Rob West: Reverse mortgages may still raise eyebrows in the church, but do they deserve to? Hi, I'm Rob West. Reverse mortgages continue to carry a negative reputation, but faithful stewardship means evaluating financial tools based on how they work today. Harlan Accola joins us to explain why many Christians remain hesitant and how a modern FHA-insured reverse mortgage could fit into a thoughtful retirement plan. And then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith & Finance on American Family Radio: Biblical Wisdom for Your Financial Decisions.
Well, so glad to have you with us today. Harlan Accola is here. We're going to be talking about reverse mortgages, and he is gracious with his time. He's going to be sticking around today, and although we will take questions on any topic, we will prioritize those questions specifically on reverse mortgages. Perhaps you have a question about whether this is right for you. Maybe you've been considering it, you have some questions, maybe there's been some misunderstandings or things that you've been concerned about. Well, today's the day Harlan will educate you, walk you through your situation, and get into the specifics in your mind. So call right now. We will begin taking those calls in just a moment: 800-525-7000. Again, that's 800-525-7000. Harlan Accola, of course, leads the reverse mortgage team at Movement Mortgage, one of our valued FaithFi underwriters. They help families explore home financing solutions, including reverse mortgages designed to help eligible homeowners use their home equity thoughtfully in retirement. He's here today to help us separate fact from fear. And Harlan, great to have you back.
Harlan Accola: So good to be here, Rob. Thanks for the opportunity.
Rob West: Harlan, many believers who want to steward their finances wisely are hesitant when they hear this term, reverse mortgage. Maybe they've been told these loans are expensive, risky, or simply unwise. I know years ago the products were much different than they are today, so maybe it's just kind of a holdover from some of those older products that even you wouldn't have recommended. But why do you think, at the core, reverse mortgages still carry such a negative perception?
Harlan Accola: Well, you know, Rob, debt of any kind feels unspiritual. It's been blacklisted because it's got so many Christians in trouble with credit card debt and overspending and doing things that are simply foolish financial decisions that debt has caused people to be in a corner and hurt them. And that certainly happened with forward mortgages before 2008, before the crash. And there have been bad things that happened with both traditional forward mortgages and reverse mortgages. But the fact is that most people are relying on something that is just rumor, something that they've heard. The vast majority of people that actually have them have a high satisfaction. But the other thing is they really haven't heard trusted voices inside the church like yourself explain the pros and cons and where a reverse mortgage might fit into retirement to make things better.
Rob West: Yeah. Yeah, I think that's certainly true. And we're quick to say here on this program, listen, if you want to get out of debt completely, including your home, and stay that way, that's great. You know, there's plenty of warnings in Scripture around the use of debt. I think to Harlan's point, I think the key is, we just encounter so many folks who maybe are living paycheck to paycheck in retirement, or they've carried a forward mortgage into retirement, and because they didn't save enough, they're just feeling the squeeze to even put food on the table. And yet they're staying in a home that's got significant home equity, and it could be converted to an income stream, to a line of credit with an optional payment. And the kids probably don't want the house anyway; they'd much rather Mom and Dad be able to have a little breathing room and enjoy the fourth quarter of life. That's where these products can shine, especially the products of today, which are much different than the products from years ago, and certainly much different than something like an HEI. I'd love for you to explain that, Harlan.
Harlan Accola: Yes, there's a lot of programs out there that have given us a bad name and a reputation that we don't, quite frankly, deserve, because we only deal at Movement with mortgages—reverse mortgages, home equity conversion mortgages that specifically are non-recourse loans. I was just talking to someone yesterday that was thinking about an HEI, home equity investment, home equity agreement. They're not regulated by FHA or any mortgage regulator. They're simply investors that give you a certain amount of money and then expect a certain amount back. Usually the term is only 10 years. If you don't pass away within 10 years or you don't sell your house within 10 years, you can be forced to repay it or lose your house if you don't. That is where we get a really bad name, and a lot of those products are still out there and actually gaining in popularity because people think that they are safe when they often are very dangerous.
Rob West: Very true. Back with Harlan Accola and your questions after this. Stick around.
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Rob West: We're separating fact from fear related to reverse mortgages today on Faith & Finance. I'm Rob West. He's Harlan Accola. He's our go-to guy on this topic. He leads the reverse mortgage team at Movement Mortgage. By the way, if you have a question on topic today, something related to reverse mortgages—maybe you've heard some things that are concerning to you, or you're wondering whether this might be a fit for you—Harlan's going to stick around and take your calls today at 800-525-7000. Every call on that topic will get a copy of Harlan's book. It's our gift to you. We'd be delighted to send it to you just to give you a primer on this topic, but then he can also get into your specific questions today. Again, 800-525-7000. We will dive into those questions here in just a moment, so call right now. Patty's standing by to take those calls today. Harlan, we talked about, you know, the products—the older products in the reverse mortgage category from, you know, 10 or 20 years ago—were much different than the products of today. I'd love for you to dig into specifically what makes today's home equity conversion mortgage different from those products people may remember.
