Reverse Mortgage Benefits: Enhancing Retirement with Home Equity

Podcast: Texas Real Estate & Finance Podcast

Episode Title: Chris Handy

Host(s): Mike Mills

Guest(s): Chris Handy

-------------------------------------------------------------------------

Mike Mills (Host) | 00:00:12 to 00:00:31

Howdy. Howdy to all you real estate gurus and lending legends out there. So, have you ever thought there might be more to your clients home equities than just those dormant dollars sitting there? Well, you've tuned into the pulse of property finance. This is the Texas Real Estate and finance podcast, and I am your host, Mike Mills, a north Texas mortgage banker with Geneva Financial.

Mike Mills (Host) | 00:00:31 to 00:01:05

And today I will be your guide on the road from equity to opportunity. So buckle up as we venture into the realm of real estate riches in an episode that aims to be as engaging as my attempt to explain Snapchat to my grandparents. So, what if I told you that there was a secret weapon in real estate that most agents and lenders are not fully utilizing? Well, today, we're going to peel back the curtain a little on a little understood mortgage product that could be the key to the next ten years of your business. You'll learn how this tool can create wealth building opportunities for your clients, all from the comfort of their current home.

Mike Mills (Host) | 00:01:05 to 00:01:28

But first, if today's insights light up your real estate radar a little bit, do me a solid. Show me some love by liking, sharing, or leaving a glowing review. It's not just good karma, but it's what keeps this podcast going. Think of it as like tossing a coin into your podcaster's cup as I stand on the street corner with my megaphone, shouting, my gray matter gum drops into the void. Your likes keep my insanity in check.

Mike Mills (Host) | 00:01:28 to 00:01:52

So help an old senile guy out. Now, have you ever met a certified reverse mortgage specialist? Well, neither have I, and it probably is because there are only a few of them walking around this little blue ball in the solar system. But I found one and brought him here today. His name is Chris Handy, and he is an encyclopedia of reverse mortgages, and he's been at it since most of you could even drive.

Mike Mills (Host) | 00:01:52 to 00:02:01

So Chris is the hero we all need right now, but probably haven't even heard about until today. So let's welcome Chris to the podcast. Chris, how you doing, sir? Morning or afternoon? How are you?

Mike Mills (Host) | 00:02:01 to 00:02:24

I'm doing great, man. Awesome. Okay, so let's start with my favorite little catchphrase these days, which is the silver tsunami. So, can you tell me what exactly that is and what it really means these days? Well, it refers to the amount of baby boomers now that are entering into the retirement age area.

Chris Handy (Guest) | 00:02:24 to 00:03:01

And it's been this trickle of folks that are slowly entering into the age that they considered their parents to be retirees. Although a lot of baby boomers are still working in their even seventy s and things like that. I think there's a big difference between the baby boomer generation and the previous generations. They're much more active, they're living longer. They generally will been given better health advice to take care of themselves more and things like that.

Chris Handy (Guest) | 00:03:02 to 00:03:22

And a lot of them have affluence, most of them built up in their homes. If you check your average baby boomer and say where's most of your money at? And tally up everything it's going to be, their home is probably their number one asset. It's in real estate. Well, yeah, it's funny these days with rates being high.

Mike Mills (Host) | 00:03:22 to 00:03:41

Obviously being in the real estate mortgage world, we see interest rates now in the sevens. Now actually the last couple of days, I think we're back into the high sixes again. So that's nice. But you always hear older agents and older mortgage professionals talk about how in the 80s they were buying houses at 18%, which was true. Right.

Mike Mills (Host) | 00:03:41 to 00:04:12

But the difference between 1980 and today was that the average house in 1982 was $70,000 and these days the average house is like $450,000. So it's quite a big difference when you're talking about interest rates. But the good news on that is that those folks that bought these houses in the even early two thousand s that are starting to get close to retirement age are sitting on massive amounts of equity because of that reason, because the home appreciation has been so dramatic. Over the last several years. True.

Chris Handy (Guest) | 00:04:12 to 00:04:45

Yeah. And it's a different world now than it was in the years ago. I think it's more of a global world economy than it certainly was then. The US is still the major player, but in the could kind of control most of our economy without a lot of outside influence. And now with China and foreign trade, I think it's just kind of a different animal now.

Chris Handy (Guest) | 00:04:45 to 00:05:11

To compare economic factors from the 80s till now. Yes. To say that it's changed a little bit would be an understatement. All right, so let's start with first off, what exactly is a certified reverse mortgage professional? Because I've been in the business for about 15 years and I've been familiar with what reverse mortgages generally speaking, are.

Mike Mills (Host) | 00:05:12 to 00:05:44

I don't know that a lot of people outside of, even realtors, the people that outside of mortgages don't understand that. I do FHA conventional, your standard VA, all that kind of stuff. But I really can't and don't choose to do reverse mortgages, nor would I want to. And it's very siloed in our industry, where if you do the standard FHA, conventional, whatever type mortgages or you do reverse mortgages and very few people actually cross over, but to actually be certified in it, there's not a whole lot of people that have that certification, correct? Right?

Chris Handy (Guest) | 00:05:44 to 00:06:13

Yeah. I'm entering my 20th year in the reverse mortgage business, started 2005 or so, maybe four or five would be my first year where I did do some mostly regular mortgages, started doing reverse mortgages, and then over time, focused. That's all I do now is reverse mortgages. It's enough to keep up on the intricacies and regulations and things like that that go into them. It's been a fast changing product.

Chris Handy (Guest) | 00:06:13 to 00:06:21

I mean, an FHA 30 year fixed has been an FHA 30 year fixed for decades, but a reverse mortgage has not.

Chris Handy (Guest) | 00:06:25 to 00:07:08

One of my goals and duties is to convey what some of those changes are and talk about what the current state of reverse mortgages are and what they are compared to how they were 10, 20, 30 years ago, because there are some big differences. But certified reverse mortgage professionals, it's a hard designation to get in that you have to have a certain amount of education. You have to have closed at least 50 reverse mortgages to apply for the designation. And it's done through the National Reverse Mortgage Lenders association in Washington, DC. And you have to take a proctored test.

Chris Handy (Guest) | 00:07:08 to 00:07:31

And then there are continuing education and extra background checks that I have to do each year. Oh, really? So they're making sure that you're not a shady guy every single year? They want to make sure that if you're a certified reverse mortgage professional, you are who the industry wants to talk about this product as a trusted resource. And have you taken advantage of all the old folks?

Mike Mills (Host) | 00:07:32 to 00:07:40

Right, exactly. I got you. And so that's kind of the little bit of the deal behind it. There's only about 200 of us in the country because. Oh, really?

Mike Mills (Host) | 00:07:40 to 00:07:52

Yeah. You think there would be more, but it takes a lot of focus and work to do it and you have to have the experience and volume to get into it.

Mike Mills (Host) | 00:07:54 to 00:07:58

Yeah, that's like four per state. That's not very many people that do that. It's not.

