Join Bruce Simmons as he navigates the financial intricacies of reverse mortgages, debunking common myths and providing expert insights into how reverse mortgages can be leveraged to protect long-term investments in your home. This episode highlights the pressing issue of housing insecurity among seniors, exploring the impact of economic shifts and the role of a HECM in offering a reliable financial safety net. With expert advice and practical examples, listeners will gain a comprehensive understanding of how to utilize reverse mortgages to ensure financial stability and asset protection during retirement years.
00:11:57 Addressing Housing Needs and the Benefits of HECM
00:17:51 Reverse Mortgage as a Financial Safety Net
00:21:56 How to Evaluate Your Home and Get Started with Reverse Mortgages
00:27:03 Financing Options and Future Considerations
SPEAKER 01 :
Welcome to Reverse Mortgage Radio, hosted by Legends’ very own reverse mortgage professor, Bruce Simmons. You have so many options with a reverse mortgage, everyone has a different opinion, and the government keeps changing the rules. You need to hear from the first certified reverse mortgage professional in Colorado to specialize exclusively in reverse mortgages, one of few in the state with the letter CRMP after his name. Bruce has the specific training and education you need to understand what you’re buying. Now, here’s your host, Bruce Simmons.
SPEAKER 02 :
Hello and welcome to Reverse Mortgage Radio on this cold and snowy day. Of course, if you’re listening to a replay of this, it may not be cold and snowy, but today… As of Saturday, whatever day, it is cold and snowy. I hope you’re staying warm. Obviously, you must be if you’re listening to the radio. You probably wouldn’t be listening to the radio if you were out shivering in the cold or shoveling snow or something. But today, what we’re going to talk about is a video from an industry professional that is a friend of mine, and he put out a video called Homeownership, a Dream Turn Nightmare for American Seniors. In the video, he talks about the cost of housing and how just maintaining your house and utilities and taxes and insurance is rising so much for so many people. And even if they don’t have a mortgage on their home at all, they’re losing their home to taxes and insurance and such. And I’m going to have a link, by the way, too. If you go to my website next week, it’ll be posted on my website next week at reversemortgageradio.net. I’ll have this radio show posted there along with a link to the video so you could watch it for yourself. But in the video, the person who did the video, his name is Shannon Hicks, and he’s with HecumWorld.com, H-E-C-M World.com. It was from, I think, January 10th, just last week. He starts out the video saying, America is facing a housing affordability crisis that is sidelining countless would-be homebuyers. But there’s another affordability crisis, one that threatens millions of older homeowners with the loss of their homes, even if they’ve fully paid it off. Then he goes into this story. He says, imagine you’ve retired with a modest nest egg. Your home is paid off and life has been generally smooth for over a decade. Then tragedy strikes. Your spouse passes away and that reduces your household social security income at the same time. your investments take a hit in the market, and your homeowner’s insurance and property taxes both have nearly doubled. With dwindling retirement savings, suddenly you’re staring down at the possibility of losing the home that you worked so hard to pay off. A recent study from Bankrate found that the hidden cost of owning and maintaining a single-family home in the U.S. now averages over $18,000 a year for property taxes, insurance, maintenance, and utility costs. That doesn’t even count – this is me talking now – that doesn’t even account for homeowners association that so many people have these days. Just imagine if it was $250 a month for homeowners insurance. That’s another $3,000 a year. That’s steep stuff. And property tax foreclosure stories. Now we’re back to the video. He says property tax foreclosure stories are increasingly common in the media. The Washington Post actually did a series of articles back in 2013 about Washington, D.C. residents, many of them elderly, low income and black who had lost their homes over tax debts as low as one hundred and thirty four dollars. $134. Talk about an abusive government stealing one’s accumulated home equity and making them homeless. Thankfully, not all municipalities are this heartless when collecting property taxes. And just as a quick side note, this is me again. Last year in 2024, I vividly remember speaking with three different potential customers who were all facing foreclosure due to delinquent taxes. They all own their home free and clear. Like I’ve said before, you always have to pay the man, right? You have to pay the taxes and insurance on your home, no matter if you have a reverse mortgage or not. You can own it free and clear, and you can still lose your home. Now, the sad thing with all three of these people, I think one was a hoarder. I didn’t see his house, but I got the impression from him. He kept stalling and stalling, and that’s one thing that a lot of people do when they’re facing problems. I find whether they have a mortgage payment or just taxes like this is they keep stalling because they don’t