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9.22.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Take Point on Retirement with your host, Erick Arnett. Erick is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Take Point Wealth Management takes pride in knowing they've helped so many pursue the financial future of their dreams, and they can help you, too. And now let's start the show. Here's Erick Arnett.

Erick Arnett:
So hey everybody, welcome back to Take Point on Retirement Radio. This is Erick Arnett with Take Point Wealth Management. I'm the host of your show. And of course we have Mister Sam Davis with us today, our DJ extraordinaire. Just keeping us in line. How you doing, Mr. Sam?

Producer:
I'm doing well. Erick. So happy to be here on the air in the Sunshine State. We have a special guest on today's show and a lot of important things to talk about, so stick around for Take Point on Retirement.

Erick Arnett:
Yeah, just a shout out to our listeners up and down the Gulf Coast from Punta Gorda, Port Charlotte, Sarasota, Tampa, Saint Pete, of course, the wonderful Nature Coast. I'm so glad you guys listened to this show and this show is for you. Purely educational and just wanted to thank thank the listeners. If there's something on the show today that makes sense to you or you have a question, you have a concern, please reach out to us. There's several ways you can do that. Of course you can just call us directly at (352) 616-0511. That's (352) 616-0511. Also, if you want to go ahead and get a hold of us just right online, you can go to our website TakePointWealth.com and upper right hand corner. You'll see a button. You just click that you can get right on my calendar and put some notes in there. And just tell me kind of what your concerns are and I'll get right back with you. And also, you know, these shows are broadcast on any podcast site, whatever podcast site you like to listen to, Spotify, iTunes, we're out there. Just download Take Point on Retirement for past podcasts. And then of course, if you just just can't catch all of today's show, we'll be there for you also on YouTube. But we'd love for you to go to YouTube channel, watch our YouTube channel and like us there as well. So please don't hesitate to call us with your questions. We love hearing from our listeners. This show is for you and today we do have a special guest occasionally, as our listeners and our retirement warriors know, we bring on what we call an industry expert in different types of industries or different financial disciplines, things that we think are relevant.

Erick Arnett:
For our retirees today. And and one thing for sure we're going to talk about on today's show, in fact, the title of the show today, folks, is Protect Your Retirement from Inflation How to Manage Rising Prices and Preserve Your Buying Power. And so it's becoming increasingly challenging. Today, we're going to get into a lot of the things that you're facing as a retiree and a pre retiree with, you know, one thing for sure we know is that inflation has been been crazy. It is getting better. However oil prices have spiked again. Food costs are still up there. And so for our retirees who are trying to in a sense plan for income in their retirement, this is going to be more and more of a challenge as cost increase. So we have Mike Forslund with us today. He's with Fairway Independent Mortgage Brokers or Lenders. Mike, I don't know if I said that, right. I'm gonna let you introduce yourself anyways, but we're going to talk today as long as we need to about the reverse mortgage and and why this could potentially be a benefit or a potential source of income, a source of funds for you in your retirement does not necessarily mean that Take Point on Retirement is endorsing this at all. Please don't, you know, take this as an endorsement.

Erick Arnett:
But we we do like to bring new ideas to the table and give you resources. You can contact us here at Take Point Wealth and the the many ways that you can get a hold of us either (352) 616-0511 or you can go to my website, take point Wealth and upper right hand corner. Just go ahead and request a chat session or a meeting with me, and I'll be happy to get you all the information you need on reverse mortgages. So I met Michael and Michael's been in the industry a long time, and I've been looking for somebody to come on the show and talk about reverse mortgages, because I do get a lot of questions about them. They're one of those things out there that are kind of a mystery to folks. You know, you hear good and bad pros and cons and and, you know, just like annuities or investments, you know, there's a lot of misinformation out there, a lot of noise. And so really, what I'd like to get to today is the brass tacks, the nuts and bolts of what the reverse mortgage is potentially, you know, some of the benefits, some of the pros, some of the cons, uh, you know, and how how this could be a potential tool to help our retirees and retirement. You know, one thing that comes to mind, Michael, is, you know, the cost of living, the cost of homes have gone up dramatically. But those of us that were in our homes prior to the, you know, prior to the increase, I mean, we've some of us have seen the values of our homes double.

Erick Arnett:
And when people are what you call cash poor, but property rich or land rich, you know, they have most of their assets. I see it all the time. I talk to people all the time and most, you know, a lot of them, their primary asset is their home. And so they have all this equity inside the home. So how is you know, you know, if they don't plan on selling the house and, and they're not going to move and they're going to stay in that home throughout retirement, then you know, that's kind of equity that's locked up in there. They don't have access to it. And so, you know, this may be a potential idea. I think folks listening today need to to investigate this and look into it and see, you know, does it make sense for you to think about a reverse mortgage? So with that being said, that was a long intro. I'm sorry about that, Michael, but, um, so happy you're here with us today. Mike. Just tell us a little bit about yourself, how people can get a hold of you and then, you know, what is it? What? What is the, I guess, the ideal person or where does this work out and maybe not work out or, you know, just kind of take it from here and kind of explain to us what the reverse mortgage is and how it may benefit us.

