Live The Life You Want and Age in Place
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Live The Life You Want and Age in Place
[00:00:00] Now on the second half of the reverse mortgage interview with Craig Gallegos, we talk more about how you, you, my lovely retiree veteran can use, capture the equity in your home so that you can have the lifestyle that you'd like to have. Not have house payments, but have the house that you want. So a lifestyle plus house, you want no mortgage.
Let's make that equity work for you.
This is what it would look like in five years. Got it. They borrowed, that has, that has grown. The loan has grown from, you know, the, the amount that it started at, plus the amount that they took, took out. So now it's grown to 62. So now in five years if they, if maybe they can't stay there anymore or something like that, they still have $519,000 after they sell.
To [00:01:00] take and use whatever, you know, whatever they need to do with that. If they want to move into assisted living or something. Mm-hmm. At that point, they still have all of that equity still there. Sure. They sell it. It's just like a normal home. When you have a mortgage, you sell it, you take the difference and you do whatever you want with that difference.
Got it. Got it. Okay, so I have a question. Mm-hmm. Because again, just thinking if somebody takes, home e uh, reverse mortgage at 62, let's plug in 62 and okay. Let's, let's say this person's gonna live for another 30 years. Same. Okay, so numbers for everything. I just wanna say I'll have to. I will have to change is I can't change it within this program.
Ah. So what I have to do is go back. So I'll do that. I'll, stop sharing and, and work on that Yeah. For a second because that's one of the things that honestly, I think that would be my concern is, that I would take out. A loan, a, a reverse mortgage, at [00:02:00] say 65, but I'm just gonna say 62 'cause that's the youngest and I'll live for another 30 plus years.
Uhhuh, and I'll stay in my house and we'll see about that. But I'm just saying kind of worst case scenario and, and I just wanna see, 'cause I know people are gonna wanna see what happens over that 30 year period. And you don't sell. What happens with that line of, of. Money you borrowed to either do repairs or just get into the house.
You know, you sold your house in Sun City and you moved up to, you know, Verde Valley, where it's nicer and cooler and more rural now do Okay, so let's say 62, but just keep the house the same that you had because that's, you know, 450 is a pretty good average here in this area. Okay, so let me see if this will work.
It's communicating. Yeah. So now we're down to 63. Okay. Okay. That's close. That's good. And, so if we work, [00:03:00] work on a 63-year-old, the numbers are very similar. They're going to, the line of credit will be, a little bit lower because. When you're younger, you need more equity. Okay. Okay. So this is how a 63-year-old would look.
And if you wanted to, let's just say, they took out at that point the whole 79,000. Okay? So you want to see what it looked like over the whole time or do you want to see with, with zero mortgage? Or how would you want like to look at it? Judy, let's just do, saying they're taking out their 79. Let's see what happens.
Okay. Over, so. The next 30 years, so it only goes to 99. So this is how it would look if they took out that 79,000. The loan has grown all the way to 1.1 million over, From over 36 years. [00:04:00] 36 years. They still have. $801,000 of equity because of the 4% growth rate of the home. And people don't think about, they don't think that they're, they, they don't keep in mind that their home is growing in value year over year.
They just focus on that loan growing year after year after year. Right, right, right. When they're 99 years old. They still have $800,000 in equity. Exactly. And I think that the thing that people also need to remember, and, and this is maybe I'm wrong, but this is what I thought I heard, is that they do have, there's an expectation that they will maintain the property.
Meaning they're, it's not, you just live in it and let it fall to shambles around you. No, that's just like with any loan out there, you have to keep your property up. Yes. Can't have a meth lab in there. You can't do crazy things like that. You have to maintain your home and, you know, like I said before, pay your taxes, [00:05:00] your insurance, and your, HOA, those have to be all kept current.
Exactly. Exactly. And so if I have a, i'm just maybe repeating myself, but I also think about, say my veterans who want to sell their home, they have a lot of equity. They've lived there forever, but the house just isn't working for them anymore. Maybe they wanna be closer to some, hospital different things, maybe a little smaller home that fits better for their current needs and lifestyle.
And if they sell their home. And they're like, I just don't wanna use all my money. And I know we kind of talked about it, but I'm making it hopefully more simple, is that I want, I sold my house for $600,000. And I wanna buy a house that's four 50. I don't wanna pay now, do I have to pay the whole 450 for the house?