want to face it. And if you’re behind on your taxes, you have to face it. One person, one lady, she contacted me like two days before the sale of her home. There’s nothing anybody can do within two days of the sale of the home. And she hadn’t paid taxes for close to 15 years before. Since 2009, she hadn’t paid taxes on her home. I think she owed about $20,000 on her taxes, but she owed her home free and clear. Other than that, and just the stalling that people had, they just didn’t want to do something. And part of it is articles, negative articles about reverse mortgages. They think, well, this is bad. I’m going to figure it out some other way other than a reverse mortgage. And the reverse mortgage can help a lot of people in that situation. Not everybody, but a lot of people we can help out in that situation if you’re behind on taxes or other debts for that matter, even your mortgage payment. You just have to have enough equity in your home. That’s a key thing. And There needs to be a reason why, you know, what happened to cause you to fall behind on your property taxes if you own the home free and clear. Why haven’t you been paying them? So things like that, but that’s very important. And by the way, too, I think now is a good time to tell you if you do have any questions about reverse mortgages. If you’re behind on some bills and you’ve got a lot of equity in your home because a reverse mortgage, unfortunately, requires a lot of equity right now, you can call me directly at 303- 303-467-7821. That’s my direct line, 303-467-7821. Give me a call. I’d love to talk to you about your particular situation. Let’s see if we can figure something out for you. Maybe we can, maybe we can’t, but you don’t know if you don’t call, right? Don’t just hope and pray that you’re going to win the that ain’t happening. And odds are you’re not going to have a rich relative die and leave you a fortune either, most likely. So you got to keep those things in mind and be real. You’re living in the real world. You can also visit me online, like I mentioned earlier, at reversemortgageradio.net. Reversemortgageradio.net is my website. You can go on there, download my free consumer guide, a 40-some page guide. booklet about reverse mortgages. It’ll answer 90% of your questions probably. You can also even fill out an application. Well, it’s not a full application, but fill out information online and get a free quote at that time. So you put in your information. It’ll tell you how much money you qualify for. And if you want, you can add more information and then I’ll call you and confirm everything that we have and I’ll rework the numbers. And usually the numbers that I work up are a little bit better than what my website offers. I just have to be safe in, in the fact that I don’t want to over promise and under deliver. I’d rather under promise and over deliver on my website. That’s kind of my philosophy on that, but a reverse mortgage in a nutshell is, is an FHA-insured loan that’s specifically designed for people who are 62 and over. It allows you to convert a portion of the value of your home into money that you can spend any way you want. You have to pay off any existing mortgage first. If you have a mortgage on your home, some kind of loan, HELOC, whatever, it has to be paid off. All debts have to be paid off on your home first. So what we do is, let’s say we qualify you for a $200,000 reverse mortgage. You have a $120,000 mortgage. forward or conventional mortgage or HELOC, whatever. And let’s say you have, well, let’s say you have $120,000 on a first mortgage and $30,000 on a HELOC. So you owe $150,000. That $150,000 has to be paid off first out of the $200,000. You don’t have to pay it off yourself. We pay it off with loan proceeds from the reverse mortgage. So the first $150,000 out of the $200,000 you qualify for goes to paying off the existing debts on the home. Then the other $50,000 is available to you on the reverse mortgage. And that could be as in the form of a lump sum. There’s restrictions on the lump sum. how much you could take in the first 12 months of the loan. And we could talk about that. But you could also set up a line of credit. You could even convert that into a monthly payment for you if you wanted. It wouldn’t be a lot. It depends on how you want to receive it because you can receive the monthly payment guaranteed as long as you live in the home. Now, if there’s only $50,000 left over, it might only be $150 a month in that situation. But let’s say you’re trying to delay Social Security for three years. And you say, well, I just need… $3,000 a month for three years. Well, we could probably do something like that with $50,000. $3,000 a month. Well, no, we couldn’t because $3,000 a month for 12 months is $36,000. So we could probably do it for in the range of two years or a little less. So there’s different ways you could do it. You could do a combination. You could take some as a lump sum and leave some as a line of credit. Most people in that situation – do leave it as a line of credit. And the nice thing is that money is available to you in case of emergencies or you need a new vehicle, whatever the case may be. But one of the benefits of having the line of credit is that it grows over time. Now, with a reverse mortgage, just like if you own your home free and clear, you do have to pay your property taxes and insurance. You have to maintain the home. And keep your name on title and live there as your primary residence. Those are the primary things you have to do if you have a reverse mortgage. We do have to qualify you income and credit wise. But obviously, if you’re behind on your mortgage, your credit is not going to be great. That does not necessarily disqualify you. We need to call. You need to give me a call and we can talk about it. It’s possible that we might be able to help you out. No guarantees, obviously, on the radio without even knowing your situation. But once you call me, I’ll let you know pretty quickly if we can help you out or not or if it’s a possible way to help you out. So please, you can give me a call at 303-467-7821. 