Producer:
Well, thank you very much for having me, Erick. Michael Forssell with Fairway Independent Mortgage Nmls number 659608. The reverse product has a couple different options that are available for folks. Like you said Erick, there was misperceptions in the industry. But basically, you know, it's it's a way it basically really if you're in your final house or if you want to purchase your your forever house, because you can purchase a home with with a reverse mortgage. And we can talk about that a little bit later. But there's a lot of different things that folks can do with with it. If they have a mortgage that they want to pay off and then not have a mortgage payment, they can do that. If they have equity in the property and they want to get a lot of credit, they can get a reverse mortgage access to that credit. And you may agree, Erick, it's really all about cash flow when you're when you're retired and not not outliving your money. And that reverse mortgage gives you the flexibility of improving your cash flow, whether that be paying off an existing mortgage to not have a mortgage, have access to equity in your property through a reverse line of credit, which allows you to draw money. Maybe when the market's down to don't get caught in sequence or returns. So there's a lot of a lot of different options available for it, but ultimately it allows you to access the equity in your property without having to make a mortgage payment. You're still responsible for paying the taxes and the insurance and the HOA, but you can access that equity, certain percentage of it, based on your age and not have to have a mortgage payment.

Erick Arnett:
So, you know, if someone's listening to the show right now, I mean, if I'm listening to you, I'm like, okay, that sounds cool. I mean, I've got this home, you know, it's worth $400,000 and I owe I owe 100 on it or 200,000 on it. And and I've got all this equity sitting there, just sitting there that I really can't tap into or utilize. And then also, I potentially may have a cash flow problem because I don't have the income or the sufficient, sufficient enough income to pay my mortgage, or it's getting just a little tight. You know, I've, I've noticed a lot of my clients and even folks that I'm meeting on a daily basis, prospective new clients, um, a lot of them are now experiencing the challenges of the rising cost to live, you know, I mean, inflation, food, health care costs, I mean, retirees. I was reading an article the other day that, you know, retirees on a fixed income are going to be even more impacted by inflation than others because, one, you're on a fixed income, it's not like you either have to tap into your investments or you have to tap into something. I was talking to a guy the other day and he said, yeah, I had this big cash, kind of, um, you know, balance or cash stash to kind of go to when I needed things. And he said, I've had it for about six years, and I've noticed, like all of a sudden it's almost depleted, like I'm having to tap into that, which means that people are spending more than they normally normally do.

Erick Arnett:
And so, you know. If I've heard, you know, one of the things that I have had clients in the past that have done the reverse mortgage and it worked out for them, and they seem to be pretty happy with it. But I know, like the rules were a little bit different back in the day. It's been a while since I've seen one of these up close. Just give us some more insight into, you know, how do you qualify for one of these, you know, is there some certain parameters that certain people would qualify? Certain people wouldn't. And then what are what are. I mean, you clearly outlined some of the positives. And you can basically, in a sense, for a lack of better terms, from what I'm hearing you say, with the reverse mortgages, you would no longer have a payment other than you still are responsible for your property tax, your insurance, homeowner's association dues, but the mortgage and interest payment goes away. And then, you know, they also would obviously receive some type of lump sum, I believe, you know, I know it's probably a formula based on the amount of equity that they have in the home or whatever. But give us some more details, like, you know, of who would qualify for this and who might be a good person for it, and maybe somebody that shouldn't even consider this.

Producer:
Well, essentially one of the some of the qualifications are what we do is FHA insured loans. There are other reverse mortgages, but the ones we do are FHA insured. It's what I would advise to do. Those are for folks that are over 62 years old, typically depend on your age and your equity. The older you are, the more equity you can tap in in your home. Typically right now it's about maybe 40 between 40 and 45% of your equity, depending on what your age is that you can borrow. So that's either to pay off an existing mortgage. A lot of folks who own the house is free and clear. Set up a line of credit, which allows them to draw money as they as needed. A great feature of the line of credit is it actually grows at the same interest rate that the interest on the loan is. So if you have $100,000 line of credit right now on a reverse mortgage, adjustable rate right now is about 7% that that line of credit, the unused portion of it is growing at 7% a year, which is nice. As you and I have talked in the past, in about 2014 or 2015, FHA came in and changed a lot of things, put some safeguards in place regarding the reverse mortgage, such as a financial component.

Producer:
It's not as stringent as qualifying for your typical mortgage, but there are some components in there because again, they just don't want to loan this out and put somebody in a bad spot. So you do have to have enough. There's a residual income component. So after your taxes and insurance and HOA and the other monthly payments you have on your credit report, you have to have a certain amount of money left after your your gross subtracted from your gross monthly income in order to qualify for this loan. And that is really set up because, again, you don't want to have set somebody up for fail where you're kind of putting a Band-Aid over a lot larger problem. So that's a good thing that there's a financial component there for that. And like I said, you have to be 62 years old. And really, there's very little information I need to get from somebody regarding whether we can. Get a reverse mortgage from them. Initially running the numbers in terms of their age, their equity, what their balance is just just to run some initial numbers.