And that's gonna be what [00:06:00] my reverse mortgage is. No, they would just have to come in with the, it's called the principal limit, factor. So they would just have to come in with, an amount based on their age, the value of their home. Maybe they only have to come in instead of coming in with that $450,000, now they only have to come in with three.
Okay, so they can take that 150, put it in an annuity or something like that from the sale of their home. Now they'll have that income from that annuity or wherever they place that. Okay. Okay. Yeah, just kind of like, just what, like you said about Charlene, it's the same thing. She sold her home. She didn't want to use all of her cash.
We used the reverse to bridge that gap between the purchase price and what she wanted to put down. Got it. Got it. And I think that that really makes sense and I do like that you mentioned that if you want to. Which kind of makes sense. It's just paying down the interest. It's like, yeah, if you don't wanna see that [00:07:00] growing, that, you know, borrow that loan, that reverse mortgage loan growing.
At least you can pay down the interest, which is significantly less, then making a house payment. But again, if you have a rough month or you wanna go on vacation, you don't have to do anything at all. And I think that as we age. And I think of many of my veterans have a lot of health issues, especially my Vietnam veterans who were exposed to Agent Orange.
And actually I'm finding a lot of my, veterans from Afghanistan deployments also are having bad, health issues because of the, the pit burnings and all that, just stuff that you just didn't expect. And so you, you want to not have that stress. And if you can take a reverse mortgage and not have to pay it back, you don't have to have any payments.
Now you have money that you were paying for a mortgage and or you now have that [00:08:00] line of credit to pay for things that. You know, are just gonna make your life easier, maybe easier for your family. Maybe it's not covered by the, VA insurance and things, but your family wants things. They, they, you can't provide it for them now because you can't work or whatever, but the house can help provide that for your family.
Oh, absolutely. And if they are gonna make a payment, I would, I would like to show you, I'll share my screen again. Okay. I'll, I'll start with. The same scenario we were just looking at, which was the, you know, the, the house is worth 478. They don't have have a mortgage yet. They do the reverse.
Now they have a line of credit. Now in five years or 10, let's go to 10 years. In 10 years, their land of credit is 289. But what if, what if they do this? What if they put a thousand dollars a month? Into their mortgage [00:09:00] every single month. They just, they wanna just, you know, they're, they're, they have the ability to keep paying.
Maybe they're still working. So now, look, so what I did was I set up a thousand dollars payment starting in month one. Any in, in, at the end of the 10th year.
Now it's 328,000. Wow that they can take out and use on whatever they want. They can use it for anything that they want. And a lot of people don't realize this. Let's just say the market does just tank, and now this house is only worth 400 from seven. You know, it should have grown to 700, but now maybe it's only worth four.
This line of credit is still $328,000, regardless of the value of their home. So how does that play out? If they have to sell it and or if their family decides to sell it because [00:10:00] mom passed away or she's in, you know, assisted living. Okay. Do you mean if it's, if they're upside down or if they still have equity?
Well, that scenario that you just gave of the, well, in that scenario, even if they took out the 328,000. And the home was only worth 400. There's still a little bit of money left, but let's just say there isn't if the house at the end of, you know, when they're going to move out because you have up to 12 months to, satisfy this lien.
Okay? Either by, you have to, either you have to sell it, it has to be sold, or, if it's under, if it's underwater, the relatives or. The, the immediate family can purchase this home if it's underwater for 95% of market value. They have like, it's basically a first right of refusal to purchase that home if they really want it.
I mean, nine times outta 10. [00:11:00] Regardless of there's equity or not, children just want to sell it and move on with their lives. Yes, they do. They don't, nobody moves into the home. You know, if it's a cabin somewhere, they might keep it, you know, just so they can use that as a vacation. Then they have first right of refusal to purchase that.
And, even if it's costing the bank that money to cover. And that's the reason that there's the mortgage insurance because FHE guarantees the bank the difference if it's underwater. Got it. Got it. And I have seen reverse mortgages, go into foreclosure because the family doesn't wanna deal with selling it.
They just walk away and they just go, the, the house isn't worth anything. I don't want it. I don't wanna refinance it and I don't wanna deal with selling it. Yeah. And I think that's probably the worst choice to do, but what happens when the family just doesn't wanna deal with it? Well, if they don't wanna deal with it, then it would [00:12:00] have to go, you know, further than like a short sale.