303-467-7821. And I’d be very, very happy to talk to you about your specific situation. get your questions answered about reverse mortgages. Now let’s get back to the article we’re talking, or excuse me, the video. We’re talking about a video that is on heckumworld.com. It’s also on YouTube as well. It’s by Shannon Hicks, who’s the owner and founder of Heckum World, H-E-C-M. The reason it’s called that is because a heckum a home equity conversion mortgage. That’s what it means, HECM. We pronounce it as HECM in the industry. But that’s the FHA’s name for their reverse mortgage program. There are also non-FHA insured reverse mortgage programs, but that’s a completely different topic for another day. We’ll touch on that again here at some point this year. I usually try to address the proprietary reverse mortgages, which are non-FHA reverse mortgages, once or twice a year to give you an update on what those are doing. But in the video, he goes on, he says, Unfortunately, this leaves many seniors facing homelessness during their most vulnerable years. In such a scenario, sadly, is not uncommon, which is being further complicated by chronic illness. Of course, now this is me again. you combine chronic illness with financial problems and you’re in deep doo-doo, unfortunately. But like he says, these factors have created a pandemic of housing insecurity for older Americans and it’s the unspoken crisis, is what he says. Then what he does, too, is he quotes an article that is, well, a study or a discussion, I guess, that was printed up. The title of the article is called Understanding and Addressing the Housing Needs of Older Adults, and I found it on www.huduser.gov. The article says, the housing needs of seniors are characterized in part by low income and higher costs, including cost of health care. Peyton Whitney and Samantha Sheckler of the Joint Center for Housing Studies at Harvard University presented findings from a research paper co-authored with Jennifer Malinsky. Older adults struggle to meet the dual burden of housing and care. That explores the impact of complications associated with aging on senior households’ ability to afford housing. Whitney noted that nearly 70% of adults age 65 and older will need to purchase long-term care services at some point in their lives, yet their ability to purchase this care is constrained by the high cost and limited public assistance. The authors analyzed 9.9 million households with individuals over age 75 to estimate older adults’ current ability to afford housing and daily long-term care services, identified disparities, and considered opportunities for improvement. Their analysis found that only 24% of older adults earned enough income to pay for housing, living expenses, and daily long-term care services, which cost $67,000 per year at medium for a population with a median annual income of $40,000. Shortfalls were even more pronounced among individuals with functional disabilities and households of color, particularly Black and Hispanic individuals who are more likely to experience functional difficulties at younger ages. Now, I want to address this real quick because I know you might say, hey, lucky for me, I’ve worked hard and saved a lot. We have a tidy little nest egg and long-term care insurance. We’re good, right? Well, are you? Really? This is where the HECM line of credit can be so beneficial. what happens is basically if you own your home free and clear, you’ve got a couple hundred thousand in the bank and you’ve got long-term care insurance. Well, that long-term care insurance gets more expensive, as you know, every year as you age. especially when you get up into your mid-60s and late-60s and 70s. Then it gets real expensive. That’s going to drain your other assets just to make that payment. I just recently closed a loan for somebody who’s in a very good situation. He actually still works at 68 because he loves his job. He makes a great income. He’s not pulling Social Security yet because he’s waiting until he’s 70. He’s probably going to work beyond 70 because he loves his job so much. But he used the reverse mortgage to pay off an existing loan on his home and set up a nice-sized line of credit. And he’s debating. He’s like, well, I don’t know. I may just use the line of credit as my long-term care policy, which is a possibility. Because the way reverse mortgages work with the line of credit, this is one of the – biggest benefits of reverse mortgages. This is why I plan to do a reverse mortgage when I retire is, well, even before I retire, I’m going to do a reverse mortgage and have a line of credit that I know is going to grow over time. And it grows automatically. It doesn’t matter