What Are The Pros And Cons Of A Reverse Mortgage - YouTube

The key to a comfortable retirement  may be sitting under your own roof. 

In this episode, I'm going to address the question  What are the pros and cons of a reverse mortgage? 

Get ready, I'm going to dispel some myths that  have been out there for years about reverse  

mortgages and you'll be able to determine  if one may be right for you and when?

So, my name's Doug Andrew I've been a  financial strategist and a retirement  

planning specialist for more than 47 years and so  I've helped thousands of Americans in particular  

optimize their financial assets based upon U.S  tax code and what have you and minimize taxes in  

retirement and empower their authentic wealth.  So, they don't outlive their money. Because I've found  

from doing this for decades that most retirees  who outlive their money do that because of three  

dangers. They don't know how to combat or eliminate  or make themselves immune from taxes, inflation, and  

market volatility and so they outlive their money.  Well, when I see that a lot of times people do not  

have the wherewithal to continue to have the same  lifestyle in retirement. Because they didn't save  

enough money they thought they were going to  be in a lower tax bracket and they weren't  

and they didn't calculate the negative impact  of inflation on their retirement income that  

was relatively fixed. Because the government only  increases your social security benefits based upon  

a formula that is usually only about one-third  of the actual inflation rate. Did you know that?  

In a nutshell, instead of comparing apples to  apples a basket of goods and services each  

year they actually can do an apples to oranges  comparison which is ridiculous. This is so stupid  

but they can compare a filet binyon steak one  year to hamburger the next if they want and  

say, "Well, people still ate red meat they have the  same lifestyle even though you're eating a hamburger  

instead of steak", okay. Now, this is what causes a  lot of retirees who outlive their money because  

every seven to ten years at the real rate of  inflation. I mean, look at the gas pump look at food  

lately. They have to double their income or take  out twice as much out of their IRAs of 401ks.  

So, what do we do here in order to make up  for that? Many times people would come to me and  

they would be so frustrated and I'd say, "Well,  your greatest asset to maybe making ends meet  

is sitting right under your own roof", and they go, "What are you talking about?". I'm going to explain  

what a reverse mortgage is and why you may want to  consider one sooner than later if you're retired.

But if this is already resonating with you and  you can think of somebody who ought to watch this.  

Share it, click like, post a comment, subscribe to  this channel because I have over 500 educational  

videos that are designed to help you gain insights  into opportunities. You never knew existed before  

and that's the purpose of this episode and  stay with me to the end and I'll give you  

an opportunity to claim your free copy  of my most recent bestselling book.

Don't pay $20 for it on Amazon I'll gift it  to you for free, okay. So a reverse mortgage.  

This is where people many times have a home  and it may even have a mortgage on it. So,  

what have homes been doing? They've been going  up in price and so that equity in the home is  

an asset. Now, sometimes people think well this  is my kid's inheritance. Most of the time when I  

ask the children they go, "Mom, dad, we don't want  the house. We don't care", this is your money and  

so if your kids aren't greedy you don't have to  worry about leaving behind a clear and free house  

or a bunch of equity in your house to your kids  unless you would rather suffer during retirement  

or live off of social security charity well for your children for support. Is that what you want?  

Most people realize, "No, I have my house but I have to sell it. But if I sell it then I have to pay  

cash and buy a new one. I can't afford  a mortgage payment." Well, do a reverse mortgage  

stay in your house. How does it work? In a nutshell,  Instead of you making a mortgage payment let's say  

to the mortgage company. The mortgage company can  make a payment to you for the rest of your life or  

you can take a lump sum or you just simply get rid  of a mortgage payment. I'm going to give you three  

examples here in a moment of different ways many a  savvy clients of mine have used reverse mortgages.  

To be honest with you, my wife and I are doing one  right now. I'm 69 and sometimes people say, "Well,  

I've heard some bad things about reverse mortgages.  They can take your house away from you." A lot of  

these things are myths. So I want to outline these  with you here in the next few minutes so that you  

can begin to understand them better and if it  makes sense you can then search out a reverse  

mortgage specialist. There's several of them out  there and go through the process if this makes  

sense for you. So, when you're looking at a reverse  mortgage the opposite is called a forward mortgage.  

That's the kind of mortgage where you're paying  down the mortgage with an amortization schedule  

and you eventually maybe own your home free and  clear. Well, can you take out a reverse mortgage  

if you have a current mortgage on your house? Yes.  A reverse mortgage is simply a kind of refinance  

and there's three basic ways that you can do a  reverse mortgage. If you've paid off your house you  

can actually take a big lump sum or you can have  the mortgage company send you a monthly payment  

based upon your life expectancy. You can actually  qualify for a reverse mortgage after age 62.  

Okay, from 62 on I'm 69 right now. You can do it  in your 70s or whatever but they're basically  

looking at your life expectancy between you  and your partner if you're married you have  

a spouse and so they look at both of your life  expectancies and they calculate it and if they  

think you're going to live you know 12 years or  15 years between the two of you then they simply  

calculate how much money they will give you. If you  have a house worth 300,000 or 500,000 or a million  

they may give you 400,000 and a lump sum. Okay,  based upon how much longer you're expected to live  

or they may say, "You know what, we'll give you  two thousand, three thousand, dollars a month",

or maybe you have an existing mortgage and so  they just basically take that and pay it off  

and you got rid of your mortgage payment. I've helped many people get rid of their mortgage  

payment and stay in the house the rest of their  life. So, let me address some of the myths about  

reverse mortgages and then give you an example of  one or two or three that I've seen just recently. 

