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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.

Speaker2:
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 Tape 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.

Speaker3:
Good morning, everybody listening in the nature coast and Tampa Bay. Good weekend to you all and thank you for tuning in to take point on retirement. Today, we actually decided to bring a guest on the show, Michael Banner on Today with us. So Mike's going to talk a little bit about reverse mortgages today. So we've had Mr. Al Johnson on in the past. I thought it went real well. Folks have a lot of questions about reverse mortgages. First, let me say disclaimer take point on retirement radio. Erick Arnett Take point wealth management. We are not endorsing reverse mortgages at all. We're simply wanting to give people the information and education that they need to make their own informed decisions. But I think it's a pretty good tool in certain cases and certain, certain circumstances. And Mike, welcome to the show. Thanks so much for being here today. I appreciate your time. I mean, I'm working with hundreds of folks a year and it comes up quite often in my conversation. And Mike, unfortunately, the number one fear when I even bring up the option of, hey, have you looked at our reverse mortgage? The instant feedback that I get is, Oh, whoa, whoa, I don't I don't like those. I don't understand those, those. I've heard bad things about those and welcome to my world.

Speaker3:
It's the same when I'm trying to inform somebody about an annuity. And bottom line is, folks, you know, it's it's when people have that reaction, it's simply that when you have fear of something, you simply just don't truly understand or have the education. And that's why we put the show together. And that's why I'm so happy to have Mike here, because Mike is an expert in the reverse mortgage world. Mike has been working in that world and that world only for a very long time. And Mike, I'm just going to hand it over to you real quick and we're just going to kind of go back and forth and ask some questions. But, you know, I guess my the most important thing here today is just trying to relieve people's fears and get them to open up and at least listen and at least investigate this. Because we also, like we talked about, we have a lot of stuff going on in real estate market market, especially in Florida. Real estate's hit all time highs and a lot of folks are sitting in an asset that's highly appreciated now and and they're going into retirement. So how do they tap into that without making any big, massive changes? So take it away.

Speaker4:
All right. Well, thank you so much for having me. And and and you're right, there's so many misinformation, so much misinformation and half truths surrounding the reverse mortgage. Even though I travel the country, not so much since COVID, but before that, teaching about reverse mortgages to certified financial planners, long term care insurance agents, independent financial advisors. Their first reaction is always, Oh, no, not a reverse mortgage. We don't like that. Well, may I ask why? Well, we've always heard this bad stuff. May I ask what you heard? Well, I. And that's how it how it goes. But, you know, I've always thought the three most powerful words in the world, in the absolute planet, contrary to popular belief, which most people think is I love you, it's actually perception beats reality. And if a client perceives that a reverse mortgage may be something dangerous or maybe something that could hurt their heirs, their children, they're always going to have their defenses up. So I'm more more one of the very blunt, reverse mortgage people. And I think that's what allowed me to to gain a national niche in saying that many of the fears that seniors had, unfortunately, are based on facts. The truth of the matter is, until the 1980s, people think reverse mortgages have been around for 20 years. Reverse mortgages has been around for 60 years. And some of the largest banks in the country were doing them in the sixties, seventies and eighties, some of the largest insurance companies. The country's IHI, MetLife, Snoopy was doing reverse mortgages in the seventies and eighties and all the things that these people heard.

Speaker4:
Not all clients, but they were children. When their parents and grandchildren were sitting possibly at a Thanksgiving dinner table or Christmas and hearing in the 1980s. Oh, my God. Grandma got a reverse mortgage ten years ago and the bank is taking their house. I'd like to say that's not true, but it was true. Reverse mortgages were never, ever as great of a product as they are today till about 15 years ago. For many years, decades, even a reverse mortgage was given to someone 62 years old and above. And people would use the mortality tables. That's something more in the insurance world than the mortgage world. But they would use the mortality tables and say, okay, mom and Dad, you're 62 and this is the 1980s. Your average age is going to be 78. So 62 from 78. We're going to give you a 16 year reverse mortgage and you're not going to have any payments for the rest of your life. And we're going to give you this much money. And and everybody was so happy. And then 16 years later, do you know what mom and dad did that was just so terrible? They didn't die. How dare they not die on time? And the reverse mortgage notes would come due not once, not twice. Tens and tens of thousands of times. And there, in fact, is where this. Its pool of misinformation started because I've talked to financial planners who have looked me right in the eye and said, Michael, I remember my aunt 30 years ago losing their house.

