Hi there, Bridget Mackay here with the law offices of Bridget Mackay in Petaluma, California and we practice in the area of thestate planning and elder law.
And I have Jeremy Forcier here with me, with Peoples Home Mortgage.
And we're going to talk to Jeremyabout a couple of topics.
The first is, and it's a question I get a lot inmy practice, is should I get a reverse mortgage on my home? Or, should I refinance my home to get my payment down and my budget a little more workable for my life? So Jeremy what are your thoughts? I know most clients end up doing a reverse mortgage becuase the appeal of not having amortgage t o pay and having a little more cash flowis strong.
So, the answer is overwhelmingly depends.
Like, it really depends on theunique situation for the individual.
So, I think there are some buckets that you really have to kind ofcheck into and check off to see if a reversemortgage is going to make sense for you.
So, the one major one is, do you have significant liquid assets or retirement funds? Okey.
Because if you do.
So, like IRA's, anuities?Something outside of your general social securityincome? Yes.
Yep, if you have any type of significant retirement funds or liquid assets.
Sometimes, most times the reversemortgage doesn't make sense.
Because you kind of already have, that's what the reverse mortgagetechnically is replacing, is that you're creating kind of anannuity for yourself.
So to speak.
So now with that said if you don't havethose things and you do have a lot of equityand your wealth is really in your house and trapped and you don't want to move.
You want to stay in your house.
You don't want to relocate to adifferent area.
So let me ask you this.
So, you don't want to move.
Why is that important for a reverse?So it's important for a couple reasons.
So, number one is what I was referring to is that alot of people don't want to move outside of thatarea where they've lived for a long period of time.
Right? But it's expensive where welive.
So, they have to make a choice.
I can't afford the lifestyle here.
And I can't afford the monthlypayment.
I have to get rid of one.
So, sometimes people don't want torelocate out of state or to a different areathat's more affordable.
It can make a lot of sense to stay.
But the second reason that you have to want to live in yourhome is that a reverse mortgage is onlyfor owner occupied residence.
Which means, you literally have to live in yourhouse in order to get a reverse mortgage.
So, you can get a reverse mortgage eliminate your payments and then rent it out and go move somewhere else.
You can't do that.
So, the summary sort of is if you have other sources of income outside of SocialSecurity.
Whether it's or even outside of your pension.
Like tapping into an annuity or an IRA or any type of vehicle like that.
It it doesn't make sense, if those accounts are significant.
Significant being between three and five hundredthousands? It's subjective.
It depends on your lifestyle.
That's why it's alwayslike,'depends'.
It's like a hard thing to answer.
But really the easy rule of thumbfor me is, do you have, and we're talking about retirementage people.
So it's good to make sure everyoneknows that.
Is there age limit for a reverse mortgage? There is an age minimum.
Right? So, you have to be a minimumof 62 years old.
So, so, we're talking about usually peoplewho are getting reverse mortgages that we've donethem for are 70, 75, 80, 85.
Because the older you are the more equity you have access to and it's an equation.
But basically, if you have 10 years worth of assets, liquid assets that you can drawfrom.
A reverse mortgage it might not makesense.
Because you can always get one ifyou run out of the assets.
It's not like you have one chance toget one.
And then a follow up question to that is, do you have to have capacity to get a reverse mortgage? Yes.
I get an adult child who says, 'we're going to get a reversemortgage on mom's house so we can pay for her care and keep her in the house but she's incapacitated'.
Mentally she can't.
It happens a lot.
That's the, usually people wait too long to start that planning process.
So, usually I'd say 50 percent of the cases that comeacross my desk are people that are have power of attorneys already.
That their father and mother can't think forthemselves.
We cannot give that personal a loan.
Because that's predatory lending.
Imean that's a protected class and it's to protect, you know, the person.
So, it's really important that when things start to change and you are starting to plan for thenext 15 of life.
If you're, you know, a sibling or a child helping your parents.
It's really important to startearly.
Because they have to take a course, pass a test, show that they have cognitiveability in order to get a reverse mortgage.
I mean that makes sense.
So the last question I have is there's a lot of, you know, practitioners out there in your area.
And I see that there is, you know, people who just do reverse mortgages and advertise that.
And then there's more conventional lenders that also do reversemortgages, like this one mortgage.
So, what is your opinion on sort of what the best approache is? Do you want someone who has abroader tool belt to really talk about the options or someone who just really does thatone focus thing? So, my opinion is.
First of all, you have to know howto do reverse mortgage.
So, you know, the school of thought islike specialized, totally know how to doit.
Or, like, you don't really know theproduct.
Which isn't true.
You can learn any product and really know it.
My opinion is to have a much broader view.
To do both because there are oftentimes people that will come across you desk thata reverse mortgage really doesn't makeany sense.
And you might see a different option doing a cash out refinance, self funding so own stuff throughequity in your house.
If the person still working, does it really make sense to do areverse mortgage? So, I think that working with an institution and especially an individual thatdoes do both and that understands it, you're going get the best advice.
Because you're not just looking atone singular product.
And oftentimes that is thequestion that we started with.
They want toknow, do we do this conventional loan, what do we do? Right.
And then because, what happens is ifyou do do just one product, you're gonna get referred, if you want options, to two different people who aresales people.
Let's not forget that.
And they're selling their product.
So, it makes it more intense because you know the person's beingpulled.
Here's s ome competition.
So, I think it's better if you're goingto get the best advice possible.
Work with someone that represents all the products and look at all the options next toeach other.
Well thank you Jeremy.
Thank you for having me.
Yeah it's really great.
Exactly 401k's, IRA's, annuities,investment account, cash, anything.