Welcome to another engaging episode of Reverse Mortgage Radio with your host Bruce Simmons. Delve into the heartfelt stories of love and loss, from personal anecdotes of high school sweethearts lasting decades to touching encounters with valued clients navigating life’s unexpected challenges. As Bruce celebrates June as the true month of love, he weaves in practical advice and insights on managing financial hurdles through the considerate use of reverse mortgages.
00:00:01 Introduction and June as the Real Month of Love
00:07:30 Personal Anecdotes and Importance of Love
Happy June 1st. If you happen to be listening to a recording of this, June 1st is when this program first aired. Today, June 1st. Happy June and welcome to the month of love. Yeah, yeah, yeah. I know. Everybody says, well, February’s a month of love. No. I’m here to tell you it is not the month of love in February. It’s June. February’s The hallmark month of love, the real month of love is June. Think about it. I don’t know personally anybody that was married in February, but I know tons of people, including my wife, who got married in June. Lucky for me, she married me. I’m very, very lucky that I found her. We’re high school sweethearts. This year, we’ll be married 35 years. We dated for six and a half years. It took me a while. But we did end up together after a whole bunch of serendipitous type activities or situations. Looking back on my life, it’s amazing to see how God just works in certain ways that There’s no way you could predict all the things that came together for us to be together, and then to have two wonderful sons and no grandkids yet, but hopefully soon. I don’t know. We’ll see. We may never have a grandkid, and we’ll just continue to volunteer with kids and have adopted grandkids, right? What got me thinking about this this month? Oh, by the way, too, you are listening to Reverse Mortgage Radio. I’m very glad you tuned in today because I’m going to be talking about some very serious stuff. So stay with me through this intro here about talking about love and things of that stuff. I’m your host, Bruce Simmons. I am the Reverse Mortgage Manager for American Liberty Mortgage in Denver. You can reach me directly at 303- 467-7821. 303-467-7821 is my direct line. You can also visit me online at reversemortgageradio.net. Reversemortgageradio.net is my website. And if you miss any of the show, you can go there next week and download the podcast. I think we’re also on different other podcast forums or sites and things of that nature. Honestly, I don’t even know where all the places are. I think we’re on YouTube. Well, I know I’m on YouTube and we do replay the radio show on YouTube as well. So you can go to YouTube and listen to it. But if you go to my site, you can also download my consumer guide on reverse mortgages. It’s totally free. You can download it and call me with any questions after you’ve had a chance to digest some of the information. But the reason we’re talking about love or I’m talking about it is because a couple of weeks ago, I had a… I met for coffee with a good friend of mine. We met through Toastmasters and he’s not a customer. He’s 88 years old and just one of the nicest guys in the world. But last summer, his wife had passed away and they were married. for 67 years and we sat there for two hours and he was telling me all about his military career and how he was kind of a delinquent in high school all kinds of things I thought I could really identify with this because a lot of what he went through back in the 40s and early 50s was what I went through in the early 80s with high school and challenges and not liking school and getting lousy grades and getting in trouble with your car and things of that nature. But then I got to thinking about other customers that I’ve worked with through the years. And one real recently, a lady that she had just lost her husband. Well, not just, but about six or eight months ago, her husband had passed away and she was the caregiver for him. And he had dementia and a a disease of the brain that I can’t pronounce that caused all kinds of problems. He had kept saying how he wanted to go home and he would escape the house in the middle of the night or during the day, she just would go to the restroom and he would be gone. And she tried to lock things up. She had to lock up the counter, the cupboards. She had to lock the doors, although sometimes he did get out still. And he kept saying he wanted to go home. He wanted to go home. And eventually… Looking back now, she’s thinking, well, maybe he just wanted to go back to God. He was done on earth. He filled his purpose here. And he just wanted to move on to the real home, I guess. That’s how she looked at it. And it made a lot of sense to me with the way she said it. And she actually has created a blog for spousal caregivers called Perry Peach. P-A-R-R-Y-P-E-A-C-H. Perry Peach is the website for her blog post where she posted her experiences as she was going through caring for her husband, good days and bad days. It’s very insightful for me. I read some of the posts she wrote and just the thought of it is very difficult for me. I can’t imagine what she went through. It’s incredibly difficult. And she’s just a super, super nice lady. And I was thinking about it because I was able to do a reverse mortgage for her to pay off her existing mortgage because she didn’t have any money. They used up all the money in caring for her husband for his last few years on this earth. And that’s one of the things that I want to talk about today is What do you do when a spouse passes away? Or if you find yourself in this lady’s position where you’re caring for a spouse and money’s tight and things of that nature. And it helps. It definitely always helps in my mind. to kind of think things through about what could happen. How would we handle this if you’re married and especially if one of you has health issues? Well, what would happen if I’m not here or you’re not here? What would I do? How would that impact me? Number one, there’s only gonna be one income, right? If you both are receiving