Speaker4:
Don't tell me they can't. But the truth of the matter is, in today's world, with the reverse mortgage that has been totally renovated pretty much since 2008, so we're talking 14 years, HUD has actually taken the reverse mortgage because it's an FHA loan that is regulated by HUD and taken the reverse mortgage since 2008. Four or five times ripped it apart and put it back together to create what is now one of the safest retirement programs or products that a senior could possibly offer. There are literally Nobel Prize winners in economics saying that the reverse mortgage could be second only to Social Security in the saviour of the senior generation. Now that we are, quite frankly, living to be 90. And I'm sure, you know, as with all the senior clients you have for the last decade, a seniors. Number one, fear is not death. It was death for 50 years. Now, our seniors, number one, fear is running out of money before they die. And even though I say that constantly in my public speaking still gives me the chills when I say that in this great country that people that have worked their hard their whole life, made a good living, have money in the bank. They retired living nice, and yet their number one fear is I can outlive my money. And that's why the reverse mortgage today's renovated and safe reverse mortgage can play such a role in not hundreds of thousands of seniors lives really and truly in millions of seniors lives, prolonging that money in the bank. Use the equity in your home.

Speaker4:
Let your portfolio sit and grow, especially now with rates going up. That may be terrible for the mortgage business. But finally, maybe seniors can start getting some return on their money, on their investments, on their CDs, on their annuities, things such as that. So with rates going up, my God, stop taking money out of your portfolio and get today's low cost new reverse mortgage that protects you, protects the last borrower, protects your heirs from never, ever owing more on it than it's worth. Your heirs can never be negative in today's reverse mortgage. And of course, the number one fear. Oh, my God, can I lose my home? Not if you pay your taxes and insurance. Because since the mid 1980s, my favorite president, Ronald Reagan, when he did the reverse mortgage act. There is no longer a term to a reverse mortgage when we lend a 65 year old or a 70 year old or a 62 year old money, it's not for ten years or 15 years or 30 years. It's until the last borrower dies. So if Dad is 65 and mom is 62 and we lose dad at 90 and mom goes on to live 98, she stays in that home and makes no payments. And if we gave it to her at 62 years old and she dies at 98, well, in that case, it was a 36 year old mortgage. But the point is, in today's reverse mortgage, as long as you pay your real estate taxes and your homeowner's insurance, you can never lose your home.

Speaker3:
Yes. So I guess that's a very important aspect to it. You know, and when you're sitting down doing that kind of planning with folks, I know you take all that into account, the equity in the home and the age of folks, and then also what their cash flow situation is like. Hopefully that's a part of the process to make sure that, hey, because what I'm what I'm hearing you say is even though the mortgage is taken care of, you still have to come out of pocket with your own money to make sure you're paying the property tax and the insurance. So for our listeners out there, super.

Speaker4:
Important to make.

Speaker3:
Sure that you're doing the proper planning. And and I kind of equate all this that you're saying, Mike, to the annuity industry. It's very similar. I mean, 15 years ago I was sitting in my office one day and an old lady came in crying and some insurance guy had sold her. She was in her nineties. It sold her like a 20 year annuity. Something major changed in her life. And she needed that money and was basically told, it's gone. You can't have it. It's been annuitize. So and that was one horror story that I was close to. This was like 15 years ago and there was very little regulation when it came to a new. Reason annuities were almost archaic. You would never have ever gotten me to recommend an annuity. And and today, when I'm working with seniors and retirees, it's almost 80% of my business because the industry has evolved, the industry has changed. There's lots of regulations now. There's lots of protections in place for seniors, especially in Florida. So some people may say, oh, when the government gets involved in things, in regulations, oh, I don't want to. That makes it even worse. I don't even want to talk about it. But in this case, you know, they they reined in the wild, wild West years and years ago.

