Getting a reverse mortgage has changed my life
Carol Tavares: ()I love you more. I didn’t leave myself out. The first thing I did was I got an air conditioner and I also bought myself a new king size bed and I want to have my kitchen cabinets painted white. I feel secure. I’ve got the money, and I can do it, I can live. I don’t have to worry about losing my house, and I don’t have to worry about making a house payment. I only have to pay taxes and insurance. I’m really happy with the reverse mortgage and considering how negative I was, I can’t believe it’s me, but it’s true.
But in the case of a house, everybody wants to give their house to their kids and their kids are going to take that home equity and convert it into cash just as quickly as they can
Harlan Accola: ()I have a lot of compassion for people that don’t like reverse mortgages because I hated, them and I told people, “Whatever you do, don’t get a reverse over here mortgage. They’re bad for you, they’re bad for your kids, you’re going to lose your house,” all the misconceptions that people say to me all the time. And then one day I got an invite to go to a seminar. That three-day seminar changed my life. The truth is there’s a lot to like. Everybody has three buckets of wealth. Bucket one is the money that we make and are able to make when we work, and after we stopped working, the ability to make social security, income, pension, income, whatever it is. Bucket two is the money we put aside for the future and that’s money that we set aside in 401Ks, 403Bs, IRAs, all the different retirement vehicles or just regular savings plans or, of course, life insurance contracts.
Harlan Accola: ()What we’ve also done is taking hundreds of thousands of dollars and dumped it into bucket three. That’s our home equity. What’s interesting, though, when we start looking for where do we pull money from, bucket one is usually not big enough. So we turn to bucket two where we’ve got our savings account. What we don’t realize is all of that equity that we had in bucket three, we can turn that into cash also. What’s wrong with using it? But for most people, they block that off and say, “No, that’s stuck,” and they’re going to leave it in the walls of their house and not touch it. One of the biggest single things that I hear over and over again, which is, “I want to give my house to my kids free and clear.” It’s almost laughable because most children are never going to use the house or move into it. It’s really strange, but everybody wants to give their home to their kids.
Harlan Accola: ()So the odd thing is that if we were going to give our kids a Christmas present and we knew they were going to take it back to the store, we’d probably give them cash or a gift card
The best time to use a reverse mortgage is at the beginning of retirement, not at the end*. If you do a reverse mortgage at the beginning of retirement, instead of waiting until you’re 82 or 92 when you run out of money, what happens is that you’ll end up with a larger legacy, you pay less in taxes, and you have more cash flow while you’re alive.
Harlan Accola: ()A reverse mortgage is kind of like you’re guaranteed not to lose. So FHA mortgage insurance guarantees that no matter when you pass away, no matter how big the bill gets, no matter what happens to the stock market or the interest rates or any of those things, you will never owe more than what the house is worth**. You will never have a bill left for your children, and you will never have to make a payment no matter how long you live, except for taxes, insurance, and maintenance. So if it’s good, it goes to the children. If it’s bad, the bill goes to FHA. You don’t know if you’re going to win for sure, but you’re guaranteed not to lose.