Chris Handy (Guest) | 00:08:02 to 00:08:28

If I tell people, okay, if you want to talk about reverse mortgages and it's not me, I hope it's at least another certified reverse mortgage professional because I know you're in good hands. Right. At least you can feel confident that if they are talking to multiple people, that at least they are certified as well and not just somebody, because I'm sure. There's a lot of people out there that put themselves especially. I would imagine the market's growing a little bit these days because there is more opportunity there.

Mike Mills (Host) | 00:08:28 to 00:09:00

So I would imagine there's more people specializing in reverse mortgages. But the idea that you have to do at least 50 of them in order to even be considered to be certified in it, then there's probably several people out there that haven't done anywhere near that that are still trying to spout off their experts at a particular topic. Yeah, I mean, what I find is a lot of people will say, well, I specialize that or do reverse mortgages. And then you actually talk about their experience, and it's one or two a year. Right.

Chris Handy (Guest) | 00:09:00 to 00:09:33

It's like, well, okay, I'm not downplaying that you've got one or two year done, but it's not as in depth as what I have to go through to maintain my credentials on this. All right, so let's get real simple on for anybody that doesn't understand exactly what a reverse mortgage is, so let's just start at the basics of it. What is a reverse mortgage in general? The standard one. And then what are the qualifications that you have to have and kind of how does it generally work?

Chris Handy (Guest) | 00:09:33 to 00:10:06

Yeah. And people try and make it more complicated than it really is. It is simply a tool or mechanism to access equity in your property, your principal residence, without requiring a monthly payment back on the money that you draw out. That's all it is typically, 90% of the time. These are set up on lines of credit or monthly payments or a combination of monthly payments and line of credit.

Mike Mills (Host) | 00:10:06 to 00:10:34

Monthly payments to the homeowner. Yeah. So the homeowner can decide, okay, do I want a check coming in for 500 or $1,000 a month, every single month out of my equity, or do I want a credit line and I'll just draw on it as I need it? Right. And then interest is assessed on the outstanding balance, just like a regular mortgage.

Chris Handy (Guest) | 00:10:34 to 00:11:12

Instead of getting a bill for it that you have to pay each month, you just get a statement saying, okay, this is how much interest was added to your existing balance. And if you have an open line of credit, this is how much your line of credit grew. Because the lines of credit, unlike a regular home equity line of credit, which is stagnant, reverse mortgage lines of credits, at least the FHA products grow at whatever the interest rate is. Okay. If the interest rate is 6% and you have $100,000 credit line, twelve months later, your credit line is up to $106,000.

Chris Handy (Guest) | 00:11:12 to 00:11:21

You grew access to your equity by 6000. Oh, wow. Okay, so it's growing. Yeah. The property is growing in value as well.

Mike Mills (Host) | 00:11:21 to 00:11:34

Is that kind of the idea? You are the homeowner, so property value is still going up as well. And whether the appreciation rate is 3% or 8% or whatever it may be, that's your appreciation. Okay. That's not the banks.

Chris Handy (Guest) | 00:11:34 to 00:12:12

We're still fighting this misconception from early reverse mortgages, which I think were before FHA got involved in the, where there's some aspect of, okay, you do this loan and then we get the house when you're done and I'll give you this money up front. And that's not how the FHA product works at all. And the current proprietary reverse mortgages don't work that way either. You're only liable to pay back what you owe up to the value of the is. And I'll just use that as an example.

Chris Handy (Guest) | 00:12:13 to 00:12:29

FHA is taking the risk on whether you borrow more than the home is worth. If there's a market crash. Really? Okay. If the market has a downturn, then you could actually have more owed against the property than it's worth.

Mike Mills (Host) | 00:12:30 to 00:12:49

But just like anything else, it's kind of like when you're losing money on a stock, you don't actually lose money until you sell the stock. So therefore you're just operating in a negative for a period of time. Which market has dips all the time. We go up and down. But if you look historically, it's like that, it's still going up.

Chris Handy (Guest) | 00:12:51 to 00:13:30

Let's look at an analogy. If you have somebody who did a reverse mortgage in 2006 at the height of that real estate boom, and then they pulled all the money they could out of a reverse mortgage and passed away in 2010 or eleven, they very well may have a mortgage balance of money. They've pulled out more than what the home is currently worth. FHA took the loss on that because the family could elect to just assign the home to FHA and walk away from it knowing that they're the heir. Well, I guess they're the heir.

Chris Handy (Guest) | 00:13:30 to 00:14:02

The senior who owned the home got the money out, but they're not liable for the fact that the home isn't worth as much to cover what they borrowed. Right. There is an option in there where the family also can buy the home at 95% of the current appraised value if it is upside down. And even a crazier scenario, because I talked about the credit line, right? Let's say you set up a credit line of $300,000 or grew because I mentioned that growth factor.

Chris Handy (Guest) | 00:14:02 to 00:14:18

Let's say your credit line grew to $300,000 and home values crashed in 2010. 1112. And all of a sudden that home is only worth 250. You actually have a credit line to pull money more than what the home is worth. So they keep it open.

Mike Mills (Host) | 00:14:18 to 00:14:26

They don't even reduce it. FHA guarantees that that line is open. It cannot be closed. Wow. You got monthly payments setting up to come in.

Chris Handy (Guest) | 00:14:26 to 00:14:48

Those monthly payments are going to be coming in off of FHA's insurance pool. You are going to get that money that you set up no matter what happens to the home value. So what are the ages when you can start doing it? And then, of course, where do you see on average that people actually start taking advantage of this loan? Sure.

Chris Handy (Guest) | 00:14:48 to 00:15:22

Well, the qualification percentage on reverse mortgages is based off of the age of the youngest spouse and current interest rates. Now, as long as one spouse on the FHA product is over 62, you can do the reverse mortgage, but the percentage of home value you can initially access goes off the age of the youngest spouse, even if they're younger than 62. Okay, so you can access it if you're 62, but if you're married to somebody that's like 59, then they're going to base the. What is it like? Is it an actuary table?

Mike Mills (Host) | 00:15:22 to 00:15:26

What's it called? They're going to base it off of the 59. Yeah, it's actuarial tables.

Mike Mills (Host) | 00:15:28 to 00:15:49

What do they call, it's like a doom and gloom table. Yeah, they go off of the Social Security doom and gloom tables is what they go off of. Calculate a lot of these figures. So if a 62 year old is married to a 54 year old, the percentage is going to go off of the age of the 54 year old. The 54 year old is considered a non borrowing spouse.

Mike Mills (Host) | 00:15:49 to 00:16:13

Got you. Now, here's the one kind of tricky part. Is that a little bit of a technicality, but if there are payments or a line of credits set up and the borrowing spouse passes away or moves out of the home and the loan isn't due, it used to be due for the non borrowing spouse. They used to say, okay, your husband passed away, the loan is due. Now, you weren't on the loan right now.

Chris Handy (Guest) | 00:16:13 to 00:16:29

They'll be like, well, the loan isn't due, but until you refinance when everybody's 62, the payments will stop or the access to the money stops. Got you. So it's not due, but you just don't get the continuing payments. Or the access of the funds. Yeah.