Erick Arnett:
Yeah. So what? What do you mean? I've always. I've heard. I'm sure people out there. I mean, I have a lot of people in my office sometimes, and we're doing some planning and they're kind of struggling. They haven't quite saved enough for retirement. And I'll say to them all you've got, you've got this 4 or $500,000 house that in fact I have one lady. She's she's got an $800,000 home. And I mean, that's a probably that's more than. Oh yeah, it's more than 50% of her total net worth. And with all the rising costs, you know, she's facing the upkeep of the home and whatnot. It's just it's getting costly. New roofs are like $20,000. I had a quote for a new air conditioner the other day, and I had no idea, because I haven't replaced an AC unit on a home for a long time, and it was $10,000. And I was like, are you kidding me? I remember paying 4000. It was years ago when had one done at another home. So you know. So this one individual, you know, did you know, throw out there. Hey, have you thought, you know, you plan on what you've told me is you plan on staying in your home. You don't want to go anywhere else you'd like to basically, you know, pass there and then pass this home on to your to your heirs. You know, you have all this money sitting there. Have you considered the reverse mortgage? Maybe you want to consider that. And most every time I bring that up, people just say, oh no, no, no, I would never do that. They've heard things like, you can lose your home or you know, you no longer own the homes. You know, the mortgage company owns it a lot of kind of kind of scary things. You know, let's talk about some of the things that are misunderstood about the reverse mortgage. I think that might be helpful.

Producer:
One of the biggest misperceptions is if you do reverse mortgage, that you're going to the bank owns your home with the lender, Olinger Home, which is incorrect. It's no different than a regular mortgage. The only difference is, is that instead of you paying a mortgage payment and paying your mortgage down on a reverse mortgage, if there's a balance that a balance accrues interest over over time. But when you go to sell the house, or if you pass in your heirs with the house, if there's equity in the property, they want to sell it, they would pay the mortgage off, no different than there would be any other mortgage. The beauty of a reverse mortgage, though, is that maybe if you live, you know, to be quite old, maybe there's a pullback in the market if you end up upside down that property. It's a non-recourse loan, an FHA, which they charge an insurance premium as part of the closing costs on this loan. At the beginning that covers that difference, that deficit. So your heirs or your estate are not left holding the bag. So again, it's a it's a it's a regular time mortgage and service. It gets paid off or it would be paid off when you sold the house. Or if you had to go into a nursing home, it has to be paid off or refinanced within six months. But if there's equity there, that is you or your heirs equity. The bank does not.

Producer:
If you were to die and you owe $200,000 and the house is worth 400. The bank doesn't get the house and get the $200,000. That would be your money or your heirs money. Another misconception is that, you know, I know a lot of folks think that they would like to leave the home to their their children and don't know what your experience is with your clients, but, you know, only about 1% of the children actually want the house. They're just going to turn around and sell it. But the idea is if somebody needs that equity in their property to pay for health care costs or, like you said, rising costs of everything else, you know, this is a way for them to get that, but then not have a mortgage payment. Um, I would suggest, though, if somebody is having trouble making their just their normal everyday keeping up on the cost, upkeep of the property, property taxes, insurance, homeowner's HOA dues, things like that. You know, maybe they might want to look to potentially downsize and over want sometimes wants to stay in the house that they're in. But if that house is too expensive for them, they may want to, you know. Kind of maybe looking to downsize instead of trying to trying to pay the cost of that. In this example, maybe $800,000 house with insurance and property taxes, maybe. Maybe too much for somebody to afford depending on what their income is.

Erick Arnett:
Right. Yeah. No. Absolutely. And then one thing that comes to mind I'm thinking about, okay, what about the guy other what are the limits of this. Like is there a maximum or minimum? I'm thinking of the guy like okay, that lives on the beach. He's got a 2 or $3 million home. And I actually actually did talk to a gentleman not too long ago. He called in off the radio show, and he did have a 2 to $3 million home paid for on the beach. And it wasn't something that they really planned for. You know, they bought this home long time ago for, you know. Not nearly that much. And they lived in this home 30, 40 years. And all of a sudden they're like, Holy cow, you know what? The market increases. We're sitting on like this two, two, two. It was between 2 to $3 million home and but really didn't necessarily have the. Income to support that or nor did he want to. They love the home. They'd love to stay there. But, you know, upkeep on the beach and taxes and and Pinellas County, all this kind of stuff was weighing on him as he was, you know, going to be taking his last paycheck at work and heading into retirement. So. Are there like limits, you know, to, to them, like is there a maximum amount, minimum amount.

Producer:
The maximum is $1,089,000 is what the maximum loan amount would be the most. So if even if you had a $4 million house, they're going to limit that to 1,000,089 is what they're going to insure up to. So you could pay off either that large of a mortgage or set up that large of a, of a line of credit. Of course, you'd have to have the qualifications in, in place. And so, you know, and getting back to kind of the, the pros and cons, you know, we we do usually stress that if someone is going to get this loan, that this is going to be on a house, that would be kind of like their their final house where they plan on spending the rest of the, you know, their, their life at. Being in the day doesn't really want you to be upside down because one that would cost them them money. But the idea is that you they'll loan you the amount of money that you're allowed to borrow is based on your value and your age. So there's kind of actuary tables set up for that. So the idea is that that folks don't, you know, get to the point where they would be upside down based on that. And that's why the loan to value is limited when you do when you do get the loan.