Speaker3:
And I just want to say that I've I've only had a handful of clients that I know that have done them, and they're extremely happy. And I've I can remember this one couple. I was invited to their home and I was sitting in this beautiful home and they were in their early sixties and they were getting ready to go to Key West on their Harley. And we were talking and they said, Oh yeah, yeah, we did a reverse mortgage on this house. We're here forever. We love it. We don't want to move, love our home. But honestly, we could care less if our kids get a single dime when we pass away. And so we're going to take this money out now and enjoy it while we can live our lifestyle. And we're hopping on a Harley, we're heading down to Key West. And so that to me is what we talk about with our folks right off the bat. At Take Point on retirement, we ask people, what does retirement look like to you? What are you doing in retirement? You know, and people kind of look at me like, I don't know. I was like, well, you need to talk to your spouse or your partner or your friend or or yourself or whoever it is you're going to retire with and make sure you guys are kind of on the same page and you have an idea what you want to do because retirement is about relaxing and having fun.

Speaker3:
Let us guys worry about the money in those things. But I just remember and then I have another gentleman that that did one as well and it worked out perfect for him. This guy was sitting in over like a $600,000 house. He had to retire early because of health conditions. So he really didn't get his retirement up to where he needed it to be. And he had some expenses and some other ongoing situations where we we really needed to find a way to extract some money from somewhere to provide provide him some cash flow to do the things he needed to do. And and he just loves it to this day. I talk to him all the time. He's was like, man, he goes. And I was able to introduce him at that time to a reverse mortgage sales, sales guy or guy. And it worked out great. And and I just tell people like, I'm not here and you're not here to sell people anything.

Speaker4:
That's right.

Speaker3:
What we want you to do is open up your mind and just listen and educate yourself, take the time, because it you may find that this is perfect for us. And that's what I want. I want folks to truly be able to free themselves up in retirement, to enjoy life. And so with that being said, I just, you know, I've I've actually had some good experiences with it. But, you know, the industry, you have one a couple of bad stories and that mystique and that stigma follows you forever. And it was the same in annuities. And and now annuities are just absolutely amazing.

Speaker4:
They've been their way of life.

Speaker3:
Yeah, they're a way of life. And one way that folks will never run out of income. And so so I just love the way it all kind of comes together in certain cases and certain, certain circumstances. But it is what you mentioned. It is a government sponsored.

Speaker4:
Government and government insured. And very interesting, you know, this inflation is hurting so many people, seniors specifically $5 a gallon, gasoline taxes going up. My God, medical expenses going up. The price of food in Publix. Unbelievable.

Speaker3:
Stock market going.

Speaker4:
Down. Yes, the stock market being so volatile that people are afraid to put anything in. The only thing that you can say that is good about this is mom. Excuse me, mom and dad's $400,000 house 18 months ago is today worth five, 55, 75. And to take this opportunity to go in and get a reverse mortgage, to not only wipe out your present mortgage or maybe you don't even have a mortgage, but most people do wipe out that present mortgage, save that cash flow, and then get an additional 5000, 150,000 in the form of a line of credit. I always look at people and say, don't take it for the sake of taking it, because as soon as you take it, the interest clock is turning, you're paying money for it. And just like any other line of credit, with a reverse mortgage, when you take a reverse mortgage, line of credit, you only charge instant interest when you start to use the money.

Speaker3:
So oh, very cool.

Speaker4:
100,000 line of credit, quite frankly. You may have a. A less than scrupulous mortgage person. Go take it all. Put it in the bank. Why do you want to put it in the bank? You may mean take $2,000 a month for five years to change your life. Totally. I mean, let's just say the people have a 1200 dollars mortgage payment, which is the average mortgage payment in Florida. And if we eliminate that 1200 dollars mortgage payment. So right there is 1200 dollars a month more than they would than they had for cash flow. And let's say.

Speaker3:
Let's do that math.

Speaker4:
Yeah. Let's just say they take an additional $1,000 a month out of the reverse mortgage. And these are not people not to be disrespectful. They're not poor, they're not rich, but they're not poor. They're living in a beautiful home. They vacation. There may be on $4,000 a month of retirement income. That's 50 grand a year. That's not chopped liver. But by doing this reverse mortgage and eliminating the 1200 dollar mortgage payment and then taking another $1,000 a month from the line of credit, did we just take them from a 4000 a month income to 6200 because they don't have the house payment and we're giving them an extra that's more than a 50% increase. Point blank and quality of life. I mean, if you want to use it to take a cruise, fine. If you want to use it to give to a financial planner and and make wise investments if you want to buy a property. We see things happening now in the last couple of years that really and truly, without sounding too corny, will bring tears to your eyes. I have people taking half a million dollar reverse mortgages, and when I do their application on their million dollar house and I go, May I ask? I have to ask, why are you doing this? You know, it's obvious you don't need the money.