Chris Handy (Guest) | 00:16:29 to 00:17:04

If you're doing this for access to funds, especially future funds, it's really optimal to have both partners be 62 or count on refinancing the other one onto the loan when they are 62. Right. Okay. If you're using the funds, and this is probably the most common use, if you're using the funds to pay off an existing mortgage and there's not much left over in eligibility after you do that, it doesn't really matter that both spouses are 62 or not, unless you do something to create eligibility. Like make payments into a reverse mortgage.

Chris Handy (Guest) | 00:17:04 to 00:17:16

So kind of interesting. Payments made into a reverse mortgage. Create a credit line which grows, which then can be accessed later. Okay, let's say somebody has a choice. Okay.

Chris Handy (Guest) | 00:17:17 to 00:17:43

You can pay money into a savings account, maybe get 3%, or maybe you can pay it into a reverse mortgage, and your credit line growth might be 6% or 7%. Oh, will. Okay. There are some benefits to making payments on the reverse mortgage. The beauty is you get to decide how much you want to pay and when, and you have control over it versus a regular mortgage.

Chris Handy (Guest) | 00:17:43 to 00:17:56

The payment is due next month on the first, whether you like it or not. Right. You can put money into it, and that money can then help the interest grow for it. That'll give you more access to funds later. So it's almost like putting money into a savings account to some extent, growing it 6% or 7%.

Chris Handy (Guest) | 00:17:57 to 00:18:18

Yeah. It acts that same way as far as liquidity is concerned. It's really access to more of your own equity. But as far as that's concerned, it can be put into the mortgage with a strategy to draw it out later, after you get some growth on it. I think you told me before we started, on average, you're seeing most folks that are doing these to be around 70.

Chris Handy (Guest) | 00:18:19 to 00:18:45

Yeah, that's typically the typical age, 68 to 72, somewhere around in there. And again, the product is probably being underutilized because there's so much equity across the US now. Yeah, it's massive. And baby boomers, again, they're an active generation. They're an active generation of retirees.

Chris Handy (Guest) | 00:18:45 to 00:19:15

And even if you are working 20 hours a week for something to do, folks are still wanting to travel and buy rvs and have money to spend with their kids and, gosh, with inflation and pricing and things, I get my clients all the time telling me, you know what? My little bag of groceries here that I used to get that cost $75 now seems to cost me 125. Yeah, it's getting out of control a little bit. Everything just keeps going up. It's not coming down before.

Mike Mills (Host) | 00:19:15 to 00:19:58

I want to get into the implications of what we can do with the baby boomers, especially with the equity and some of the things that we can use this equity for. But before we do that, I want you to talk a little bit about, I think if you haven't paid attention, a lot of people have this negative idea in their head about reverse mortgages that they're either taking advantage of older folks or like you said earlier, the bank is going to take the house when it's done. Can you explain a little bit, like, why were there some negative, why do you think there were some negatives around it a while back? And then what is the reality of what kind of happens to the home once the retiree or whatever either passes on or decides to sell it? Or what are the implications there at that point?

Mike Mills (Host) | 00:19:58 to 00:20:09

Especially because anybody that, it's usually the kids, right. It's the heirs that are all like, wait, you're giving my mom's house away. Let me talk to her, make sure. So can you clear up a little bit of that for me? Yeah.

Chris Handy (Guest) | 00:20:10 to 00:20:36

The negative connotations, again, were kind of the old original concepts of reverse mortgages where, okay, and there are some programs, they're not really reverse mortgages, and I don't do them, but there are equity sharing programs and some things out there right now where they say, okay, give me this equity or I'll give you the access to this equity and you give me the house when you're done. And somehow that has stuck for three decades. Yes.

Chris Handy (Guest) | 00:20:39 to 00:21:09

And the current product isn't, the program is not like that at all. A matter of fact, it's set up to not be able to access a ton of your equity, just use some of it. And there's a large cushion in there, especially from FHA's point of view, for market fluctuations in real estate, because like I said, keep in mind, if the real estate value falls, FHA might take a hit. But if they rise, and then we have a really good real estate market like we've been, that is your money or inheritance. Yes.

Chris Handy (Guest) | 00:21:09 to 00:21:21

And so you get the upside. They're taking the risk on the downside. Well, because they're taking the risk to the downside, they might give you access to 50% of the home equity because it grows on top of it, too. Of course. Yeah.

Mike Mills (Host) | 00:21:21 to 00:21:41

They're not going to give you all of it because there's a lot of risk involved. Yeah. They wouldn't give you 80, 90% of the home's value and then grow it on top of that. Any little market turn, they're upside down. So there's purposely a cushion built in there that typically is going to go to inheritance again.

Chris Handy (Guest) | 00:21:41 to 00:22:11

The liability is to pay back what you borrowed, plus any interest that's been assessed that you haven't made payments on. Right? So let's say you have a $500,000 home and you borrow two on it with the reverse mortgage, and by the time you're done, maybe the loan balance has gone to three, but maybe your home has gone to seven or eight in that time. That's using typical amortization projections. Based on what?

Chris Handy (Guest) | 00:22:11 to 00:22:24

Home appreciation has been 4% average in the country, certain areas seeing six and eight. And I'm talking about a 40 year period, 50 year period. Right. So when you look at that, you're like, well, that's not a bad deal. I get to use this money.

Chris Handy (Guest) | 00:22:24 to 00:22:54

And, yeah, I owe 300,000 at the end, my kids are going to sell the home for six, seven, eight, pay off the 300. They're going to keep the rest as inheritance. And generally, especially the last 2025 years, that's how the program has worked out. And so there's that negative connotation in the back people's heads that, well, that's not the way it works. The way it works is now the bank has it, now the government has it, now there's no money left in the house.

Mike Mills (Host) | 00:22:54 to 00:23:03

Right. Taking all my stuff. You're taking all my stuff and there's nothing there for anybody and that sort of thing. It's like, that's not how it's really designed to work. Yeah.

Mike Mills (Host) | 00:23:03 to 00:23:49

You're just giving access to the equity to your parents or the bank is giving access and the equity to your parents so they can use it while they're still alive and still thriving and everything, versus just sitting in there that they can't ever get to it and not having to move and not having to relocate to somewhere else. Because like we said a minute ago, the trend is this whole silver tsunami thing is like, all right, well, all these people are going to have these homes come available for sale in the next now versus the next five or ten years. And what we're seeing more and more is that baby boomers are choosing to stay in their homes. They're not choosing to downsize, they're not choosing to move into retirement communities. They're staying where they are at least at a greater clip than they had historically.

Mike Mills (Host) | 00:23:49 to 00:24:35

And so this is a way for them to stay in their homes, but still be able to access the equity and not have to pay massive amounts of money in order to be able to do that. If you're on a fixed income like Social Security, which is next to nothing these days, if that's what you're getting, but you've built up this asset and you have all equity in it, and the only way to get it is to penalize you by taking out a loan with 8% interest that you got to pay back. So you're just basically taking everything that you got, the income coming in to pay it off. Well, this route, you don't have to do that. And that's money that they can then access and use to take trips and buy rvs and do whatever it is that they want to do in order to enjoy the twilight years of their life, which is what we all want to do.