Yeah. But I mean, dealing with it would make more sense because you, you know, well, we both know that. If, even if they don't care when you have a foreclosure, the amount that someone can buy, purchase that home for is gonna be, they think it's worth nothing. Well, if they think it's worth nothing, it's gonna be less than that.
On, on, you know, when it gets foreclosed on because somebody's gonna bid on that home and maybe it's worth 200,000 and they're gonna get it for a hundred. It's tough to go through at that point because they ha, you know, they're grieving and they don't want to deal with it. But, you know, most of the time right now, the way that the, the houses have grown, there's gonna be equity there.
And you know, why, why not take that equity? Right. Take, take, take the money as an inheritance. Yeah. Yeah. And, and then let the realtor do all the work. What do you have to sign? What do you have to do? You have to sign some papers? That's, yeah, exactly. [00:13:00] You don't have to show the house. You don't have to be here.
The realtor will help you get rid of stuff, clean the house, you know, get any repairs that maybe would be needed or tweaking just to make it worth more, a little more to try and, you know, maximize the market dollar for you. Yeah, maximize it. Yeah. I mean, don't, don't. Forget about realtors as being a resource in those scenarios.
And reverse mortgages aren't any different than regular mortgages, except you don't have to make a payment in that 12 months. Whereas if you inherit a house that has a mortgage on it, you have to make those payments or they will take it well, yeah. So yeah, it, it gives you 12 months to get the house.
Sorted out on the market and sold. And no money outta your pocket, so to speak. Yeah, and the most important thing to remember is to be if this situation, especially for you, Judith, if this ever happens to you. Be in [00:14:00] constant contact with the servicer. Let them know you're working on the home. You're fixing it up, you're gonna put it on the market.
Let them know you've put it on the market. You have to update them. That's the only way, 'cause you know, it's, it starts off at three and then they extend to six, and then they extend further. But if it's on the market and you're actively trying to sell it, then just keep that communication going with the services so they don't just come in and take it themselves.
Well, and that's, that's relevant on any mortgage. But I think in particular, just keeping in mind that if someone has a reverse mortgage on their home and you're going through that grieving process, it's a little more challenging. However, and there's my little plug, is people. People that are older or have health issues, please have a trust, have a will.
Communicate with your family, what your needs are, what your wants are. Make sure all that paperwork is readily available so that nobody is digging through drawers trying to find out what's [00:15:00] going on. It is on you to communicate those things. But I really like the idea of there being able to leverage the reverse mortgage.
For, aging in place. That's a big thing these days because, we don't like to leave our homes and, you know, the day of, you know, I gotta sell my house and move into a nursing home or whatever. I mean, we've got so many levels of care now and levels of independent living, assisted living, skilled care, all of that.
We've got the memory care units, we've got it all. But your home can help afford those things if that's where you need to go. And it can also afford to. To keep you, I always say kiddingly, my house has gotta pay for its own repairs. My house has to, you know, whatever, and this is a great way to do it without having to incur more debt and actually free up money so that you don't have to scrape and whatever to.
Get [00:16:00] by that you have the money then to make those repairs, to make the modifications needed and then make memories and you know, enjoy your golden years. And so many people, you know, I mean, you, you're the, the debt will be a little bit higher because of the mortgage, but you're not, you know, a lot of people, you know, they're older.
I'll just use my credit card. I can pay it off, but that's hard to do. You're on fixed income. Yeah. You know what your income is going to be every single month. So if you need a new air conditioner, and it's, you know, 15 grand. I mean, that, that can be a, a significant outlay of cash and Right. Cash flow is everything in retirement.
Exactly. So you won't have to spend that money, each month or whatever on those, those, those emergencies that might come up. And think about what you can do with this for, you know, like you said, you want to age in place. You can have long-term care. You can have somebody come in. Take care of you a couple times a week, [00:17:00] three times a week, you know, every day if you need, you have that availability with the reverse and not having to write that check.
Your house is gonna write that check for you. Exactly. Exactly. And I think that, just, it just opens up so many avenues for people that they didn't know about before. And I know that old school. I grew up being told, Hey, you've gotta pay off your house. You buy a house, you live in it until you die, and you don't wanna have a loan because that's the whole freedom of as you get older, is that you don't have a house payment.
Right. However, I don't have a house payment, but. I don't have any. I'm not gonna make more money. When I was working and I had a career and whatever, I knew I could make more money. I could do X, I could get promoted. Whatever. I can get X, Y, and z. I could change jobs when I am 70. I'll just say, [00:18:00] I don't wanna be working like a dog just to try and make sure that I have enough money to pay for things like a new air conditioning unit and pay off my credit cards.