Erick Arnett:
You know, I'm just thinking out loud to I know there's a lot of folks out there that would be potentially considering this. So, you know, what is it that they need to do? Like what is the first step? Is there a place to get information to research? I know that you're. Well, actually I think we have about five minutes left or so here in the first segment. I'd love for you to. I know there's probably a lot of different lenders out there that are, you know, offering reverse mortgages, brokers. There's probably I mean, I remember back in the day hearing that there was some companies that were less credible than others that were doing these. But this is a government program, right? I mean, it's it's backed and monitored and was created by the government. I remember hearing back in the day, like when the markets crashed, I think there were some people in some reverse mortgages back in like 0405 when and they're like, they were all sudden they were upside down. And did they get a margin call or whatever and say, hey, you know, we're foreclosing on your house. I mean, was that something that was happening back in the day? That doesn't happen now. Other you know, I think you had mentioned one time before when I was talking to you, there's other lenders other than that people might want to I don't know if they're necessarily bad or good, but there are certain things that people should be looking out for as they're kind of trying to investigate this or start talking to some people.

Producer:
Well, I would advise to do the FHA insured loan because, again, it ensures that there is no recourse that that insurance is again, if if the market pulls back on or you know, you live to your 105 or 110 and, and through different circumstances, you end up upside down on that property that you or your heirs or your estate are not left paying that difference that's paid by the insurance. So I'm not very familiar with the other products out there, but I would advise someone to only do the FHA insured loans. I know, like you said, it involves the government, but that insurance is there for a reason. You also get that credit line growth with an FHA insured loan and the other proprietary loans. I don't know if they have that same feature. Again, we don't really do those types of loans. We do the FHA insured loan, and that's what I would advise people to do. My websites there that tell reverse fairway.com has a lot of information. That's very helpful. But if someone just wants to get some, they can reach out to me 850980 4400 just to get some basic information. I mean, again, if I've got somebody address their date of birth and the value of their home and their mortgage, we can run some, some, some brief numbers because again, on this loan isn't for everybody. Erick, as you talked about, you know, kind of annuities and things like that. It's not a product that's for everybody. But there are some great. Positives of regarding this loan in terms of what it can help people do and like I said, improve, improve cash flow and at the end of the day, know a lot of people want to leave their house to their heirs, but most of those heirs don't really want that house.

Producer:
And at the end of the day, if you've got all this trapped equity in your property and you need it to for medical or other purposes, to be able to access it without it affecting your cash flow is very powerful for folks who are retired. And again, this this loan was I'm going to say it had had had some some negativity or surrounded it back, you know, probably the late 80s when it was when it was first started and into the early 2000s. One of the big things not to take too much time is that if both spouses weren't 62, you had to take the younger spouse off title, and then they weren't able to stay in the house after the the older spouse passed or or moved along to a nursing home. And that was a that's kind of where you you may have heard some foreclosures. People talk about that. That was pre 2014 that is no longer in place. That spouse is stays on title and can stay in that property even if the older spouse happens to pass or go into a nursing home facility or something along those lines. So that's one of the the things that have changed regarding that. But FHA will not foreclose on your house. They would only foreclose if the taxes and insurance aren't kept up. But a regular mortgage company would also foreclose on a regular loan if the taxes and insurance weren't weren't paid.

Erick Arnett:
Believe it or not, we've gotten through the first segment of the show here. About 30 minutes into it, we got a break for a we got to take a brief break right here, but I still have a couple more questions if you would stick with us. And then we'll wrap up when we come back. Folks, thanks for listening. To take part in our retirement radio. We'll be right back.

Producer:
You're listening to Take Point on Retirement. To schedule your free no obligation consultation visit. Take Point on Retirement.com.

Producer:
Do you want a steady stream of income for retirement? Then it's time to consider annuities. I'm Matt McClure with the Retirement Radio Network. Powered by AmeriLife. Gone are the days when most employers offered pensions with guaranteed lifetime payouts to their workers. But what if I told you that you can build your own personal pension? It's possible with an annuity. An annuity is a financial product that provides a series of regular payments to an individual over a specified period of time, often for the rest of their life.

Producer:
There are several options for you to.

Ford Stokes:
Consider when choosing an annuity. Be confident in knowing that there is an annuity out there that can meet all of your needs.

Producer:
Ford Stokes is founder and president of Active Wealth Management and author of the book annuity 360. There are several different types of annuities, including fixed, variable, and fixed indexed.

Ford Stokes:
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Producer:
While each can provide tax deferred growth and a lifetime income stream, variable annuities put your principal at risk in the market.

Ford Stokes:
If you are currently investing in a variable annuity, your funds could be in serious trouble if the market experienced any downturns.

Producer:
With so many possible choices to consider, it's essential you speak to a financial advisor or professional to help you make the best decision for your future. So are you ready to consider an annuity as part of your retirement plan? It's a key question to consider as you approach what should be your golden years with the Retirement Radio Network powered by Amara Life? I'm Matt McClure. Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
At take point wealth management. We know you've worked hard to earn your money, and you've worked even harder to save it when it comes to wealth management and planning for retirement trust, Erik Arnett and his team of experts who have been helping individuals, families and business owners find financial freedom for more than 20 years. Let us help you protect and grow what you've worked so hard for. Schedule your free, no obligation consultation now at TakePointWealth.com. Welcome back to Take Point on Retirement. Schedule your free financial consultation now at Take Point on Retirement.com.

Erick Arnett:
So hey everybody welcome back to take part. On retirement radio brief break there. Thank you so much for listening today. Once again I'm Erick Arnett, your wealth advisor here at Take Point on Retirement Radio. We've also got Mr. Sam Davis, and we're still continuing our conversation and our reverse mortgage lender and expert, Mr. Michael Forslund from Fairway Mortgages. And wanted to ask you a few more questions. But also, while we have our listeners attention, Sam brought up a great, great point in our break as to how people can at least start investigating this and how what what the next step is. I love for you to repeat your contact information, your website, and then also, I know you have a lot of tools on that website. If somebody wants to go to that website and just kind of dabble a little bit and see you know, if they potentially might be somebody that this is a good idea for.