Mike Mills (Host) | 00:24:35 to 00:25:10

So it's a shame that the stigma has followed for so many years because everybody thinks, well, once my parents pass on, the bank is just going to take my house. But that's just not true because the heirs actually have the option at that point to buy it, correct? Yeah, the heirs can still buy the home again at 95% of whatever it appraises at if it is upside down and either the bank or FHA will take the loss on it. Non FHA products are out there where the bank takes loss. FHA's insurance pool will take the loss on that program.

Chris Handy (Guest) | 00:25:11 to 00:25:39

But, yeah, they still have the opportunity to buy the home at 95% of what it is valued at at that time, especially the last several years, there's not many people that have been upside down that way in their homes who have done. They just refinance it then can you refinance it? Like, you can refinance it if you want to keep the home in the family or whatever, you just say, okay, well, we owe $300,000 on this home. That's worth six or seven or eight. We want to keep it.

Chris Handy (Guest) | 00:25:39 to 00:25:52

Okay, we'll go out and get a $300,000 home. I've even done reverse mortgages for heirs who inherited the home from the parent who had a reverse mortgage. That's even happened before. Oh, really? Okay.

Mike Mills (Host) | 00:25:52 to 00:26:25

Were they just of age at that time? Because their parents, they were 62, and their parents passed away and had a reverse mortgage of maybe 85 or 90. And maybe at the time when the parents did the reverse mortgage, the home was only worth so much, and it's gone way up in value. And so it works out to use the current value that has gone up so much since the first reverse mortgage was done, and it works out to be able to move it into a new reverse mortgage. I mean, some things have to line up correctly in the market to do that, but it can be done.

Mike Mills (Host) | 00:26:26 to 00:26:33

So as real estate professionals, realtors and lenders, what do you see? If you were talking to a room full of people, what would you tell them?

Mike Mills (Host) | 00:26:36 to 00:27:00

What's a good use case for this product in their business? And when they come across clients or past clients have had this much equity and being able to access it, why do you think it's so important to understand this product as a professional? Well, let's look at their choices. Right, because this can be done as a purchase product, too. So I'll touch on that.

Chris Handy (Guest) | 00:27:00 to 00:27:32

If you're looking at a choice of saying, hey, I need funds and I'm looking at getting a 30 year fixed mortgage, that senior likely will never see the end of that payment schedule. Whatever mortgage they're taking out, or if you're a professional and they're 75 years old and you're putting them into a 30 year fixed, they're not going to be around to see that paid off, just not on that payment schedule. So you're giving them a payment for life. Reverse mortgages, no payment, not for life. They can decide what they want to pay and when.

Chris Handy (Guest) | 00:27:33 to 00:28:11

So even if they're buying a new home and saying, well, I want to downsize and I am going to downsize, I am going to buy this home, I'm looking at taking out a 30 year fix. Okay, well, you have a payment for the rest of your life now in this new home, except if you do a reverse mortgage now, you can decide if you want to make any payments at all, right, the down payment on a reverse mortgage is more, well, the. Idea on that is that you would sell, like if you had somebody that was selling their $500,000 house or whatever, right? And they were downsizing to a smaller property, they would use a big chunk of that money towards that in order to do the reverse purchase. Is that how that works?

Chris Handy (Guest) | 00:28:11 to 00:28:39

Yeah. So the way that would work is, let's say they're downsizing into a $300,000 home, right? Well, depending on their age, the down payment could be as much as 200,000 or as little as 125,000, depending on their age. But let's just say, okay, it's a typical 60 something year old right now. And now all of a sudden, okay, I'm going to downsize into this $300,000 home.

Chris Handy (Guest) | 00:28:39 to 00:29:08

I have this cash, I'm thinking about paying cash for it, but I don't want to use all my cash. So I'm going to take out a mortgage. The reverse mortgage would cover 100 of it. Let's say they would put down two and they would hold 100,000 or more in their bank account for retirement assets and then not have payments on the reverse mortgage, 100,000 that is remaining on the home they just bought. They can decide if they want to pay anything on that at all.

Chris Handy (Guest) | 00:29:08 to 00:29:27

And like I mentioned, if they do, it just builds up the credit line and grows at 6% or whatever. Now, in actuality, the last 25 years, the average interest rate on this has been in the fours. And these are monthly adjustables. They're not scary monthly adjustables because there's no payment. Whether the rate is 2% or 8%, the payment is still zero.

Chris Handy (Guest) | 00:29:29 to 00:29:43

It's interest and credit line growth. How much is your credit line growing. Based on how much is your credit line growing? How much interest are they going to assess based on what rate and the average? The last, going back to the late 90s till now, the average has been in the fours.

Mike Mills (Host) | 00:29:43 to 00:29:54

Okay, real quick on the payment side of it. So, taxes and insurance, right? Because if you own a property, you're obviously going to have property taxes. Yes. And most people are going to have insurance.

Mike Mills (Host) | 00:29:54 to 00:30:10

So how does that work? Yeah, the same as if you own the home free and clear as the homeowner. That's your obligation, is to pay your property taxes. And because there's a loan down there especially. But you would want to protect your investment even if you didn't have a mortgage.

Chris Handy (Guest) | 00:30:11 to 00:30:33

You don't want your home to have a disaster burn down and then no money to rebuild it and just take the loss, that'd be catastrophic. Most people have homeowners insurance, obviously, separately. Or does it come out of. Or can you set it up either way? Like, can you have it be paid from the line of credit or from the reverse mortgage and you don't?

Chris Handy (Guest) | 00:30:33 to 00:31:03

Yeah, good question. Most people choose to pay it independently. Most people do choose to. Some will use the reverse mortgage to make that, where they will draw money manually off of the reverse mortgage to pay those bills. Interestingly enough about credit and income qualifying on the Reverse mortgage is that the main factor of getting approved for a reverse mortgage is do you have credit and funds to pay your taxes and insurance as demonstrated in the recent past?

Mike Mills (Host) | 00:31:03 to 00:31:26

Right. And if you have mortgage lates or credit card lates, and there's things that would even stop you from getting any sort of regular mortgage loan. A reverse mortgage will still typically do it if you have enough eligibility to set up a prepaid escrow account to pay taxes and insurance through the reverse mortgage for a certain amount of time based on your life expectancy. Got you. Okay.

Chris Handy (Guest) | 00:31:26 to 00:31:52

So you might have to pre fund 30,000 of your eligibility to pay taxes and insurance, but then that might last you eleven years, twelve years, whatever it may be. So ultimately, to qualify for it, you don't really need income, obviously, because this is part of where it's coming from. You're getting money not being paid. And then as far as credit is concerned, it's not really a credit issue, it's just more of have you paid your taxes and everything you're current on? There's not any issues with the property.

Mike Mills (Host) | 00:31:52 to 00:32:05

And you have a history of making sure that that wasn't the case. Right? Right. Yes. There's a little bit of income qualifying to make sure that you have a reasonable cash flow to make sure that you're not going to go delinquent in the future on your taxes and insurance.