Social Security, suddenly now you only have one income. Granted, it’s the higher of the two, but still, that’s not going to help that much. I mean, it’ll help a little, but it’s not like having the two incomes together. Those are just some of the things that we’re going to talk about today. And so it is a very serious topic today about basically what happens if you have to care for a spouse or If heaven forbid you lose your spouse, if and when that happens, are you going to stay in your own home? There’s all these different questions you need to ask yourself and be prepared to answer as well. I’m not a counselor. I’m no aging expert or any of that stuff. I just originate reverse mortgages, but I’ve seen a lot of challenges that people go through. And we’re going to talk about a few of those. By the way, let’s touch on what a reverse mortgage is. If you’ve never heard my show before, in a nutshell, a reverse mortgage is most of the time an FHA-insured loan. FHA is for the Federal Housing Administrator. or administration. And it’s not a loan from the government. Some people still think this is a government loan. No, it’s a government insured loan. The loan comes from individual companies, like the one we work for, American Liberty Mortgage here in Denver. And then we we are insured by FHA. The FHA insurance protects you in that if ever the lender goes out of business and you’ve got money coming to you, whether in the form of a monthly income or as a line of credit that’s available to you, they guarantee that money is 100% guaranteed by the Federal Housing Administration, FHA. And also too, They guarantee that you can never owe more on the house than it’s actually worth. Well, let me rephrase that. You’ll never be responsible to repay more than it’s worth. You could have a balance that exceeds the value of your home. I’ve had customers that had that happen in 2008, but they just continued to pay their taxes and insurance and everything worked out, obviously, because property values shot up after 2008, after the big drop, and then they came right back. But what happens with a reverse mortgage is no mortgage payment is required. You’re not required to pay any principal or interest mortgage payment. You can make payments on it. It’s a payment optional program is what we like to say. However, the house is still yours. It’s still your home. You must pay your own property taxes and homeowner’s insurance. You have to maintain the home, live there as your primary residence. It can only be done on primary residences, and you have to keep your name on title. As long as you do those five things, you could owe double or triple whatever the value of the house is on your mortgage. And you can never, ever be kicked out. And you’re never going to pass that debt to your estate or your heirs because this is what’s called a non-recourse loan. What that means is the lender has no recourse against any other assets that you have or your estate or your heirs. If you pass away and you owe a million dollars on the reverse mortgage and your house is only worth $200,000, the lender will take, well, the lender, your heirs can even keep the house in that situation too. A lot of people don’t understand how that works. But let’s say your heirs are going to inherit the house regardless. You pass away, you owe a million dollars, the house is only worth $200,000. Your heirs inherit the house. And they’re going to say, holy cow, this is such a beautiful home. I really want to keep it. But there’s no way I could pay a million dollars. They don’t have to. They only have to pay 95% of the current value. Since the current value of the home is only $200,000, they go get a new loan for $190,000. And the lender has to accept that as payment in full. Then what they do is they write the rest off. Well, they don’t technically write the rest off. They file a claim with the mortgage insurance company. The mortgage insurance pays the lender. Since the lender is getting their money, they’re not going to come after any other assets that you or your estate have or your heirs or anybody. Now, if your heirs do not want to keep the house, they could just sign it over to the lender and they can walk away. The lender will not come after any other assets you own. That’s not what happens with a traditional mortgage. With a traditional mortgage, the lender can and does come after other assets that you leave. If you leave $100,000 in the bank and you owe $100,000 on the mortgage, they’re going to do everything they can to try to get as much of that $100,000 as possible. Keep that in mind. So the reverse mortgage is a non-recourse loan. And that goes the same for proprietary loans, even with proprietary loans. And those are non-FHA insured reverse mortgage loans. So with a reverse mortgage, you will never… be responsible to pay anything beyond the value of the home. That’s that FHA protection that you actually you’re charged for. Okay. That’s part of the closing costs. And we’ve gone into that time. And again, I’m sure we will again, but if you have any questions, you can go to my website at reverse mortgage radio.net. I talk about closing costs. There’s all kinds of videos on there. I talk about, uh, how the program works, what your responsibilities are, all kinds of stuff. But you can also just give me a call too, if that’s easier for you. Give me a call at 303-467-7821. My name is Bruce Simmons. I’m the reverse mortgage manager for American Liberty Mortgage in Denver. Today, we’re talking about, unfortunately, the difficult challenges when you lose a spouse or a loved one. So, Even if you don’t lose them completely, but you’re either caring for them yourself or you have to move them to assisted living. I did a loan for a lady, Debbie, up in Nathrop, and she actually did a testimonial for me on my website of a good friend of my mother-in-law’s. She is just a very, very, all my customers are very sweet. I tell you, I have the best customers in the world. And if you want to be one of my customers, you got to be nice. Okay. If you’re not nice, don’t call me. All right. I’ll tell you that right now because