Speaker4:
You have an 800 credit score. The house is free and clear. The Mercedes and the BMW are free and clear. Why are you doing this? Truthfully, Mike, we have grandchildren that are strangling on their student loans, and when we die, we're going to be giving each one of those grandchildren 100 grand. We have five. This just happens. Yeah, but we don't plan on dying for 30 years, and they need the help now. Can I afford to take a half a million out of my savings account or portfolio? No, I'm not that wealthy. But when I spoke to my financial planner, I thought, why not take a reverse mortgage, take a half a million out, give 100,000 to my grandchildren now to pay off that student loans and enjoy life with them. There's no payment. I'm just giving them their inheritance in advance. I don't want to wait 30 years. So of course that's an extreme example. But there are many more like that. Paying off student loans, helping children, so many parents helping their children right now, people in the seventies saying my son's factory or restaurant or whatever has suffered because of COVID, I'm taking 100 grand out to help my son. I mean, so, yes, it's the people that are doing it for quality of life and and because they need to go to Publix.

Speaker4:
I had one two years ago where the man took out an incredible amount of money. In fact, he asked for a specific amount. And I'm I'm don't quote me on this because I'm I don't remember exactly, but it was something like 227,080 $0.09 when he called. That's what he asked for. I go, That's a weird number. He goes, Yeah, but that's what I want. And then when we were processing the loan, he kept saying to my processor, Remember, I need to walk away with 227. So finally I just said to him, then nice Jewish man in Fort Lauderdale. I said, Ben, one nice Jewish man to another. What's with that number? Well, he goes, Well, as you can see by my application, I'm fairly wealthy, but since World War Two, I've always wanted a Rolls Royce. I was in the Army. I saw it abroad. My wife has been telling me for 50 years that if I spend $200,000 on a car, she'll divorce me. And even now I believe her, even though I'm in my seventies. But when I told her I could do a reverse mortgage, buy my car and have no payments, she went, Go, go with God, do it.

Speaker3:
And I still got my house, my roof over my head. Go do what you gotta do. Yeah, yeah. But no.

Speaker4:
Yeah, that's, that's far and few between. But the amount of people that we have helped get a reverse mortgage, maybe not even given them any money, but just eliminated their mortgage payment cases, allowed them to buy long term care insurance that they so badly need. Even Medicare supplement. It flips me out because I'll be 64 in just a couple of weeks. So I'm a I'm a year away from that. But how many people don't have something as simple as a medicare supplemental policy because they're just barely making ends meet? Again, they're not poor. But their debt service, their car. $5 a gallon for gas, food. And they say, wait a minute, we'll just eliminate the house payment and then we can get those medicine policies or that long term care insurance and still have more disposable cash left over for quality of life. So it's such a different product than when then when we were younger, when our parents were younger. It's just a staggering tool now from everywhere, from that needs based group of people that are not retired on a lot of money. And I have to tell you, right up to the upper middle class that are doing half a million dollar and million dollar reverse mortgages to take the financial pressure off their lifestyle because they want to live their lifestyle. They worked for 40 years to earn that lifestyle. And just because the economy is going down the tubes, they shouldn't have to give it up.

Speaker3:
Hey, they have a great asset there. And and what I'm hearing you say is I'm just hearing more and more I'm hearing the words freedom. I'm hearing the words cash flow. And and that, to me, is what's so important in retirement. I mean, you didn't have the freedom and you may have had the cash flow while you're working your whole life, but now you're not working and you might feel pinned down and you're retired, especially like you said. Let's talk about it. I mean, inflation is crazy.

Speaker4:
This is ridiculous.