Mike Mills (Host) | 00:32:05 to 00:32:24

Got you. Okay. And then there's a mechanism to address some of that, plus credit issues to say, well, okay, if you have enough eligibility in the reverse mortgage, then we can use that. Where people run into problems is, well, I need almost every bit of my eligibility to pay off the mortgage I have right now. Right.

Chris Handy (Guest) | 00:32:25 to 00:32:36

And again, even if that mortgage is at 3%, it still has a payment. Yes. And it's the biggest bill you pay. Yes. And depending on your age, you may not ever see the end of it.

Chris Handy (Guest) | 00:32:36 to 00:33:07

So it still makes sense for a lot of folks to pay off that low rate mortgage and replace it with a reverse mortgage. Just for the cash flow issue? Yeah, just to help on a monthly cash flow basis, like you said earlier, especially with the cost of living just going through the roof, as it has been with utilities and insurance and grocery bills and everything is just incredibly expensive these days. So to not have that big, massive monthly payment is a big help for anyone. All right, so let's talk about some of the applications for it.

Mike Mills (Host) | 00:33:07 to 00:33:28

So what are you seeing these days when it comes to how people are starting to use and utilize their equity? Because again, people are living longer. We're not talking about folks that are on the verge of death here. We're talking about people that have a good 20 solid lease years left to go for anything we have to worry about. So what are you seeing the use cases for it?

Mike Mills (Host) | 00:33:28 to 00:33:48

Are you seeing people purchase real estate? Are you seeing individuals use that money for investment purposes to help grow their retirement. Yeah. There are specific ways that it should be used responsibly. It's not really encouraged.

Chris Handy (Guest) | 00:33:48 to 00:34:07

Kind of frowned upon in the financial planning world's told not to do this. Don't take people's home equity and throw it in the stock market. You don't want to necessarily do it that way. I'll circle back. Number one use is to pay off an existing mortgage and do something different with that cash flow.

Chris Handy (Guest) | 00:34:07 to 00:34:42

If you don't have that mortgage payment, maybe that means you need to draw less money and be taxed less each month on the money you take out of an IRA or 401. And so there's that use. There are uses to buy real estate investment property, either, depending on the size of the property you're buying and the size of your principal residence. Either the whole thing or the down payment can be used as funding with the reverse mortgage, to buy a vacation home or an investment property, or that sort of thing. Diversify.

Mike Mills (Host) | 00:34:42 to 00:35:01

Or you can help out your kids. Because these days, the biggest hurdle that I see, at least on the traditional mortgage side of things, is, I don't say most people's credit, it's hit or miss. It's not any better or worse than it was, but people's credit is what it is. It's either good or bad, and it's a 50 50 thing a lot of times. So credit is not the issue.

Mike Mills (Host) | 00:35:02 to 00:35:32

And in a lot of cases, even these days, income isn't as big of an issue. It's getting to be more so because home prices have gone up and rates are higher. But for the most part, those people are looking to buy their income can make it fit. Where people run into problems is having the cash for the down payment and the closing costs. And instead of having to use these, I'm not against down payment assistance programs, but if you really look at what they are, they're a bit of a detriment to the home buyer because you're paying 1% to one and a half percent more in interest, usually.

Mike Mills (Host) | 00:35:32 to 00:36:28

And then these days, especially, if you refinance that home and in a certain given amount of time, you got to pay all that money back. So this could be an avenue if you have a parent that is retirement age or thereabouts, and doesn't have a ton of income, but also wants to help, but they don't have access to the cash. Well, if they've got $300,000 or 200 or whatever of equity sitting in their house where they don't have to refinance and take out an 8% new mortgage and make payments on that. You can go this route to help out the transfer of wealth, as you would call it, to the next generation to buy homes as well for their family. Yeah, it's a mechanism to do that, and a couple of different ways I've seen that done lately, one would be to do the reverse mortgage and gift that down payment or financial assistance for the children.

Chris Handy (Guest) | 00:36:29 to 00:36:53

There's kind of a neat, newish reverse mortgage product on the market that's come out in the last couple of years, which is a second mortgage, reverse mortgage. All right. And it's designed for people who don't want to necessarily pay off their existing low rate first mortgage. They've got a 2% $150,000 mortgage. They don't want to mess with that.

Chris Handy (Guest) | 00:36:53 to 00:37:17

Yeah, but they still want the funds. Maybe they're buying an rv, maybe they're buying a vacation home. Maybe they're helping their children buy a home. And so at a competitive market rate, and I'm just ballparking, but the prime rate right now is eight and a half. For not far above that, you can get a reverse mortgage, second mortgage.

Chris Handy (Guest) | 00:37:18 to 00:37:36

You decide the payment on it and you can access a certain amount of those funds and you're not required to pay off your existing mortgage like you do with a traditional reverse mortgage. Right. So it's a whole second lien altogether that you're not having to make payments on. That's just growing based on the equity of the house. Yeah.

Chris Handy (Guest) | 00:37:36 to 00:37:51

So basically it's saying, okay, you can take out a second lien that's going to require you this big of a payment on a 15 year schedule or whatever it may be. Or you can do a reverse mortgage, second lien and you decide what the payment schedule is. Yeah. You want to pay anything on it each month? Fine.

Chris Handy (Guest) | 00:37:51 to 00:37:58

If you don't, that's fine. Right. You can decide. And guess what? I can qualify you on it because there's no payment on it.

Chris Handy (Guest) | 00:37:58 to 00:38:42

I don't need you to have x amount of extra income for this additional debt because there's no payment on that debt. And I don't have to factor that debt into whether you qualify or not. Well, in another way to do it, which is something that we've been working on together, which is why I had you on here to begin with, was in that same scenario with that second lien. You have a lot of people that are downsizing homes or moving from one place to another, and nobody likes to move all their stuff out before they go buy another place. And so it's almost like a bridge loan product, too, if you can use it, because now you can get access to the equity to help you buy the next home, and then you can then sell the home that you've pulled it out of already.

Mike Mills (Host) | 00:38:42 to 00:39:23

And obviously it pays off the reverse mortgage and it pays off the current mortgage, but now you have the funds and you're not having to make an offer that is necessarily contingent on you selling this other house because you're trying to get the money that you need to put down on this one. So it's access to that money ahead of time, and it acts like a bridge loan and can really help people a lot, especially because coming up with those funds can be challenging when you want to put down 20% or whatever the case may be when you're moving. Yes, exactly. Kind of a new concept, something the industry has been seeing introduced in the last, just couple of years. Available in a handful of states right now, but it's growing right now.

Chris Handy (Guest) | 00:39:23 to 00:40:00

Off the top of my head, it's in states like Texas, California, Florida, South Carolina. Typical states that also tend to do a reasonable amount of reverse mortgage volume, too. Probably soon to be in Nevada and Arizona, a few others. But yeah, it's a neat product to say, okay, we're not going to make you pay off that existing low rate first mortgage if you don't want to, to access this cash. I'm going to give you a great way to have you decide how to manage the payment and the basically funds you want to take out of the house.