Harlan Accola: Biggest thing is that they are non-recourse, which is a fancy word for an absolute guarantee from the Federal Housing Administration that you can never be upside down in the house as far as owing more than what the house is worth. So, contrary to popular opinion, it is impossible to leave a debt behind for your children. There will always either be equity left or the difference will be forgiven because of the guarantees that come from the federal government with the insurance. It also guarantees that you never have to move. As long as you're paying your taxes and insurance, which you would have to do anyway, you never have to worry about moving, even up to age 150, which is in writing on the mortgage document. My personal loan is one on my 150th birthday is when it's due. So the peace of mind that I never have to worry about making a payment, I never have to worry about our four sons getting a debt left behind that they're responsible for, is a huge reassurance and something that simply was not available to many of those early programs until there was reforms that came from the Federal Housing Administration. I think one of the other big things is a lot of people felt that if they did it and they passed, that their spouse would get kicked out of their home. And that sometimes happened in the past because of the fact that some husbands would do the loan without their wife's information or their wife's age, or she wasn't involved in the process, and she didn't even know. And after he passed away, she was kicked out of the house. That was a horrible situation, and really not the fault of the industry, it was the fault of the husband that made the wrong choice. But that has been completely fixed. Nobody can do a loan without including their wife or their husband.
Rob West: Mm, yeah, that's really helpful and I think clears up a lot. Taking your calls today, 800-525-7000. Every call on this topic gets a copy of Harlan's book. Let's dive in today. We'll begin in Ohio. Matthew, go ahead.
Matthew: Yeah, hi folks, thanks for taking my call. My question is this about the reverse mortgages: My sister and I are co-owners of the family house. She lives there, I do not. It's in New York State. And we're both retired. I'm 74, she's 78. She's in a good place financially with her retirement, and I am not. And we'd like to take some money out of the property such that I can have a more, you know, better quality of life. A couple of things that have come up in my research is that we would both have to live there if we were both, you know, the people assigned on the reverse mortgage. And then also I was concerned about, what about preservation of asset if, for instance, I go into a nursing home and have to have Medicare assistance? Don't they claw back and try and take some of that asset to pay them back for what they would have to pay for my nursing?
Rob West: Yeah, great questions. No, no, those are really good, Matthew. Harlan, dive in.
Harlan Accola: Yeah, those are excellent questions. It's kind of multifaceted. Let's take the first scenario. You do not have to live in the house. However, when your sister would pass, the loan is due. So if you're both co-owners on the house, that's okay. You're simply a non-occupying borrower, and so it is possible to do that. It's just that the trigger of the repayment happens when your sister would pass, because she's the one that lives there. So if she passed first, the loan would be due, and you would inherit the house—the way it sounds, that you'd be the only one that would inherit the house—and then you would receive whatever's left in the equity that wasn't used. But this is a typical situation that is done between children, between spouses that are getting a divorce—unfortunate situation like that—is she effectively buys out some of your ownership of the house by giving you money from the reverse mortgage. It's a very common thing that we do on a regular basis. So it would be of help to you, does not hurt her, does not create payments like a lot of people do in doing a loan, so this would be kind of tailor-made for your situation, so it would be of help to you. When it comes to Medicaid later in life, that's a whole 'nother discussion, but it would protect—the asset can be protected, and the money that is in the house is not something that Medicaid is going to go after, but simply money that you've used to live. If you took out a big chunk, like $100,000, and put it into your account, that can be subject to Medicaid. But the smartest way to do it would be to be taking out a little bit at a time so that you could—would not put the money in danger on that situation. So in combination with an elder law attorney, we've done many of these situations to protect not only the asset, but to create cash flow while you're alive. So there's two different birds that can be killed, so to speak, on the same plan in putting this together of getting some of the cash out. So, excellent question, Matthew, and something that would fit very well for your scenario in combination with an estate plan that would protect her, your sister, and you.
Rob West: Matthew, does that make sense?
Matthew: Yeah, it does. And I think I'll be looking to follow up with Harlan in the near future here, if that's okay.
