Rockinthehill]

We took out a HECM in December 2021 when interest rates were still low. On closing we received the first draw of over 20k. Then no more mortgage payments ever so I keep the $1300.00 I was paying in to the conventional mortgage is now additional income we get to keep. When we die the family can still sell the house, and keep any profits after paying the HECM lender. This has allowed me to put in new HVAC and a new roof for cash. Its been great for us. That said in this interest environment I would NOT have done this and dont recommend it unless interest rates go do down to 4% or lower

[@TheMoneyAdvantage]

Thanks for watching! Glad you found this valuable. Yes, this is a financial strategy, not a principle. Principles never change; strategies come and go. The point of all of our content is to educate, and should not be considered personal advice. Just because something works for you does not mean it is a good idea for everyone.

[@JohnJohn-wr1jo]

What were the total closing costs including the one time insurance. The deal breaker for an elderly family member was the closing cost and higher interest rate. Didnt make sense. She was far better off with a HELOC.

[@charliesargent6225]

But she doesn't have to pay it, just roll into the RM and costs depend on the value of the home, age, interest rate. What people don't understand is many will not qualify for a HELOC because of inadequate income and that's why they take out a RM in the first place, they're running short of their investment assets and have no alternative except to sell their home which they don't want to do because of multiple reasons, main one they're attached to their home and area. HELOC's are actually riskier, if they're not paid, and skip just one or two payments you can or will lose your home, RM have no payments due and nothing due until the home is sold. You can only lose it if you don't pay the property tax and home insurance or properly maintain your home. That applies to HELOC's also@@JohnJohn-wr1jo

[@MrWaterbugdesign]

Using a reverse mortgage to buy a new primary residence is too high a risk for me. With a new home people don't always like it. My parents moved from NY to AL when retired, didn't like it and moved back after 2 years. The the higher fees for the reverse mortgage and negative amortization wouldn't have been a good deal in that case. Maybe better to pay cash and wait a year to do a reverse.

[@TheMoneyAdvantage]

Just like most things, 1) it’s not for everyone 2) it depends on each person’s unique financial picture whether it makes sense or not.

[@Savannah-ed4rv]

I'm curious if a HECM would be a good option fie me being a single borrower, and my elderly mother lives with me. Can she be added to those protections if something were to happen to me and I couldn't stay in my home. Thanks. Putting her on the title won't likely be an option.

[@TheMoneyAdvantage]

Thanks for watching! It is possible you could apply as co-borrowers, however, we are not mortgage specialists. Reach out to Mike Stanley (www.linkedin.com/in/mike-stanley-757-646-4147-6395aaa/). We have interviewed him twice, and here is one of the interviews: kzbin.info/www/bejne/bmOToneQaqiefKc

[@marilynh5487]

My mom just passed and the house is a reverse mortgage. Any suggestions on how to get it out.

[@TheMoneyAdvantage]

The contracts have changed over the years, so there is not one simple answer. You should contact the bank and ask them how they can purchase it back.

[@sting114]

What’s the balance? What’s the house worth? If there’s equity, sell it and take the money 💴. If it’s negative, give it back to the bank .

[@billligon4005]

My RM people will only give me 47% of my equity. Can I get more of my equity?

[@TheMoneyAdvantage]

Thanks for watching! Depends on your personal situation. There are limits, and because of increased mortgage rates, those limits have come down. The banks must ensure that appreciation can outpace the compounding interest of the loan to which you are not making payments.

[@brettburnside1457]

Cute smile Rachel 😉

[@TheMoneyAdvantage]

Thanks for watching! Yes, my wife is beautiful but more importantly she has a brain.

[@amcpacer2909]

I will be 70 in a few months. Single no children. I almost got a reverse mortgage. Then i heard how expensive the closing costs are. That turned me off. I thought it would be good for me being single and no children and wife to leave my assets to.

[@TheMoneyAdvantage]

Reverse mortgages are not for everyone. Thank you for watching!

[@sting114]

If you are planning to live there forever, why not?

[@lovinglife3954]

Good grief the one guy needs to figure out his mic that was annoying.

[@TheMoneyAdvantage]

Thank you for watching despite the technical difficulty