Chris Handy (Guest) | 00:40:00 to 00:40:22

It's a really neat way to say, I'm going to put the management of how to handle that into your hands. Yeah, no, I mean, just having access to that money. The other thing I realized, too, as you go through this, the process is actually pretty quick and easy. It's not quite as drawn out as I think a lot of people think. And I don't mean quick and easy as in like, you're going to rush them through it.

Mike Mills (Host) | 00:40:22 to 00:40:39

There's a certain steps that you have to go through with the education of the borrower, but ultimately it's not something that seems to take. People are like, oh, this is going to take forever. It really doesn't. I mean, you can knock it out in less than 30 days in most cases. Yeah, you can have a lot of control.

Chris Handy (Guest) | 00:40:39 to 00:41:06

The homeowner and senior can have a lot of control over how fast the process goes. I mean, it's typically we do an analysis package and say, okay, here's what you qualify for based on current market conditions and your age and what we think home value is. That looks good. Okay, let's do an application. And then you set up a required counseling session with a nonprofit housing counselor who explains it on top of us explaining.

Mike Mills (Host) | 00:41:06 to 00:41:16

Right. So you've been double explaining. Yeah, you got to do it. Part of the deal, part of the protection. Again, you don't want to take advantage of the seniors.

Chris Handy (Guest) | 00:41:16 to 00:41:43

And so it's like you're going to be double explaining this to make sure you understand how the terms are. And then you go through the process of underwriting, getting the home appraised, and finish any underwriting conditions and fund the loan. And so, yeah, that process can take 30 days. It just depends a little bit on how fast the homeowner wants to go through the process. A lot of it's up to them.

Chris Handy (Guest) | 00:41:44 to 00:41:55

Part of it's designed to go at their pace. The counseling requirement. Okay. When you're ready to do your counseling requirement, then everything looks good. Counseling went great.

Mike Mills (Host) | 00:41:55 to 00:42:13

Okay. Move forward at that point, too. So a lot of it's up to them. Now, we talked a little bit about this, but I'm curious, because you've been doing this so long, what are the common questions that you get from, because obviously the kids are going to come into play at some point. Let me get this guy's number.

Mike Mills (Host) | 00:42:13 to 00:42:16

I got to give him a call and figure out what the heck he's trying to talk to my mom. Sure. Yeah.

Mike Mills (Host) | 00:42:18 to 00:42:43

The reason I want you to kind of explain this a little bit is because any realtor out there that's hearing this or even a lender that wants to kind of give this as an option. And remember, if you're a lender and you want to talk to your clients, this is a way to go. And I wouldn't steer them necessarily away from it. Let them talk to somebody. If you have someone, especially within your company, that can do it, and a lot of times there are ways that you can share commissions on some of these things.

Mike Mills (Host) | 00:42:43 to 00:43:07

I know it's a little different depending on what company you're with and what products are being used, but you shouldn't steer away from it just because you can't do it. If you were talking to realtors and lenders that were going to say this or bring this product up and they were concerned about, well, what happens when the kids call me? What do I say to them? How do you approach it with the heirs to say, hey, look, here's what we're doing. Here's why we're doing it.

Mike Mills (Host) | 00:43:07 to 00:43:25

I know you probably explain the process a little bit, but what do you find kind of is a good way to kind of help calm some of the fears that naturally come with this. Sure. And I'll speak to two aspects of it. Maybe one would be more commonly thought of for realtors if they propose this. But okay.

Chris Handy (Guest) | 00:43:25 to 00:44:12

As a purchase product, circling back to what I mentioned before, if your client gets into a 30 year fixed and they're already in their not likely to see the end of that mortgage, if you show them this option, this is an option where you're not burdening them with a lifetime payment, it's up to them how much they pay. And since the home is still historically going to appreciate, I think pretty much everything we do in real estate is still predicated upon this long term appreciation experience and rates that we have, I. Don'T think there's a lot of, hasn't gone down. Yeah, I don't think there's a lot of banking planning that goes on predicated. I'm like, well, we're pretty sure home values are just going to fall for 20 years.

Chris Handy (Guest) | 00:44:13 to 00:44:53

Likely the home is going to go up in value. And yes, if they aren't making payments, the reverse mortgage balance will grow, but the home value is also going to grow and we're likely to play out in where there's a good scenario, where the inheritance is still there. Likewise, from a refinance standpoint, if your parents, senior homeowners don't do the reverse mortgage, that means the children are going to get everything and they'll get nothing. Even what they've worked for their entire lives, this equity they've built up, and they don't get to use any of it. You guys all get it.

Mike Mills (Host) | 00:44:54 to 00:45:09

Yes. Not really that fair sounding, right? This isn't designed to say, well, they're going to take it all, leave nothing for you. This is more of like, well, let's kind of split this up some for mom or dad. Well, and that's probably the question.

Mike Mills (Host) | 00:45:09 to 00:45:47

Sometimes if you get that, it's like, okay, so what are we talking about here? Because if mom and dad are ready to do this and they understand and they've been explained twice on what it is and how it works, and now son or daughter are a little upset about it because they see their money going out the window, it's like, are you worried about you? Are you worried about your parents or are you worried about you? Because it sounds like you're kind of worried about you and what you may or may not get. But why would you not want your mom and dad to enjoy their last few years and get the money that they've worked so hard to put into their home and then be able to enjoy it, versus just sitting there barely living on ramen noodles and Social Security when they don't have to.

Chris Handy (Guest) | 00:45:47 to 00:46:16

Right, exactly. And it's all about enhancing the quality of life. And again, using what they've worked so hard their whole lives for, it's not giving the whole thing away. In my examples, I'm talking about, you have a half a million dollar home, and maybe the senior homeowner uses 200, 300,000 of it, and the rest is going to the kids. And that seems pretty fair.

Chris Handy (Guest) | 00:46:17 to 00:46:26

That's a fair outcome. So we're looking for win win outcomes. In this, or if nothing goes to the kids, it's still fair because mom and dad worked. It is. Yes.

Chris Handy (Guest) | 00:46:27 to 00:46:32

I mean, technically it is. But to be fair, in the back.

Mike Mills (Host) | 00:46:35 to 00:46:51

Of nice, Chris, because I'm not doing that loan, you can be the nice guy on that one. I'll just say, yeah, I mean, it is true. To be fair. It's not like, oh, I work so hard to inherit your home. Yes, but people think that way.

Mike Mills (Host) | 00:46:52 to 00:47:06

That's kind of how the brain works. Something I just thought of. You had mentioned a minute ago about the rate. I'm curious, did you say that the rate that you get it on is fixed or is it variable? Most of these are done on variable rate lines of credit.

Mike Mills (Host) | 00:47:06 to 00:47:10

When do they adjust? Every year? Monthly? Monthly. Okay.

Chris Handy (Guest) | 00:47:10 to 00:47:58

They follow the one year treasury note. But we're in a situation right now where at this point in time, rates are high or higher, but all indications, time will tell. Nobody can say for sure, but all indications are that rates are going to start to decline. So just as you would take the negative side of an adjustable rate, where if the rates go up, your rate goes up, you'll also get the benefit of the downward side of that. And I think that's where a lot of people that did adjustable rate mortgages when, you know, prior to say, 2020, right, when rates were at six, five, 6% for a period of time, 17 1819, and then they dropped down to two and three.