what the value of your home does. It does matter what interest rates do a little bit because the growth on the line of credit is equal to a half percent greater than then the interest you’re charged on the loan. For example, let’s say your interest rate is 6.5%, that you’re being charged on any money you’ve actually taken from the reverse mortgage. See, the way the reverse mortgage works is no payment is required on that loan. However, you’re still charged interest every month, interest and mortgage insurance, in fact. So those charges get added to your loan balance. Your loan balance grows over time. However, if you have a line of credit as well, that line of credit grows at a half a percent greater than the interest rate you’re charged. If you charge 6.5% interest on the loan balance, your line of credit is growing at 7%. Let’s say you’ve got $100,000 in your line of credit. A year from now, roughly, you’re going to have $107,000. And because of compounding, in 10 years, you’re going to have close to $200,000. Now, that may not be enough to cover you for a decade of long-term care insurance or long-term care. But let’s say you start off, you own your home free and clear right now. You’ve got a $600,000 home. You might be able to get a $200,000 to $150,000 home, depending upon your age. you get a $200,000, $250,000 reverse mortgage on that home, that could double in 10 years. Let’s say you’re 72 years old. Now you get to 82, that $250,000 is now $500,000, roughly speaking, on average. Now, obviously, if rates drop real low and the growth rate on that line of credit is only 3.5%, then you’re not going to double the money in that year. But if the interest rates go up and the growth rate on the line of credit is 10%, it’s going to double a lot quicker than 10 years. This is one of the beauties of reverse mortgages is having that line of credit available. And also having it accessible for emergencies. You don’t have to tie that money up. You don’t have to put it in an annuity that you can only tap 10% every year. After the first year, there are zero restrictions on drawing money from the line of credit. By the way, if you did just tune in, you are listening to Reverse Mortgage Radio. My name is Bruce Simmons. You can contact me directly at 303-467-7821. 303-467-7821. That’s my direct line. I’m the Reverse Mortgage Manager for American Liberty Mortgage here in Denver. American Liberty Mortgage has been around since 2003, which just coincidentally is the same year that I began originating reverse mortgages. I went to work for them, though, in 2011. So I’ve been there now going on 14 years. It’s a fantastic company, super rating and Better Business Bureau, all that blah, blah stuff. But you want to deal with a local company that you understand if you’re going to get a reverse mortgage, that you know and you’ve done research on. You can contact the Better Business Bureau. You know that I live in Westminster, Colorado, so I’m in the area as well. I do loans up and down the front range everywhere from… I think Red Feather Lakes, Greeley, Fort Collins, Loveland, Longmont, Boulder, Denver, Castle Rock, Colorado Springs, Pueblo, wherever, all along the Front Range, mostly. Although I’ve gone out to Burlington, or is it Burlington? I think it’s Burlington, way out on the eastern plains. I’ve gone up to Montrose, all over the state as well. I don’t like doing that in the winter, but… Now that we’ve got electronic signatures, I don’t necessarily have to do that all the time. However, I still like to meet with you in person as often as possible. So if you call me and you say, hey, Bruce, I want to talk to you about a reverse mortgage. And it looks like it might be beneficial for you. I’ll work up some numbers and then I like to come out. and talk with you. And I look at your home too. You say, hey, I’ve got this issue with my house. I’m not sure if it’s going to meet FHA guidelines. I can come out and take a look at it. I’m pretty knowledgeable about that. I’m not an appraiser, but I can also pull data from the multiple, not multiple listing, but just from the county record sales and things. My title company has a website that’s really beneficial for that. Pulling up Sales that I could check square footage on to compare it to yours and the condition of it. I could look at realtor notes sometimes, not every time, but a lot to get an idea, a closer idea what the actual value of your home is. Sometimes people say, hey, my home’s worth 800 grand. I say, well, I’ll look at this and say, you know what? I understand maybe you think it is, but unfortunately, it’s probably closer between $650 and $700. And sometimes people don’t like to hear that. They say, okay, never mind. But most of the time, people are appreciative of it because they want to be aware of what the actual value is. Some other times they’ll say, well, you don’t understand because I’ve got this special thing and that special thing. Anyways, and sometimes we just have to let the appraiser Say what it is, you know, and we can challenge appraisals too. If it’s a bad appraisal, we can challenge it. If you don’t like some comments the appraiser made, that’s not going to make any difference on the actual value. And actually, I should get an appraiser on sometime as a guest. I’ll have to see if I could do that in the future. But either way, I’m kind of off topic here. The bottom line is that a reverse