Rob West: Absolutely. Yep, hold the line. Our team will get your information, we'll get his book out to you, and they can help you make that connection. Also, folks, if you want to learn more, just go to faithfi.com/movement. That's faithfi.com/movement. Let's go to Arkansas. Hi Roger, go ahead. Roger, are you there? All right, we're going to see if we can get Roger back on the line. We'll come back to him. Let me go to Tennessee. Randy, how can we help?
Randy: Yeah, sir. I'm a 75, retired, and own my own home, and I was curious about this reverse mortgage. I have a question as far as, if you get a reverse mortgage, can it be taken out all at once?
Rob West: Mm, yeah. Good, good question. Harlan, let me let you tackle that one, and then we'll hit the break, and if Randy has any follow-up questions, we'll get to that.
Harlan Accola: Sounds great. Yes, Randy, there's three ways to get money out of a reverse mortgage. You can take it out in a lump sum, as you just alluded to, which isn't always the best way to do it, because you don't want to take money out that you don't need until you need it, just like taking money out of an IRA. You take it out a little bit at a time. But you can, because some people use it to pay off a loan or buy a motor home or car or something like that, so it's your money, you can use it for whatever you want. Secondly, if you want to set up a line of credit and just pull money out as you need it, whenever you need it, it's guaranteed to be available no matter what for the rest of your life, and it grows by about 6%. So that's often the smartest way to take the money out. And the third way is to just set up an annuity-type payment—it's not an annuity, but you just take a monthly check and every month you receive a certain amount guaranteed for the rest of your life or for a certain period of time.
Rob West: Randy, stay on the line. We'll see if you have any more questions after this.
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Rob West: Great to have you with us today on Faith and Finance here on American Family Radio. We're talking home equity conversion mortgages. You might say, "I'm not familiar with that term." Well, it's basically the new form of reverse mortgage that allows you to tap into the home equity, as long as you're 62 or older and you have—generally speaking—50% or more equity in your home, to be able to pull some of that out with an optional payment, and that's key, or refinance an existing mortgage and then make that equity available as a lump sum or a line of credit or a monthly check, which again, can be a game changer in that season of life, or can be used—and this is where more and more advisors are leaning into this conversation.
Harlan, I'd love for you to weigh in on this, and then we'll head back to Tennessee and talk to Randy. But more advisors are seeing this as a part of the financial planning tools in the toolbelt to think about the best timing in terms of how to access the various assets that are in the retirement portfolio, right?
Harlan Accola: Well, that's so true. I was just working with a Kingdom Advisor that I met in Florida at the conference earlier in the year, and here in Minnesota, and we're doing some training for his entire team in how this helps with tax planning, helps some of his clients buy second homes, and also helps with the overall giving plan because there's several of his clients have more than $1 million in their paid-off homes and they want to give to their family or to charities or their church. And so, this isn't something that's just for poor people. We certainly want to help people that are in poverty that need money for food and the basic things of life, but it also works in the other area for the people that just want to be more generous, want to save money in taxes, and more carefully steward all of their resources. So, that's an excellent point. It's something that we sometimes forget as stewards, that we have a lot of money sitting in our house. What are we doing with that? And that's something that we can be very helpful with when we work with financial advisors in the comprehensive planning.
Rob West: Yeah, very good. Thanks for that. Back to the phones. By the way, Harlan's going to stick around for the entire broadcast today. If you have a question on reverse mortgages, we will prioritize those questions, and every question on-topic gets a copy of his book as our gift to you. Randy in Tennessee, I know Harlan responded to your first question. Did you have any follow-up questions on that?
Randy: Yes, I do. My mother-in-law died a several years ago, and the state—and she went, first she was in the a home, and the state took her her home and and and everything, including a—she had a a thing to for her burial insurance. They even took that, so I had to pay for everything. That's why I was asking about taking that out and just giving it to the church and my relatives and that. Is Is that Is that legal, or I mean...
Rob West: Yeah. Great question, Randy. Harlan, any thoughts on that?
Harlan Accola: Well, yes. A lot of people, I call that giving with a warm hand instead of a cold hand. Everybody just automatically believes that you should pay off your house and you should give it away when you pass away, and that's okay. That's one way to do it. But I've had a lot of people that know that they're completely fine and they've pulled money out of their house specifically for giving because they get a tax deduction and they don't need the money in their house and they said, "Hey, God needs things done in other countries and right here in the US right now, so I'm going to pull money out and and give it while I can," because yes, there are many houses that are gobbled up by medical costs at the end.