Mike Mills (Host) | 00:47:58 to 00:48:09

Well, they got the advantage of the lower rate because their rate adjusted downward. It didn't adjust up. And I think people forget that when it adjusts, it adjusts both directions. Yeah, correct. Yeah.

Chris Handy (Guest) | 00:48:09 to 00:48:50

Right now it's already been floating down. And I show the long term appreciation or interest rate trends, including appreciation, but also the interest rate history. And like okay, kind of draw conclusions about where we're going to be right here based on, and I can give some input on economic news and what the Fed's saying and things like that, and help people say, here's your conclusions about where you're at. But I talked to a lot of my clients who are in a reverse mortgage, and it's not all terrible. I mean, I did a lot of reverse mortgages when rates were 2%, and yes, those rates rose to six and 7%.

Chris Handy (Guest) | 00:48:50 to 00:49:27

No one called me going, oh, this is terrible. I'm going down the tubes, everything like that. Because a, if people had credit lines, it grew their credit lines at a much bigger rate than what I originally set up, and b, they weren't making payments anyway. And so whether their payment was zero on 2% or zero on 7%, it didn't affect their daily or their monthly bills. Well, not to mention if they got a reverse mortgage in 2020 at, let's say, 4%, that their house was worth $400,000, by 2023, it was worth $600,000.

Mike Mills (Host) | 00:49:27 to 00:49:58

So you get the swings in the market. Look, I talk about this all the time on the show, and I talk to realtors about this, and consumers get a little sick of seeing it on social media everywhere because everybody that's in real estate is talking about the idea. But it's just true that when mortgage rates come down, which this is all a cycle, they will. A matter of when is the question. Not if, it's just a matter of when, but when that does happen, then home values are going to go up.

Mike Mills (Host) | 00:49:59 to 00:50:48

That's just how it works. And especially in a circumstance where we have such a limited supply that we've had over the last several years, and there's no real relief in sight, because even as builders have dominated the purchase market for the last twelve months, they have pulled back on even their permits and new construction. They're starting to pull back on their amount that they're building, and more and more folks are staying in place, and they're not selling home because they got a 3% rate. So when rates do start to come down, yes, there'll be more people that want to sell, but there'll also be a lot more people that want to come in and buy because they think it's more affordable at that point. And so that's just going to drive home values up even more because we haven't been in a healthy, balanced housing market where we have a good number of buyers and sellers on equal side, I don't know, since maybe like 2013.

Mike Mills (Host) | 00:50:50 to 00:51:12

It feels like it's been a decade since we've gotten over three or four months of supply. And even when you see, I see notes all the time now because obviously I pay attention to a lot of stuff because I talk about it all the time on this thing. But you'll see like, oh, certain parts of the country, they're at five months of supply right now. But then you dive into the numbers and you go, well, three months of that five months are homes that aren't complete. They are homes that are, that won't.

Mike Mills (Host) | 00:51:12 to 00:51:58

Be ready or even be able to move into for the next eight months or best case scenario. So there's so much inventory that's being included in the numbers on new homes that are not finished or haven't even started. And so it's just one of those things where as rates start to change and start to come down in the situation of a reverse mortgage, if rates come down, number one, you're going to pick up the lower rate, and number two, you're going to probably grow your value and the amount of equity that you have at the same time. And so again, it comes back to a lot of win win situations where as a homeowner that doesn't want to shell out thousands of dollars a month for a payment that at the end of your life you just want to enjoy. I mean, why did you work so hard for everything if you don't get some years to enjoy yourself a little bit?

Mike Mills (Host) | 00:51:58 to 00:52:24

This is a great avenue to do that. And as real estate professionals and lenders, we have to make our clients aware of this stuff. We got to tell them about it. We got to make sure that they know that these are options for them. Because especially if I was a realtor and I was working with homeowners trying to sell, or even just if I'm out there marketing myself on social media, I might be marketing as, hey, if you're in your home and you want to help your kids out and buy their first home, there's a way to do that.

Mike Mills (Host) | 00:52:24 to 00:52:55

Call me and I'll tell you how to do it. Because there is a way to do it without having to take on an extra payment, but still being able to access that money. So it's just the ways that you can use it are, I think, so vast and so many opportunities for it. I think it's incredibly important that, especially these days, because we're at that peak 65 for these boomers, that our industry just needs to get very familiar with this product and how it works. So we can properly explain it to our clients and then refer them to professionals like you to be able to do it.

Chris Handy (Guest) | 00:52:55 to 00:53:37

Yeah, absolutely. And we really need other real estate and financial professionals to understand how this works and how to best utilize it. Case in point, the industry is trying to reach out right now. Reverse mortgage industry is trying to reach out to the mass affluent homeowners out there and retirees out there, who all typically have financial planners, and show them how having a standby reverse mortgage line of credit can help extend and smooth out their portfolios. Extend the life of their portfolios, smooth out market fluctuations.

Chris Handy (Guest) | 00:53:37 to 00:54:16

And Dr. Barry Sachs published a decade ago articles in the Journal of Financial Planning about how using home equity via a reverse mortgage to manage draws during retirement can extend the life of the portfolio. And it kind of works like this. And I could describe the graph I normally use, but let's say somebody retired in the year 2000 and they had 500,000 in their market, doubled. The S and P doubled in three or four years and went up to a million.

Chris Handy (Guest) | 00:54:16 to 00:54:43

They retired in the year 2000 with a million. And then they thought, well, I'm going to use the Bengin rule, which means draw 40% out of your portfolio and you should never go broke. And they did that. But the problem is they immediately ran into the.com crash. And then a few years later, they're still pulling their 40,000 a year out, maybe adjusting it for inflation, too.

Chris Handy (Guest) | 00:54:43 to 00:55:00

Maybe it's slightly more than 40,000. Then in 2008, they ran into the housing market crash. If you still keep pulling that money out, your million dollars, which was never supposed to be exhausted, is done by about 2013. It's gone. Yeah.

Mike Mills (Host) | 00:55:00 to 00:55:32

And right now we might be at the top end or the front side of a crash that may be coming, maybe not to that extent, but the way the market has gone up, the stock market has gone up, and the crypto markets are exploding right now over the last six months. Leads one to believe that that kind of growth is not sustainable. And you need to be very careful about your money that's sitting in the market right now. Yeah. And so the last thing financial planners, you or anybody wants you to do when the market is down is keep pulling money out when the market is dropped.

Chris Handy (Guest) | 00:55:32 to 00:55:49

But you have a source for it if you use it, which is your home equity. If that same person had a standby reverse mortgage credit line that year, they can drop. Maybe it only needs to be year because it's not taxed. Money on a reverse mortgage isn't taxed. It's a loan, technically.

Mike Mills (Host) | 00:55:49 to 00:56:01

Oh, yeah. So you get to write off the interest? You get to write off the interest if you pay it. Even if you pay it and draw it back out. That's a whole nother little ninja work on the mortgage, on the loan.