I wanna be able to travel, I wanna be able to enjoy life. I wanna be able to go out and have a bite to eat with friends. I don't wanna be counting every penny and stressing about everything I spend or don't spend because. You know, I don't have a house payment, but I have no money. I have no monthly money coming in.
We, we, I've, I've had clients crying to me on the phone because they can't go and do the things that they want to do. We had a loan that we did for a lady in Scottsdale, huge home, beautiful home. Husband died. She didn't have any monthly income. All of his, all the income was from him and she was selling furniture, [00:19:00] selling prized possessions to pay her taxes and her insurance on her home.
See, and there's way, that's no way to live. We saved her home, got her a ton of money with the reverse, and now she is very, very happy. See, that's a great success story. That's a great example of how it saves a person's life. Saves them. Think of that stress that she dealt with every day. Exactly. What can I sell today?
And, and just think about that. When you are older, your body does not handle stress as well as it did when you were younger. It's like you could give yourself a heart attack, a stroke, all kinds of things that you, we really just don't need in our life as we're older. Now the one thing that I do wanna touch on really quick, and we're running to the end of our time here, is it, there is a.
Process, you have to apply for the reverse mortgage, just like you apply for any other loan. And there's a process. And [00:20:00] the cool thing that I can tell you everybody watching is that Craig and I've worked with quite a few different reverse mortgage providers. Vendors. Craig is the only one I will ever recommend, I will only work with because he.
Did such a great job of staying on top of things. He knows reverse mortgages. He communicates really well. He educates, he answers questions. He understands that we're dealing usually with people that are a little older, and this may be, you know, a lot of new concepts and verbiage. He takes his time with them.
And Charlene would also say that it was wonderful, working with you. And so from my standpoint, having worked with other reverse mortgage people, I was so upset with one because they literally. My clients ended up homeless in between their homes because the reverse mortgage company didn't know what they were doing, and so we [00:21:00] just kinda were stalling and struggling.
And I had another one where the, the person that was the mortgage liner just wasn't communicating, didn't know what was going, I don't know what he kept ghosting us. I'm like, oh my god. None of that has happened with Craig. You're on it. You're responsive. We've stayed in touch. You're very awesome about wanting to educate and helping not only, people, potential, people that could use the reverse mortgage, but also agents to understand the concept and make that available.
And my last little pitch for you, he has agreed to come to my subdivision, which like I said, has a lot of older people living here. To talk about reverse mortgages to really maybe, hopefully help some of our, homeowners figure out better ways to pay for the repairs, the roof, the, the painting, the windows, things that their homes need that are kind of required [00:22:00] in our subdivision.
And so thank you for taking time out of your schedule to come up and do that. Thank you. And, because he's in the Phoenix area and we're up here, up north. So I just wanna say that, I, I really appreciate you having me here and, I look forward, and I know this was geared mainly towards veterans, but did you know that Fairway has our own, foundation, it's called the American Warrior Initiative?
I did not. And we've given away 431 service dogs to veterans. The last 10 years. Wow. Yeah. Well, would you be wonderful. Be so kind as to share that information with me so we can add it in our show notes. Yeah. So that people can potentially link into that. And then I will also be grabbing your information and putting it in there so people will know how to contact you.
I know you've got email, phone, website. You're also on Facebook, I think. Facebook. Yeah. Facebook. Yeah. Everything. Yeah. So I'll make sure that they have all the information on how to, reach you. [00:23:00] So Cool. Sounds great. Cool. Cool. Yes. Thank you. Thank you so much. Thank you all.
One of the things that I'm so thankful to Craig for is that he has busted all those myths about reverse mortgages. And the funny thing is, is that people say, well, if I have a reverse mortgage, the bank owns my house. Hello people. If you have a mortgage on your house, if you don't make the payments, the bank will take your house.
The advantage of a reverse mortgage is. The bank owns your house. You never have to make a payment, and when you pass away, you can leave that money to your kids. So if you're interested in more wealth building, understanding more about veteran loans or things that are gonna help you make decisions about buying or selling, please check out my other videos from my other lenders and.
Leave a message. Subscribe, subscribe, [00:24:00] comment, DM me. Please reach out, and we look forward to seeing you on my next video.
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