Producer:
Yes. My website is Tallahassee reverse fairway.com. Phone number is 850980 4400. And as you said Erick, on that website there is a reverse calculator which again is your birth date, your value of your property. And if you have a mortgage balance it'll give you some options. But I really would recommend if somebody is interested in this, everyone's situation is different. Just reaching out to me to discuss your particular situation because again, this loan, you know, isn't for everybody. There's a lot of value in this product, but I think it's best to, to to call and discuss your goals and what you're looking at doing in the future in coordination with, you know, with, with Erick or your financial planner to improve your cash flow, things like that, to really kind of see if we if this is something that could, could help you reach those goals. Yeah.

Erick Arnett:
When we're doing retirement planning here at Teak Point Wealth Management then by the way, if you're listening today, you know, we're offering that completely complimentary. All it requires is for you to get a hold of us and give us a little bit of your time, and we will build out a total retirement plan for you, getting you to and through retirement from A to Z. This plan is an in-depth plan. It's not a complicated one. We share about 2 or 3 pages with you. However, we take quite a bit of time to look at all of the potential needs, objectives, goals, and obstacles that could potentially be facing you in retirement. We call it the Retirement Freedom Plan. It's free to you if you call today (352) 616-0511 or go to TakePointWealth.com and that upper right hand corner you'll see my calendar. You just click right on it. Pick your time. Jump right on. We'll start our conversation with about a 15 to 20 minute chat. Whether you don't know when to take Social Security, there's multiple ways to take it. Should I defer it? Should I take it now? How is that going to impact me tax wise? How is it going to impact my Medicare? I have several accounts. Which ones do I go to first? You know, what are the tax implications? Implications? Do I have enough income to get me through retirement. What's inflation going to do? I mean, on and on. This plan, folks, covers front covers everything from A to Z. It's a $1,500 value. It's free to you today if you call or get a hold of us. We're standing by. In fact, I'm standing by on the phone right now.

Erick Arnett:
It's (352) 616-0511. If you're listening to today's show and maybe some things that Michael have said interest you, maybe you're you're thinking, hey, I might be in the situation where a reverse mortgage works for me. I might not be in a situation that reverse mortgages work for me. However, what I can tell you is in working with Michael, with several of my clients, just like he said, he can get on the phone with you. He's super knowledgeable. He's been doing this for a long time. He's not going to try to steer you in any direction one way or the other. You could probably talk to you within five minutes and tell you whether or not you're going to be a good fit for this, and walk down that path with you and investigate with somebody that's got the experience that Michael has. Be careful about who is out there kind of offering these things and offering information. You know, you can go to the website and get or you can go to the internet and get all kinds of false information. Just just give Mike a call if you can also call us here at 2.3526160511. And we'll start that conversation. I'll get Mike right on the phone. We can do a two way call, whatever it takes. Folks, this show is for you. It's about education. That's why we offer you free books. You know, we offer you free reports. We offer you free retirement planning. We offer you free financial planning. This is your show, folks. That's. All about you taking advantage of it and just putting in the time to get a hold of us and give us the data and the information that we need to go to work for you to build out and optimize that stress free retirement plan for you.

Erick Arnett:
And it might just be that looking into reverse mortgage might make things a whole lot better. I don't know, but we have to investigate it. And the first step is getting a hold of Michael and going through the process to just kind of do that initial investigation to see if, hey, you know what? Okay, maybe, maybe I am a good fit for this. Let's let's continue the conversation. And 100% confident that Mister Forsland is the right guy to call because, you know, he's worked with my clients in the past and he's never, ever tried to say, you know, hey, I definitely think you should do this. In fact, he's told my clients several times, I don't think this is a good fit for you. So got to get with somebody that you like, know and trust and someone that can answer those questions. And that's Michael Forslund and and Mike, one of the things that I've been hearing about too, is obviously everybody's panicked about interest rates, regardless of the whether you're interested in reverse mortgage or maybe you're out there thinking about selling your home, buying a new home, downsizing, whatever. People are concerned about interest rates. I just wanted to pick your brain because, you know, you're in the industry, you know, what are you seeing? I mean, what do you think? Where do you think rates are headed? And, and and, you know, should people continue to move forward with their plan? Should they hunker down here and wait for some changes? You know what? What's your opinion on all that?

Producer:
Well, you know, we get a lot of information from industry insiders here at fairway. We have a lot of consultants that that study, you know, data and try to get an idea of maybe where things are going. I think my personal opinion, I mean, obviously the days of the 3% interest rate are gone. Before Covid, interest rates were around 5%. That's probably a healthy mortgage rate environment. I think everyone would agree. I think we'll probably head that direction and probably maybe in the, you know, mid to upper fives. But if people are are waiting for the 3% interest rate days, unless something happens like Covid again, those days are probably again, that was just a 18 months of that. And now we're kind of paying the price on that because the fed overcorrected. And now they're trying to trying to fix that. And so I think people need to just know that, you know, you might get five and a half, 6% down the road. But that's not necessarily a guaranteed thing. But that's probably what their realistic expectations is. The question is probably, you know, is that going to be mid to late 24. But if it is it relates to reverse mortgages. Most reverse mortgages folks will do an adjustable rate. So right now that's mid sevens. But the beauty of that is is that we'll go down as the market goes down. And again you're not paying that interest that's accruing. But it'll it'll go down as rates go down. So you kind of get the best of both worlds without having to refinance that loan. So in terms of interest rates, I just think people have to have a the expectations that we're probably going to be in that five and a half or 6% area, probably, you know, down the road, it's probably going to be best case scenario and I think we'll get there. But it just a matter of when.