Mike Mills (Host) | 00:56:01 to 00:56:21

Yeah, I got you. But the main thing is draws out of an IRA or 401K are taxed. They are not on a draw from a reverse mortgage. So if you leave that money in there untaxed to recover, and the subject comes up of required minimum distribution. So we can talk about how to deal with that.

Chris Handy (Guest) | 00:56:21 to 00:56:48

But the big concept is if you allow that market money to recover instead of pulling it out when it's down, use the money you need normally on your home equity via the reverse mortgage. No payments on that money anyway. So it's free to pull. Now all of a sudden your portfolio recovers. And I can show you how somebody in 2013, when that first example ran out of funds, they had 800,000 left, right.

Chris Handy (Guest) | 00:56:48 to 00:57:24

Because by managing the money than assets that they had, right. Because when the stock market is on its way down, when you pull money out, that's when you hit the cost of the loss, right. Because you're taking money out of the market when it's on the downside and then you're losing. But if you can leave, because I think people get confused on it because when you're talking about this, let's say it's in shares, let's say you own 100 shares of Apple, right? Well, if the value of those hundreds of shares starts to go down and you sell 20 of those shares to pay your bills or whatever you need to do, then when the market rebounds, you're only going to have 80 shares that are going to grow at the rate that they were before.

Mike Mills (Host) | 00:57:24 to 00:58:04

Whereas if you can leave those full 100 shares intact, yes, it might go down for a period of time, but you'll get the benefit when it rebounds back up. Because again, I never want to say always, but if you look at the stock market, it'll have its dips, but it always gets to new all time highs. But if you have an outlet like the reverse mortgage or that you can draw on during those times of the market being on a downward trend, which, by the way, is usually accompanied by low interest rates, so the money that you're borrowing on your reverse mortgage is generally going to be probably at a lower rate, then that's going to hold you over. So you don't have to sell off your portfolio at a loss. You can hold it in there a little bit longer.

Mike Mills (Host) | 00:58:04 to 00:58:16

Until the market starts an uptrend. And then when it does, then you can take that extra money that you made and pay off the reverse mortgage if you want to, right? Yeah, if you want to. Or just let it sit because your money is still working in the portfolio too. Yeah, no, that's brilliant.

Chris Handy (Guest) | 00:58:17 to 00:58:43

You're a financial planner, you want your clients to have a robust portfolio. There's nothing to manage if your client are taking the money, goes bust from overdrawing their portfolio. Yeah, no, man, I think it's great. And like I said, I didn't understand the product very much or even really, I didn't even really think about it, honestly. It wasn't even something that I ever considered that I ever thought about.

Mike Mills (Host) | 00:58:43 to 00:59:18

And I mean, it just worked out. Luckily I had a client that had met with somebody else about trying to do reverse mortgage on their house, and then you and I got hooked up from that and talked about it a little bit and then opened my eyes to all these different, like even just sitting here. And I hate whenever I do these podcasts, I always have 1000 ideas. I got to go back and write them all down about promotion and advertising on social media, about this product and what it can do. Because here's the thing that I think a lot of lenders, especially lenders, but even realtors don't consider is they're like, well, why would I talk about a reverse mortgage?

Mike Mills (Host) | 00:59:18 to 01:00:05

Because it's not going to benefit me, right? They'll think, well, like if I'm a loan officer that doesn't do reverse mortgages, then I don't want to talk about it, because then they'll just end up going with Chris and I don't make money on the deal, or if it's a realtor and they say, well, reverse mortgage doesn't sell a house, so why would I want to talk about it? What you want to do is you want to educate your clients about everything that you can educate them on when it comes to real estate. So the more you understand about every product available, even if you can't sell it or it doesn't always directly benefit you, you still want to be able to be educated on it and speak about it intelligently, because if you do, and you can do that in a public setting, you attract more people to you to ask questions about what it is. And there are people all the time, time that may think they want a reverse mortgage or want to find out more about it that end up not going that route.

Mike Mills (Host) | 01:00:05 to 01:00:38

And there will be people sometimes that come to you that do a reverse mortgage that I send to Chris or it goes out to somebody else who then has a kid that they're going to help buy the house that I get to do the loan for. Know, it's, you have to look at it as a growth mentality as opposed to just like, oh, I just want to keep it all for myself. Because the more you understand about all of the products available to people and the more that you can educate your clients about everything that's out there, the more likely it is that you're going to be able to reach more individuals and therefore, in the aggregate get more deals. And that's really what we're all trying to do. Agree?

Chris Handy (Guest) | 01:00:39 to 01:00:53

Yeah, I agree. It makes you a more well rounded professional to know all of these tools that are available to your clients and. You'Re legitimately trying to help people if. You fit them in the right. And we absolutely.

Chris Handy (Guest) | 01:00:54 to 01:01:29

With reverse mortgages, a lot of that process is based on fitting them into the right products so everybody's happy. And you, as the person who maybe referred them or talked to them about it, you come out as the hero on the whole thing because you fit them into the best scenario for them 100%. Well, Chris, I really appreciate your time today. This is great information and I'm glad that we met each other because I got to find out about all this. And I think it is a new tool I can add to my toolbox to reach more individuals.

Mike Mills (Host) | 01:01:29 to 01:01:48

And I hope anybody that's listening to this takes that away from it as well, because it is truly something that you can benefit from. Now, you are based out of Nevada, right? I'm in Nevada, handled most of the country, to tell you the truth, license wise and things like that. Certainly most of the higher value in reverse mortgage states.

Mike Mills (Host) | 01:01:51 to 01:02:15

You obviously in our company, Geneva. Certainly if anybody's watching it from them, give Chris a call if you have any clients that are looking to reverse mortgages and then anybody that isn't with us or outside, how can they contact you to ask any questions or refer somebody over to you, Chris, if they need help? Sure. Well, my website is www. Rmfor seniors.com.

Chris Handy (Guest) | 01:02:15 to 01:02:37

So there's information on there. I'll put that in the show notes. Yes. And then email c handy@genevafi.com and then I just take calls all day on my cell, PH177-577-5669 for just scenario questions. And I help people who have reverse mortgages and say, what do I do about this and that on this reverse mortgage?

Chris Handy (Guest) | 01:02:37 to 01:02:44

And I'm happy to help those people all day, too. Yeah. Well, man, I can't appreciate you enough. And thank you for coming on today. It was great.

Mike Mills (Host) | 01:02:44 to 01:02:58

And your wealth of knowledge, the encyclopedia of reverse mortgages, just like I said in the beginning. So thank you so much. Thank you for everybody that stuck around and watched till the end. I appreciate it. I'll have a market update again on Tuesday next week.

Mike Mills (Host) | 01:02:58 to 01:03:15

And next week, my guest, because it's spring break, at least here in Texas, I will be continuing my series with my daughter. She'll come in for her third trip where we talk about teen finances. She's got a job now. She's got a budget that she's working off of and bank accounts. So we got a whole lot to talk about.

Mike Mills (Host) | 01:03:15 to 01:03:27

So if you have a teenager that you're trying to navigate through how to manage money these days, it'll be a great one to tune in for. So I appreciate everybody that was here this week. Thank you again, Chris, for coming on, and we'll see you guys next time.