Speaker3:
The stock market is is very challenging, very volatile. And a great point that you made was the fact that, you know, I'm hearing like what I kind of feel is like the timing for this might be really, really good. I don't know. I'm going to let you answer that, but because you're the expert. But, you know, to me, if you have an asset, especially here in Florida, in our market, by the way, Tampa Bay, if you didn't know, our market is the fastest and hottest appreciating housing market in this country. And, you know, so you may have found your house has gone up 20, 30, maybe even 40% just in the last year, year and a half. So you're sitting on this great asset, but you have no way of of benefiting from it other than you have you have a beautiful roof over your head and you're safe and all that. But and tapping into other areas of your portfolio, like your 41k or the stocks right now to cover your income or expenses. Probably the absolute worst timing, the worst thing you could do. So, you know, I love the fact that this just gives people another option to look for the cash flow that they might need in retirement. And and yeah, it's just it's pretty simple if you're not paying a mortgage and at the same time, you're able to draw a cash flow. I mean, that's that is tripling your cash flow or doubling your cash flow overnight. And that to me, seems extremely powerful. And, you know, let's talk about it. The timing, you know, right now might be the best. I mean, what are your what's your opinion on that?

Speaker4:
There's no doubt the timing is the best. I mean, you know, a reverse mortgage, simply put, is about quality of life. It shouldn't be used for risky investments. There are actually guidelines against buying securities and stocks. We don't want you risking your home equity. Reverse mortgages are about quality of life. That's what retirement should be about. But you're right, it's just the perfect timing right now. Another factor about the new reverse mortgage that flips people out when they find out about it. I know I was guilty of this during when the bubble burst from 2008 to 2012, during the Great Recession, I had a line of credit of X on my home and and then values started to go down and I got a polite letter from my bank like millions of AmErickans did. Dear Mr. Banner, we have your line of credit at X. Unfortunately, due to declining real estate values, we're decreasing that line of credit. Millions of AmErickans that happen to. And that's okay. People go, oh, those mean banks. No, no, no. Banks deserve to be protected for the money that they're giving you is a very interesting fact about today's reverse mortgage. Let's say I do an appraisal on the house and the house comes out at 500,000. And so many times people say to me, You sure we paid 300 for three years ago? No, that's the value of 500. And here's a line of credit of X. That line of credit is a contract with HUD, with our government. If there is another bubble bursting and many people think there will be not in the near future, but there will be.

Speaker3:
And there is a potential.

Speaker4:
Yeah, yeah, of course. And the value goes down. They don't decrease your line of credit. Your line of credit is a contract for the rest of your life from the day we close. I've had people call me so many times over the years. Well, during 2008 to 2013, Mr. Banner, we just got our monthly statement. Yes. And we have that 100,000 line of credit still available. And and you gave me 150,000 to pay off my mortgage. It was a 250 reverse mortgage. The house at the time appraised for 450. But I just had a realtor tell me my house is worth 300,000. Yes, your house is worth even less possibly in the recession. Are they going to take away my line of credit? No, ma'am. I told you that in closing, they don't care. Well, what if it goes down further and I'm upside down? They're still not going to take away your line of credit. That line of credit is a contract with the government. And as much as the government is all goofed up.

Speaker3:
That's for another show.

Speaker4:
Yeah, that's for another show. No matter what side of the aisle you're on. One thing you have to say about AmEricka, always Social Security checks, never late VA pension checks, never late. Even if they have to go in the basement and turn on the printing machine and print the money. Seniors, veterans, disabled people, they get their checks on time. In this great country.

Speaker2:
You're listening to take point on retirement to schedule your free no obligation consultation visit take point on retirement. 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, Erick 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 take point wealth dot com.

Speaker5:
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.

Speaker2:
Welcome back to take point on retirement schedule your free financial consultation now at take point on retirement.

Speaker4:
So having a line of credit of X and when things are collapsing around you I don't know if you saw yesterday between two and 7:00 last night the market had such a bad time that some of the major mortgage lenders in the country. Stopped taking locks. They wouldn't lock a person's rate. You're buying a house somewhere in the 50 states of AmEricka and going, can you quote me a rate and the major lenders of this country yesterday between and two and seven, two and 5:00 when no, we don't know what's happening. We can't quote you a rate. And then when we later that day, early last evening, we had a record increase in rates rates in the in this country that were in the twos and threes in January are now in the sixes and sevens.

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