Erick Arnett:
So yeah. So if the fed at some point probably in 2024, if they get the inflation data that they're looking for because the Fed's been pretty clear about, hey, they don't care about much of anything other than they're just trying to get inflation to a number that they want it to be at, which is I guess 2% basically. And so anything above that, they're going to still be kind of ready to pounce and raise rates. In fact, the fed folks, this is recorded. We can't go live for compliance reasons. But we're we're broadcasting or we're we're recording the show on Wednesday the 20th of September. And the fed is meeting today. And the consensus is that they will pause here for a little bit and then maybe raise again in November, a quarter or a quarter point. If they don't see the inflation data coming down to their liking, they they're not concerned about recession. They're not concerned about job growth. They're not concerned about any of that. What they've been explicitly clear about is that they want to see inflation come to into a range that they're comfortable with, and it's not quite there yet. It's been heading in the right direction, a positive direction. But inflation is still there, especially when you factor in oil prices and food prices.

Erick Arnett:
Food prices, you know, potentially in the markets in general, are kind of already poised or priced in another quarter basis point hike this year. Whether that happens or not, we don't know just yet. But potentially what would happen is once they pause or say they go to like a neutral stance and say, okay, you know, we think we've we've got the rates where we want them to be for now. And we. We're seeing. We're seeing inflation coming back to where we'd like it to be. They potentially will then start to lower rates, maybe next year or late next year. I mean, that's kind of just a prediction. Nobody knows. But when they so like when the fed lowers a quarter point or they raise a quarter point, is that a 1 to 1 ratio. Do you see interest rates for mortgages go up a quarter point or is it typically they go up a whole point? I mean, what do you I mean, what do you kind of see there? Because in a sense, what you're saying is, you know, you're all the data that your company looks at and your researchers are looking at is that the fed is probably going to eventually start lowering rates next year, which would bring mortgage rates down. What what else? I mean, I guess the other thing too is like what what other factors could bring rates down? Because a lot of times I see and listen to folks in the, you know, they're I'm not going to buy a home right now or I'm not going to do anything.

Erick Arnett:
I'm waiting for rates to come down, or I'm waiting for home values to come down and I tell them it's like, well, how long are you going to wait? Do you, do you know, do you have a crystal ball like, you know, when rates are going to come down and you know when home values are going to come down, or are you just hoping for that? And I don't want people to, you know, impact or make decisions based on the fact that they think, you know, that something's going to happen in the future. How will rates be affected if they lower, if they do start lowering rates next year? Because what you're saying is you you think that potentially and I'm not putting you on the spot or but you think potentially that rates could be a whole percentage point lower in late 2024 2025. So should people wait till they put their plans on hold? You know, what is your what is your feeling on that? Well, one of.

Producer:
The biggest questions I've gotten for 25 years in this industry is when the fed raises or lowers rates a quarter point. What does that do to mortgage rates? Typically it has a small effect, but normally the the market really dictates the overall market dictates mortgage rates. So it takes into consideration, you know, different things. Like you said, consumer price index, inflation, shelter in place costs, things like that. And typically when the fed makes a move, the the mortgage market is kind of already factored that in there. So the really right now the the ten year Treasury typically the the rate on that is about 2% less than where more one and a half or 2% less or mortgage rates should be. And right now it's a little over 3% the gap. So rates are what we call artificially inflated for for various reasons. And that's why a lot of the experts believe that once that correction takes place, then we'll be probably closer to like 6%. But again, there's other factors. So when somebody sees the fed raise the rates quarter point, that has to do with your lines of credit, your car loans, things like that, not mortgage rates. So to answer your question, Erick, a quarter point increase in two months. If the fed does that or even does that today typically has very little effect at that time because the market has already factored in what the fed is anticipating doing. They're very slow to react, but they usually give an idea of what they're going to do in the future. To answer your question about whether people should wait, I mean, if you're in a current home and you're at 3% and you're deciding on, you know, do I want to go buy and do something at 7%? That really all depends on what your situation is.

Producer:
If you need more room, things like that. But any first time home buyers that are listening here, the longer you wait, the more you're you're just you're not going to. You can't save money faster than the cost of homes we know here, especially in Florida, that there's low inventory. The reason for that is because there's fewer houses than there are buyers, and that means that prices will continue to to to go up. Will they go up as much as they have the last three years? Probably not. But there will be price increases. So if people are waiting to try to save a point or a point to have an interest rate that may be washed out in the increase in home prices the next year and a half. So if you can afford to buy now, I would suggest that you strongly look at that because again, rents aren't going down and you could always refinance. We what we say in this business is, you know, marry the house and date the rate. And then you can refinance. And in the year and a half or whenever it's appropriate, to get a lower payment, if you can afford to buy now, but to spend 15, 20, 25, $30,000 on rent a year. If you can afford to buy, I would suggest it.