And so, there is a 5-year lookback whenever you're doing taking any money out and giving it away, but in the normal course of business, it's completely legal to give away anything, whether it's in a house or whether it's in an IRA or whether it's in a savings account. That's up to you as to how you want to spend it. They're just trying to stop people from specifically taking it out as soon as they go into a nursing home in the Medicaid situation. But it's it's something that's completely legal, and I certainly plan on not having that much equity in my house when I pass away because I'd rather give to my family and to the church and to Christian causes while I'm alive rather than waiting—I might not be dead for 20 or 30 years. So, I want to do something now. So, your thought process is is is very accurate, and I think that that's something that more people should consider from a stewardship standpoint of what can they give.
Rob West: Very good, Randy. Thanks for your call today. We'll get you that book. Lines are open: 800-525-7000. That's 800-525-7000. Let's go down to Missouri. Mike, go right ahead, sir.
Mike: Good morning. Yeah, I talked to Harlan. So, I guess—well, my wife and I, we talked to Harlan last August, and then I followed it up with a talk with you, Rob, about two weeks later. And we did go through with it. Went with Movement Mortgage, and Harlan set us up set us up with George, and it was a—it was a very good process. It was it was kind of lengthy, but... but it was very... what's that? Yeah. But it was—there was a there was a few difficulties on our end as far as we had to get some things done because it was an FHA loan, but aside from that, you know, we've got our reverse mortgage, and we're sitting on quite a big chunk of change.
Rob West: Wow. Well, Mike, thanks. You didn't have to take the time to make that call, but I appreciate that encouragement, and Harlan, that's got to be good to hear, huh?
Harlan Accola: Well, it is. There's so many people that we can change. The fear thing keeps so many people away from it, and there's so many people that say, "I wish we would've done this earlier." I just thought it was—one person said, "I thought it was a sin, so I never went any further." And so, we're so thankful to be able to get that news out.
And Mike brings up a good point: it does take time because we ask a lot of questions and go through the underwriting and make sure that it's right, because it's the biggest decision that many people make in their retirement. And some people get a little bit frustrated with the amount of time because it is an issue with going through a lot of paperwork and everything else, but once you get through it, you don't ever have to do it again. So, we certainly appreciate the opportunity to be of help to to Mike and and his family.
Rob West: Excellent. Mike, we appreciate your call today. Thanks for that testimony. Well, every line is full. Harlan Accola is here. We're going to get to as many calls as we can. We've still got plenty of time, so if you're holding, stay right there, and we'll be sure, Mike, to get you a copy of Harlan's book, and anybody else who calls today with a question on-topic, we'll send you Home Equity and Reverse Mortgages, really the primer on this topic written by Harlan Accola. Much more to come just around the corner. This is Faith and Finance on American Family Radio. I'm Rob West, and we'll be right back. Stay with us.
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Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. I'm Rob West. Well, we've got Harlan Accola here today, and we're taking your calls on, specifically, reverse mortgages. You know, our perspective on this topic is this: You know, I talk a lot about the principles that we see in God's word related to money management, starting with "God owns it all" and money is a tool, and Jesus is our ultimate treasure. And then those wise money management principles include living within your means and avoiding debt, and setting long-term goals and having—giving generously and having some margin, or something left over at the end of the month. You know, those are key, and they're wise.
And, you know, we go back to this idea of debt. We say that, you know, debt can mortgage the future, and we have to be careful. You know, it can rob God of an opportunity to provide, and we can get overextended and pre-commit funds in the future that we don't have. I think one of the differences is with what we're talking about today is for those who have not saved enough for retirement in this fourth quarter of life, or they need more flexibility, or they just want to be able to control the timing of when they tap various retirement assets because of tax implications, and IRMAA, and Medicare, and all the things. You know, often leveraging your home equity can be a game changer, because, you know, it's tax-free money. It's money that you can then tap into when you need it, and that payment is optional.
Also, keep in mind that your home continues to grow in value, and so often, when you leave your home to your heirs, they don't want the family home—they're just going to sell it anyway—and then they'll pay off whatever mortgage exists. Whatever's left is available for them, unless you decide to give that away, and everybody wins, including you, because you had more flexibility—access to a line of credit or a monthly check in retirement. Now again, that's not for everybody. These products are not inexpensive in the sense that, yeah, you're going to have the 
FHA fee up front, you're going to have interest on top of the money borrowed, but at the same time, it really could be a game changer for many people. And that's why a lot of people are saying in this season of life, "Yeah, I think this makes sense for me."
We're taking your questions today because we realize, with these products, there's a lot of misunderstanding, and Harlan has been gracious with his time to answer those questions today. So, let's dive back in. Roger in Arkansas, you've been waiting patiently. Go ahead, sir.