So, off times people will use HECM.  A home equity conversion mortgage. Sometimes people  

use a home safe type mortgage and a mortgage  specialist that does reverse mortgages will  

explain the differences and what might be  helpful to you and so what you're doing you  

have to go through a counseling session and get  a certificate. Because they don't want you doing  

something or making a decision without being fully  informed which is smart and so you can pay a lower  

interest rate a little bit higher or if you've got  already a huge mortgage on your property that is  

at least 50 percent loan to value. But you live in  a nice area where the real estate is appreciating  

that the interest rate may be a little bit higher  but you get rid of your mortgage payment the rest  

of your life and you can stay in that home. So,  the mortgage company secures the loan with your  

property. Now, that mortgage is not doing payable in  your lifetime unless you move or if you go into a  

rest home or both of you. Between the two of you  if you have not lived in the home for 12 months  

or longer they may have a clause that says well  it's due. Now, they don't come in and just foreclose  

on your house they give you a chance. They give  your children a chance for you to sell the house.  

They'll give you a window of time maybe 90 days  or 180 days to sell the house and you get all  

the remaining equity. The lender does not grab  all your equity. Now, if you want to walk away  

if the mortgage has accrued to a higher balance  than it's worth because of a recession you can  

just turn over the house to the mortgage company  if you want. You just do it a deed in lieu of a  

foreclosure but most of the time homes continue  to appreciate at three, four, five, percent a year.  

They already know this. So, if you start out with a  reverse mortgage of two hundred thousand or five  

hundred thousand the balance just keeps growing.  But your house keeps going up in value and so they  

keep that spread and this allows them to then give  you a monthly payment or that you can take a big  

lump sum or you can just get rid of your current  mortgage payment even though you owe $500,000 or  

$700,000 on a house worth a million to or whatever.  It doesn't matter what your property is worth  

it's the ages of the people on the title and  they will always combine those based upon life  

expectancy. So, let me give you a few examples and  this will help you understand it better. I have  

a dear friend and client she's a widow has been a  widow now for like 18 years and she has a mortgage  

payment of ,800 a month and her house has  doubled in value in the last 10 years because it's  

appreciated over 7 a year. She's tired of having  that 1,800 mortgage payment and so she simply did  

a reverse mortgage. So now, the mortgage lender just  took it over and said okay you don't have to make  

the 1,800 payment anymore that's accruing and a  loan balance. She can stay in the home the rest of  

her life. They can never kick her out of her home  unless she doesn't pay her property taxes or the  

insurance on the home. You still have to maintain  the home and pay property taxes and insurance.  

But as long as she does that she doesn't have  to make a mortgage payment if the house isn't as  

worth as much as the mortgage balance they can't  come in and take it over. That was the deal. That  

was the risk they took. They calculated that. So, if  the reverse mortgage starts out at three hundred  

thousand it can grow to six hundred thousand,  nine hundred thousand and they're counting  

on the house going up. When you finally die if  you have a house now worth a million and a half  

and the reverse mortgage is a million three  there's two hundred thousand of equity. 

That belongs to your heirs. The heirs sell the  house and get the 200,000 and the lien on it  

just like any mortgage company the mortgage  gets paid off. The mortgage was accruing  

and so they can't come in and take your house away  from you. The loan is never due as long as you live  

in it and you pay the taxes and insurance for  as long as you live. Does that make sense? I have  

another gentleman and he did the same thing and he  freed up about seventeen hundred dollars a month.  

I have another close acquaintance that had  about 800,000 of mortgages between a first and a  

second mortgage but the house is worth a million  and a half and they freed up $4,800 a month the  

rest of their lives. They'll probably live another  20-25 years between the two of them. What can that  

couple do with an extra $4,800 a month? Do the  math that was a huge increase in their cash flow  

by simply getting rid of the mortgage payment or  if their house was free and clear they could be  

taking three or four thousand dollars a month of  income. One way or another they either save 4,800  

or if they had a clear and free home they just  created four or five thousand a month of income  

and it's tax-free. So hopefully, you've gained some  insights maybe into some opportunities you didn't  

know existed before. There's a lot of myths out  there about reverse mortgages. I'm not saying it's  

right for everybody but it could be right for you.  If you want to learn about opportunities like this. 

I would strongly recommend that you visit our  website. You attend our educational sessions.

But the best way to do that claim your free  copy of my most recent best-selling book  

and you'll be notified of educational webinars  seminars and other books and videos and master  

classes that we offer. My passion and my purpose  is to enlighten people so that they can understand  

things instead of hearing all these myths out  there that are just simply not true off times.  

Go to laserfund.com contribute a nominal amount  towards the shipping and handling I'll cover the  

rest of that and fire out a copy of this 300  page book to you and you can begin to learn  

why this is my favorite financial instrument to  have my serious cash. Where I would put my reverse  

mortgage positive cash flow in order to keep it  liquid, safe, earning predictable rates of return.