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Should I Get A Reverse Mortgage Or Refinance My Home? - YouTube
Channel: unknown
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Hi there, Bridget Mackay here
[4]
with the law offices of Bridget Mackay in
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Petaluma, California
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and we practice in the area of the
state planning
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and elder law.
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And I have Jeremy Forcier here
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with me, with Peoples Home Mortgage.
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And we're going to talk to Jeremy
about a
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couple of topics.
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The first is,
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and it's a question I get a lot in
my practice,
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is should I
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get a reverse mortgage on my home?
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Or, should I refinance
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my home to get my payment down
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and my budget a little more
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workable for my life?
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So Jeremy what
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are your thoughts?
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I know most clients
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end up doing a reverse mortgage
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becuase the appeal of not having a
mortgage
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t o pay
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and having a little more cash flow
is
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strong.
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Yes. So,
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the answer is
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overwhelmingly depends.
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Like, it really depends on the
unique
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situation for the individual.
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So, I think there are some buckets
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that you really have to kind of
check into
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and check off to see if a reverse
mortgage is
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going to make sense for you.
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So,
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the one major one is,
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do you have significant
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liquid assets
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or retirement funds?
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Okey.
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Because if you do..
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So, like IRA's, anuities?
Something outside
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of your general social security
income?
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Yes. Yep, if you have any type of
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significant retirement funds
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or liquid assets.
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Sometimes, most times the reverse
mortgage
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doesn't make sense.
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Because you kind of already have,
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that's what the reverse mortgage
technically is
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replacing,
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is that you're creating kind of an
annuity
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for yourself.
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Right.
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So to speak. So now
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with that said if you don't have
those
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things
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and you do have a lot of equity
and your wealth is really in
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your house and trapped
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and you don't want to move.
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You want to stay in your house.
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You don't want to relocate to a
different area.
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So let me ask you this.
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So, you don't want to move.
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Why is that important for a reverse?
So it's important for a couple
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reasons. So,
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number one is
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what I was referring to is that a
lot of people
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don't want to move outside of that
area where they've
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lived for a long period of time.
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Sure.
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Right? But it's expensive where we
live.
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So,
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they have to make a choice.
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I can't afford the lifestyle
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here.
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Right.
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And I can't afford the monthly
payment.
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I have to get rid of one.
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So, sometimes people don't want to
relocate
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out of state or to a different area
that's more affordable.
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It can make a lot of sense to stay.
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But the second reason that
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you have to want to live in your
home
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is that a reverse mortgage is only
for owner
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occupied residence.
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Which means,
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you literally have to live in your
house
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in order to get a reverse mortgage.
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So, you can get a reverse mortgage
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eliminate your payments
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and then rent it out
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and go move somewhere else.
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You can't do that.
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OK. So,
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the summary sort of is if
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you have other sources
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of income outside of Social
Security.
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Whether it's
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or even outside of your pension.
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Like tapping into an annuity
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or an IRA
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or
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any type of vehicle like that.
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It it doesn't make sense,
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if those accounts are significant.
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Significant being
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between three and five hundred
thousands?
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It's subjective.
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It depends on your lifestyle.
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That's why it's always
like,'depends'.
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It's like a hard thing to answer.
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But really the easy rule of thumb
for
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me is, do you have,
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and we're talking about retirement
age people.
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Right.
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So it's good to make sure everyone
knows
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that.
Is there age limit for
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a reverse mortgage?
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There is an age minimum.
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Right? So, you have to be a minimum
of 62
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years old.
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OK.
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So, so,
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we're talking about usually people
who are getting
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reverse mortgages that we've done
them for
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are 70,
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75, 80,
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85.
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Because the older you are
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the more equity you have access to
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and it's an equation.
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But basically,
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if you have 10 years
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worth of assets,
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liquid assets that you can draw
from.
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A reverse mortgage it might not make
sense.
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Because you can always get one if
you run out of the assets.
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Right.
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It's not like you have one chance to
get
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one.
And then a follow up
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question to that is,
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do you have to have capacity to get
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a reverse mortgage?
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Yes.
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Yes.
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Right.
I get an adult child who says,
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'we're going to get a reverse
mortgage on mom's house
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so we can pay for her care
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and keep her in the house
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but she's incapacitated'.
Mentally she
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can't.
It happens a lot.
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That's the, usually people
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wait too long to start that planning
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process.
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Right.
So, usually I'd say 50
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percent of the cases that come
across
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my desk are people that are
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have power of attorneys already.
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That their father
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and mother can't think for
themselves.
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Right.
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We cannot give that personal a
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loan.
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Right.
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Because that's predatory lending. I
mean that's a protected class and
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it's to protect,
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you know, the person.
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So, it's really important that when
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things start to change
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and you are starting to plan for the
next
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15
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of life.
Right.
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If you're,
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you know, a sibling
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or a child helping your
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parents.
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It's really important to start
early.
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Yeah.
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Because they have to
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take a course, pass a test,
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show that they have cognitive
ability
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in order to get a reverse mortgage.
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Right. I mean that makes sense.
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Yeah.
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So the last question I have is
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there's a lot of,
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you know, practitioners out there
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in your area.
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And I see that there is,
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you know, people who just do reverse
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mortgages
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and advertise that.
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And then there's more conventional
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lenders that also do reverse
mortgages,
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like this one mortgage.
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So,
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what is your opinion on sort of what
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the best approache is?
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Do you want someone who has a
broader
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tool belt to really talk about
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the options
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or someone who just really does that
one focus
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thing?
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So, my opinion is.
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First of all, you have to know how
to do reverse mortgage.
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So,
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you know, the school of thought is
like
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specialized, totally know how to do
it.
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Or, like, you don't really know the
product.
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Right.
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Which isn't
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true. You can learn any product
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and really know it.
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My opinion is to have a much broader
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view. To do both
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because there are oftentimes people
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that will come across you desk that
a
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reverse mortgage really doesn't make
any sense.
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Right.
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And you might see a different
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option doing a cash out refinance,
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self funding so own stuff through
equity
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in your house.
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If the person still working,
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does it really make sense to do a
reverse mortgage?
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So, I think that working
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with an institution
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and especially an individual that
does do
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both and that understands it,
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you're going get the best advice.
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Because you're not just looking at
one singular
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product.
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Right. And oftentimes that is the
question
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that we started with. They want to
know,
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do we do this conventional loan,
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what do we do?
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Right.
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And then because, what happens is if
you do
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do just one product,
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you're gonna get referred,
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if you want options,
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to two different people who are
sales people.
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Let's not forget that.
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And they're selling their product.
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So, it makes it more intense
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because you know the person's being
pulled...
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Here's s ome competition.
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Yeah. So,
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I think it's better if you're going
to get the best advice
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possible.
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Work with someone that represents
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all the products
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and look at all the options next to
each other.
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Yeah. Good.
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Well thank you Jeremy.
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Thank you for having me.
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Yeah it's really great. Thank you.
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Exactly 401k's, IRA's, annuities,
investment account, cash, anything.
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