Erick Arnett:
Yeah. And that's a that brings up another thought. Um. When it so like okay. And that's and that's kind of some advice that I've given folks, particularly those first home buyers, even my, my own kids that are kind of at that age now where they're like getting ready to potentially buy their first home. And, and even older folks, I hear it all the time just in passing or chatting. They're like, well, you know, I'm going to wait. Well, actually, I have some friends. They're about my age, you know, in their mid 50s, and they want to move down from the north and retire in Florida. And it's funny, not funny, but I remember having a conversation with them about three years ago. And it was during Covid. We were we rented like a Vrbo by the water and they came down and we all hung out for a week and it was a blast. And they were starting to look for homes and they were, you know, oh, these are you know, this is a little more expensive than we thought. And, you know, and the interest rates were actually good back then, too. I mean, they probably could have got a 30 year mortgage for 4 or 5% or whatever, but they were like, oh, we're going to wait for the markets to hot. We're going to wait for the for the house housing to come back.

Erick Arnett:
And I told them, like, I don't think that's going to happen and here's why. And, you know, I, I stay pretty tight to some builders. And I have some clients that are heavily involved in real estate and building spec homes and all this kind of stuff. So I'm not an expert by any means, but I'm somewhat have my ear to the ground and, and I kind of hear what's going on and. And I kind of told them, I'm like, listen, you know, there's a whole new effect going on right now, something that we haven't experienced in our country or our lifetime before. And it's called the baby boomers. And they're coming to Florida and they want they want the sunshine. They want to, you know, retire. That's always been their dream to come to Florida or the southeast in general. I mean, it's exploded. North Carolina, South Carolina, Georgia, Texas, Arizona, you know, all those retiree states have exploded with growth because they're coming. I think it's like 75, 80 million baby boomers are going to turn 65 in the next year, year and a half. I mean, so these folks are ready to retire. They have they saved. They have money. They have 401 K's and pensions and they're home. They have equity in their homes up north. And so they're going to sell those and they're ready to come down and they're paying whatever people are asking.

Erick Arnett:
And sometimes they're paying even more than what the people are asking. That's still going on, from what I understand. But I wanted you to meet we've got about I think we got about 6 or 7 minutes left in the show. I wanted you to just maybe comment on some of your expertise there and why you think that the market is, is I don't think you're going to see any dramatic pullbacks in home values. And I know that Florida is typically always been that boom bust kind of state, you know, and we've seen that historically. But if folks are sitting out there waiting for some type of big, the recession or big pullback in home values, it's not going to happen. I'm just telling you, I don't think it's going to happen. And just because of some of the things that I read and the data that I looked at, and one of the things that you mentioned, Mike, was there's just not enough inventory, I think, and maybe you can comment on this. I listened to this one guy. On YouTube or whatever is like a real estate guru. And he kind of broke down the facts of the data pretty nicely. And he was basically, bottom line is that we're about 6.5 million homes short and and to even build new homes, we would have to build three times as many homes as we're currently building over the next five years, just to even potentially get to that 6.5 million home shortage.

Erick Arnett:
So for many reasons, and because interest rates have been really low for a while, and people are kind of locked into these 30 year mortgages, they're not selling their house either. They're not going to sell their home when they're paying 2 or 3% mortgage to go somewhere else and pay a much higher rate. So that inventory is not coming back on the market. You have the investor market, you know, people are buying up homes and corporations are buying up homes in Florida for the vacationing and the explosion that's happened, you know? So, um, you know, I don't think home values are coming back and interest rates are going to be sticky here for a while. And yeah, I think interest rates will come down a bit and then maybe a year or two. But if interest rates come down, home values are still up or going up. You're not saving anything in payment. Right. So, um, you know, but what are some of the reasons that you think or what you what's your opinion? I just want to know, maybe your opinion because you work in the industry every day as to what where you think home values are headed, particularly in our market and in Florida.

Producer:
Well, I hear all the time, like you said, people say I'm going to wait for the market to come back. And I always ask, what is your expectation of the market coming back? And I think because a lot of people experienced either as a child, maybe when they were younger, the millennials, they experienced the financial crisis of 2008. Back then, Erick, there was 4 million homes for sale in the United States. Today there's 900,000 homes. That's why property values are not going to and prices are not going to come down because the inventory is so low. And that's not going to be changed at any time soon, because there was about a five year period to late 2000 where there wasn't a lot of new construction. So as you just stated, the amount of homes that would have to be built to to meet the demand is those numbers are never going to be met. So this is the new norm. This market is the new norm. You know, $300,000 house isn't going to come back down to 250 like it was two years ago. We may not see that much of appreciation going forward $50,000 in three years, but you're going to see your normal, you know, the the average is 4% a year, one statistic in 75 years of them keeping the data. Erick, there's only been seven years where there hasn't been a national appreciation of homes in this country. And five of those years were in the late 2000.