I only like working with nice people, but everybody who I work with for the most part is not, are very nice. I guess I probably had in 21 years, maybe four or five people that I ended up doing loans for. that I did not like at all. And most people, if they call me and I don’t like them, we just don’t gel. Our energies are different. And so they go on to another person. And it’s fine with me because I want to work with people that I like. And hopefully you like me too. But Debbie was a, well, she’s still around. She’s got a beautiful home up in the put into a nursing home. He wasn’t in hospice or anything of that nature. It’s just, she couldn’t care for him anymore. And they were in kind of a small mountain town and they, she didn’t have the resources. So he had to go to Colorado Springs or Denver and different, he ended up in different places until finally after about four or five different nursing homes. He ended up in one where he was very happy, but she had to come up with the money to pay for it. And while she had some money, she didn’t have enough to pay for the care that she wanted to give him. So she did a reverse mortgage and she wanted to stay in her home. She loves her mountain home. And it allowed her to pay for the care for him. And it was very difficult because they kind of waited longer than they should have to do a reverse mortgage. It was difficult for him because, well, we could do e-docs where you can just… push a button to sign. He didn’t have an email address that she could take to him and all that because everybody, each customer has to have their own email address in order to do e-docs. And we cannot do e-closings. So you still have to sign all the documents for the closings. But unfortunately, they kind of waited too long. He was able to sign everything, but it was difficult. It was very difficult for him. She took all the paper to him. And there’s a lot of pages that you have to sign. I call it elder abuse, I swear. Unfortunately, we add a form every month, whether we need it or not. Sometimes multiple forms. It’s amazing how many documents there are. It’s just silly, silly things. I tell everybody that I work for the Department of Redundancy Department. We spell things out multiple times in multiple ways and do our absolute best to confuse the heck out of you. But that’s the way this, it’s a government insured loan and that’s what we have to do. So she got everything signed. And then this was during the COVID, the pandemic stuff. I couldn’t go to the, the place to explain it to him. So I met with her, explained everything to her, left the documents with her. She took them to him, got everything signed. And then we did the, they did the same for the closing, except there we had to have a notary. So the notary was like out in the lobby area and she had to take forms to him. And it was, it was kind of a mess, but we got it done and she was able to take care of him and tell his passing and And then also, too, she was able to give him a send-off, a memorial, because they traveled the world in a boat, the two of them. They went all around the world in a boat and just did all kinds of things. She actually wrote a book about it, her experiences. I swear I meet the best people in the world. But they did all kinds of stuff. And so what she wanted to do is she went and rented, with the reverse mortgage proceeds, a tall ship in the San Francisco Bay. And she had all her friends come out to the ship. And then they spread the ashes in the ocean. And it was just, I guess it was just the best thing. And when she met with me, I saw her again because my mother-in-law brought her to a Thanksgiving family event afterwards. And she’s just kind of a shorter lady, but she was poking me in the chest saying, I was able to do this because of you and the reverse mortgage. And she poked me in the chest as she said that. It was just the best moment. And those are the reason things like that, when stuff like that happens, It makes me very, very proud of what I do. There’s people that say, oh, yeah, you steal old people’s homes or you steal people’s equity and blah, blah, blah. Eh, screw them. You know, I know that I do a good service for people and I help people. And I’m so, so glad that I get to do this. It’s a very, very rewarding job. But also, too, I’m working on a loan kind of similar to that right now where the people – waited too long and the, the wife now is in hospice and I was able to meet with them, uh, in the hospital room and she was totally cognizant and she signed everything and she seemed like she had decent strength, but now we got the approval and we’re working on things. We’ve got the appraisal and the initial approval and we’re trying to get some stuff done. We’re still a couple of weeks out from closing probably, but, uh, She’s going downhill now. I don’t know if she can sign the final papers. And if something happens where she passes away before we sign the final papers, then it’s going to be a challenge because he’s only got one income. and he’s going to lose her income. I think we can qualify him, but I’m not 100% sure. So I’ve got to work up those numbers here next week and make sure that we can still help him. I think we can. But it’s just more of a challenge when you wait that long. That’s why preparation is important. And if you were listening to the last couple weeks of shows, Brady Mullen was on, and he’s a retired financial advisor. He now works with me in business development for getting the word out to realtors and financial advisors and people like that so they could share this program with their clientele. But basically what he’s saying is that everybody, everybody – who owns a home should make a decision about a reverse mortgage when they’re retiring in their early 60s. Yes, you want it now. Or no, it’s not right for you now. It may be later. Or no, I hate this idea. The whole concept of it is terrible. I’m not interested. But you really should understand it and make a decision about it. OK, because a lot of people can really benefit if you’re in a home that you’re going to stay in and you’re in your early 