mortgage can help you. We’re talking about people in need on this program today. In the past, I’ve talked about people who are very well off who get reverse mortgages. I’m not really going to need a reverse mortgage when I retire, but I’m going to get one. I’m going to get one to buy a home. Right now I’m in a multi-level home and it’s not where I want to retire. I’m going to end up moving into a single level home and I’m going to do a reverse for purchase. And then I’m going to overpay the amount of money that I have to bring to closing, which will create a line of credit. If you’re thinking about moving, downsizing, whatever, please talk to me about this because I just got a call today from a real estate agent who said, yeah, my clients are getting a house built and they could bring about 75% down, but then they’re going to have to get a loan for the difference. And they’re going to say, well, they might have to get a part-time job. They’re in their 70s. They might have to get a part-time job to make the payment. And he said, you know, I thought about this. I thought maybe they should talk to you, Bruce, about a reverse mortgage. I said, you think? Of course they should talk to me because a reverse mortgage can certainly help somebody in that situation. You should not have to work if you don’t want to when you’re at that stage of your life. Keep that in mind. So a reverse mortgage is just a very flexible tool that can provide a lot of benefits for you in the form of peace of mind. That’s really what it boils down to. A reverse mortgage should be peace of mind. If it’s not for you, if you’ve got a reverse mortgage, you say, oh, yeah, this is anything but a peace of mind. Well, then you probably shouldn’t have had it to begin with, and you probably shouldn’t were not explained properly. Because when I meet with people, I always make sure that I go through exactly how the loan works. That’s why I like to meet with you in person. I show you the numbers in your specific situation. Okay, this is how much your loan balance is today. We’re going to pay it off. These are the closing costs. In black and white, I say here, line by line, I go through. This is the mortgage insurance. This is the origination fee. This is the appraisal, title insurance, credit report. recording fees, all that stuff. And you can see all the numbers. And then I say, and then that gets added to your loan balance. We’re paying off your mortgage of $120,000 and your HELOC, your home equity line of credit of $30,000. That’s $150,000 plus these closing costs. And this is the new balance. So this is the amount you owe on the loan. And this is the amount of interest you’re charged, assuming the interest rate stays the same, because I don’t know what’s going to happen with interest rates. Honestly, don’t count on rates coming down. I think they’re going to bounce around a little bit this year. They’re not going to drop in any kind of significant way. And I always tell people, if you qualify for enough to pay off your mortgage today, and maybe your line of credit is only $20,000 when you were hoping for $120,000, Look to do it anyway. You know, there’s a saying in the forward world. Marry the home, date the rate. That’s what people say, because you can refinance. And with a reverse mortgage, most of these reverse mortgages, the interest rate is adjustable. So your interest rate’s gonna come down. The reason people refinance reverse mortgages is to gain access to additional equity in their home. If the interest rates do come down, which I don’t think is gonna happen this year, but I’ve been proven wrong before, But if the rates do come down, you can refinance your reverse mortgage, or you might be able to refinance your reverse mortgage and get additional cash. Because if rates come down, I think values are going to increase. So now, because the amount we can loan is based on the interest rate, if the interest rates come down, we can loan you a higher percentage. So maybe today we can only loan you 35% of the value. But if rates come down, now we can loan you 42% of the value. But now your home value has gone from $600,000 to $700,000. Now we’re basing a loan amount of 42% of the value of your home on a $700,000 home instead of when we originated the loan and we were basing a 35% loan to value on a $600,000 home. And so we could get you more money, possibly. So just get out from under that mortgage payment. If you’re retired and you’re making a mortgage payment, there’s a way out. Please call me. My number is 303-467-7821. My name is Bruce Simmons. I’m the reverse mortgage manager with American Liberty Mortgage here in Denver, 303-467-7821. Or visit me online as well. And if you just tuned in, you can hear the entire podcast on my website next week. We’ll have it up next week at ReverseMortgageRadio.net. ReverseMortgageRadio.net. And you can also go check out the article or the video from Shannon Hicks with Heckum World called Homeownership, A Dream Turned Nightmare for American Seniors. I’ll have that linked on my website as well. Thanks so much for listening to me. Hope you’re staying warm. And enjoy the day.
SPEAKER 01 :
Call Bruce Simmons today. Ask about his free Colorado Consumer Guide, 303-467-7821 or reversemortgageradio.net. Bruce will come to you anywhere across the front range to make sure you understand how reverse mortgages work. Regulated by DORA, NMLS number 409914.