Producer:
The other two years were 91 and 92. So not to bore you with statistics, but that's what I tell buyers. I tell realtors because the majority of my business is is first time home buyers do do reverse mortgages. But a lot of my business is first time home buyers as well. And a lot of people are scared. They're scared of this market. You mentioned having, you know, your kids are of age to buy. And again, if you can't afford to buy, you don't want to get in over your head. But if you can, again, you can always refinance that rate because we don't know what rates are going to go. But there's a pretty good indication that prices are not going to come back for the simple reason of supply and demand. They're just not because and rents are going to continue to go up. But that's the we're in a different environment. And the crash of 2008, when money was easy to borrow, lender lending standards were were dropped there for about 4 or 5 years, which kind of caused that crisis. But now we're back to where we were previous to that. But the reason that the market, as people say, the markets, it's going to stay hot because when you only have 900,000 homes for sale versus 4015 years ago, that's the reason. And that number probably isn't going to prove that much because, as you said, builders just can't build homes fast enough.

Erick Arnett:
Yeah, and I don't think the builders were building a ton of homes during that three year phase of Covid. Either, you know, so that slowed things down. Materials couldn't get old materials whatever. But yeah, I just I don't I have to agree. I mean, I think I like your opinion is that, hey, go ahead and do what you got to do. And if rates do come down, great, just refinance and what you know, when does it make sense, do you think to refinance where the cost aren't, you know, prohibitive? In other words, should you if you can get a one interest rate, one percentage point lower, does it is that a good catalyst to refinance if you're just saving 1%, let's say you get a 7% loan, and all of a sudden a year from now, you could get a 6% loan. Does that make sense to refinance their just for a different for 1% or it all.

Producer:
Depends on your balance. The higher your balance, the more of effect 1% will have. 1% rules is pretty good, but. Typically you want to have at least a two or a 250 mortgage, because if you're below that, sometimes the the costs don't justify the means because you want to be able to recoup those closing costs back in about a 2 or 3 year period in in the savings of your of your mortgage, if you are going to refinance, this is usually kind of the the what we we, we tell people to do in the industry don't don't refinance to save 50 bucks if it's going to take you eight years to make back those costs that you rolling back into your loan. Right.

Erick Arnett:
And you're happy to help talk people through that. Yeah, sure. You would tell them like, hey, you know, this this doesn't make sense, you know, or no, this look how much money you're going to save this totally.

Producer:
When rates were when we were in that low rate during during Covid, Erick probably told twice as many people as refinance said, hey, this this isn't going to make sense for you to save $100, but it's going to you're going to have to roll $6,000 into your it's going to take you this long to make it back. And how long do you plan on being in the house? Oh, probably not that much longer. So it's just a case by case case thing. But we know rates will come down. So if you can afford to buy now I stress that all the time. If someone can afford to buy now, you need to be out there looking with your realtor, trying to find something. Don't don't put it on the back burner because it's. And when rates do drop Erick. When they when they do drop hopefully drop maybe a point or so there's going to be a big rush of all the people who have been sitting on the sidelines, who probably have them should have been waiting. They're going to rush back in. And so now you're going to have, you know, ten, 12 offers on every house. That's going to be harder to find something because you're gonna have a lot more competition with fellow buyers.

Erick Arnett:
Man, that's a great point. I mean, you have brought up about ten great points in today's show. And how long you been doing this, Michael?

Producer:
Since 1995. All right.

Erick Arnett:
So so you've been doing this for a while and we like you. We know you and we trust you. And that's super important folks. You know take point wealth. You know we we recommend and refer our clients to Mike whenever these situations arise. And Mike, we got to wrap up and I'm so glad you came on today's show. I definitely want to have you back at some point in time. Unfortunately, you know, an hour long show. We can't answer all questions. But once again, just share your information and your contact information for our listeners. We got to wrap up here. But folks, if you have any questions about mortgages and I know we kind of emphasize reverse mortgages today and how that could potentially help you to and through retirement. But you've got to start with just taking the first step. And that's just calling and asking some questions and entertaining the thought of it. Don't get your information from your neighbor. Don't get information from Google. Get your information from an expert that's been in the industry since 1995. Doing this all day long, every day. And by the way, take point would not associate ourselves with anybody that doesn't do it the right way and the honest way and takes care of our clients. So, Michael, thank you so much for being on the show today. Let's wrap up and just, you know, share some, share your contact information with us once again. And hopefully folks will reach out to you and ask some ask some questions about reverse mortgages. Yeah.

Producer:
The easiest way to get Ahold of me is 850980 4400. Thank you for for having me, Erick. And again, with reverse mortgages again, there's a lot of misperceptions. Like Erick said, you know, your neighbor Google, a lot of things have changed in the last ten years. I wasn't doing it versus ten years ago, but I have been doing them for several years since. And like I said, just something to talk about. We can overcome misconceptions you may have because again, they're out there, you may hear about them, but a lot of those have been put to bed because of the changes FHA made. But be glad to answer any questions on on regular mortgages as well. Again, Michael Forslund with Fairway Mortgage 850980 4400. And thank you again for having me.

Erick Arnett:
Thank you so much. Unfortunately, folks, we've got to go. Mike, thanks for being on the show. We've run out of time, folks. Thanks for listening to Take Point on Retirement Radio. This is your show. This is about your education. We're here to help you. Free books. Call us. Get a hold of us. Take point. Wealth.com. And if you've got questions about a reverse mortgage, get a hold of us today. And once again, thanks for listening to the show. You guys. Have a great weekend.

Producer:
Thanks for listening to Take Point on Retirement. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free, no obligation consultation, visit. Take Point on Retirement.com or pick up the phone and call (352) 616-0511. That's (352) 616-0511. Investment advisory services offered through Brookstone Capital Management LLC, BCM, a registered investment advisor. Bcm and Take Point Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

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