60s. Getting it set up early has huge benefits because one, number one, the line of credit grows over time. If you don’t owe any money on your home or you owe very little money in, we can leave a good chunk in a line of credit and you’re in your early 60s. that growing for 20 years could double or triple in that time period, that money that’s in there. Just growing at 7.2%, it doubles every 10 years. And the compounding effect of that line of credit is amazing. And then at the end of your life, if you do need in-home care, or you might be able to stay in your home because you’ve got this money set aside in your line of credit, and it’s already in place. If a spouse passes away, now you’ve got that backup. You can call us and we can convert that line of credit into a monthly payment where we sends you money every month to replace the income you may have lost. So all of these things are very important concepts that a lot of people don’t think about and their benefits of doing the reverse mortgage and getting it in place early. Even when rates are higher like they are right now, we don’t know if rates are going to drop. Nobody knows. I am kind of pessimistic about interest rates. I’m not pessimistic about the reverse mortgage program. This program will be around regardless of interest rates. It’s more beneficial when interest rates are low, but there’s certainly benefits like the growth of the line of credit when interest rates are high because the line of credit grows at a half a percent greater than the rate you’re being charged on the loan. In other words, right now, interest rates are roughly about seven and a half percent. That means if you have money in your line of credit, that line of credit is growing at 8%. Now, a lot of people say, well, you’re earning interest and I understand that that’s the easiest way to look at it. But another way to look at it, a more correct way to look at it is like, think of it like a credit card. You’ve got this line, this money available, that’s credit. If you take any money out of that line of credit, you’re borrowing those funds from the reverse mortgage. When we increase the amount of money available to you to be able to borrow, it’s like having a credit card where they increase your credit limit. If you use that money that’s available to you, well, then you owe that money. So if you have $100,000 in your line of credit and this year it grows to $108,000 because you didn’t touch it, you can’t just take that $8,000 out and say, woohoo, I got $8,000. I just earned $8,000. No, you didn’t. you borrowed an additional $8,000. That $8,000 that you took out of your line of credit, you put it in your pocket, but now on the ledger, balancing the ledger out, You took it from the asset part. Now it’s on the debit part. So your loan balance grew by $8,000 when you took that $8,000 away from the line of credit. Okay, it has to be at least like a teeter-totter. They have to balance, right? Keep that in mind. But by getting it set up early, you can benefit better. more down the road. So kind of in a roundabout way, we’ve talked about a couple of different reasons why you’d want to get this set up before you really need it. Number one is you may not qualify if you lose an income from one of your spouses, if one of your spouses passes away. Well, I shouldn’t say that, if your spouse were to pass away. Also too, Caregiving expenses, we talked about that. If you set that line of credit up early, you have money to cover caregiving expenses. But also, we don’t know what’s going to happen with interest rates. If interest rates go up, the amount of money you can qualify for down the road is going to go down. In other words, it’s an inverse relationship. As interest rates go up, the amount of money we can loan you as a percentage of the value of the home goes down. The other thing is… FHA could make changes to the program. Pretty much since 2009 through 2018, for that time period, almost a decade, every single year, FHA was making changes. They were reducing the amount of money we could loan. They were adding financial assessment. They were adding collateral assessment, where you now may have to do a second appraisal if the algorithm doesn’t match on your appraisal. So all these things could detrimentally impact your ability to qualify for a reverse mortgage. In 2017, there was a huge change in we reduced, FHA reduced the amount of money that we could loan to somebody by 20%. In other words, if somebody could have done something in the summer of 2017 and they decided not to, well, October came around, boom, just like that, now they may not get enough to even pay off the existing mortgage on their home. I don’t anticipate any major changes like that. We haven’t had any for a few years, knock on wood, and hopefully it could be something good, although… Expecting something good from a government bureaucracy is not a good way to look at things, I don’t think. It’s not a very realistic way to look at things, I should say. But it could happen, hopefully if it does, because it will help us qualify more people. make it easier for you to gather to get the money you need to be able to benefit from a reverse mortgage. And even if you don’t benefit today, if I cannot qualify you today, it doesn’t mean that I can’t qualify you two years, three years, four years down the road. I always tell that to people. If today you need $150,000 to pay off your existing mortgage, but I can only loan you $120,000 and you don’t have the difference to bring to closing, Well, maybe next year or two years or three years or four years down the road, you might. We might be able to loan you enough at that time. So give me a call with any questions. My name is Bruce Simmons. I’m the reverse mortgage manager with American Liberty Mortgage in Denver. My number is 303-467-7821. 303-467-7821. Or you can visit me online at reversemortgageradio.net. Reversemortgageradio.net. Go there and download my consumer guide guidebook. Lots of good information there. You can also check out the podcast as well there. So I look forward to talking with you in the future. Have a great day.