Roger: Yes, sir. You hear—can you hear me now?
Rob West: We sure can. Go right ahead.
Roger: Okay. I'm—I'm retired. I'm 79. I pay my tithes, and I—I support some other people. What I was interested in is getting enough money to buy a vehicle. My vehicle is way up in miles, and—and it's not as dependable as it used to be. And I was wanting to buy a vehicle, and my question is, when I go to pay that back, can I pay as much as I want, when I want?
Rob West: Hm. Yeah, great question. Harlan?
Harlan Accola: Yeah, Roger, that—that's a misconception of so many people is that you can't make payments on a reverse mortgage. There's a lot of people that use a reverse mortgage to borrow money for cars, for home improvements, for whatever, and they fully intend to pay it back. But they don't want to be required to pay it back in case they get sick, or lose a spouse, or some hard times come along. It's the safest money to borrow once you're past 62, because you can make a payment if you want, and if you don't want to, you don't have to. You can skip a month, you can skip a year, you can skip several months, or you could never have to pay it back until after you move out of the house.
So, it relieves the borrower being the servant to the lender. You are not a servant to this loan; we are a servant to you. And we give you the money, and you don't have to pay it back. But if you want to, just like any other loan, you make regular payments, and you can make them as big or small as you want every month, or just, you know, run into some money, do a big lump sum. Or if you want one month you want to help someone else that is in need, don't make a payment to us—use that money to help someone else. It's completely up to you, and you can manage the debt as you wish, not according to what the lender makes you do. That's a great question, Roger.
Rob West: Roger, is that helpful?
Roger: Okay. Yeah, another question. How much interest is on that loan?
Rob West: Hm, yeah.
Harlan Accola: Great question. It's regulated by FHA. It's only about 
above the 10-year Treasury, so it's controlled by FHA, so it's about the same as a 30-year mortgage, which right now is running between 
and 
. So, that's the amount of interest that is charged every month, and then we show how much interest is accruing. And if you want to pay it, you can, and if you don't, it just goes on to the balance. So, very reasonable rates. A lot of people say, "Well, it's really high interest rates." It's nothing like—some people borrow from credit cards, which are 
to 
. We're very closely controlled on usually the lowest amount that's available for commercial lending anywhere.
Rob West: Roger, we'll send you a copy of Harlan's book. If you want to know more or connect with him, our team can help you do that, or if you're comfortable on the internet, faithfi.com/movement. Harlan, there is also, when we talk about expenses, you mentioned the interest rate, there is also that 
FHA fee up front. Talk about what that covers.
Harlan Accola: Yes. A lot of people say, "Well, you know, reverse mortgages are expensive." And in one way, they're the cheapest loan you can get, and in another way, they're a more expensive loan. The fee of 
of the value of the house guarantees three things: It guarantees you'll never have to make a payment, it guarantees that you'll never go upside down so your kids won't owe anything, and it guarantees you'll never have to move—that there's never a time comes where, "Okay, you've been in there long enough." So, you do give that up, but you give it up in the form of equity, not in cash. So, you don't write a check for it, so it's very inexpensive cash flow-wise to get into a reverse mortgage; it just comes off from future equity.
And like one client told me the other day, "So, I've been watching my house on Zillow, and it goes up and down by 
, 
, 
every month, it seems." So, it's kind of a moving target, and you're not paying for it with real money, but it is still something that is paid back and is tacked onto the balance. And we are very clear about how much that is, and it shows up line by line exactly what the closing costs are so that people know what is paid back in the future.
Rob West: Hm, very good. Thanks for that. And Roger, again, thank you for your call, sir. Let's see. Sharlanda in Texas, go ahead.
Sharlanda: Okay. My question is that I am looking into a reverse mortgage. I have started a process with a company, and there are tremendous fees involved with it, up to about $11,000. Is that unusual? And are other companies—are their fees less?
Rob West: Yes, great question. Harlan, your thoughts on that?
Harlan Accola: Yes. We're a national lender, and because of our volume, typically our fees end up being a little bit less. But it is more expensive, as we just talked about, because the 
is non-negotiable and has to be—that's not our fee, that's not anybody's fee—that has to go to the Federal Housing Administration. But it all depends on just exactly how you're doing things and what your costs are in your local area for title fees, origination costs, and so on. We'd be happy to give you a second opinion. The company that you're with might be fine, but we'd be happy to give you a second opinion as to, is that the best option that's available, or are there some things that should be trimmed off from there? So, it's always good to get a second opinion that we can look at it and be of help.
Rob West: Very good. Sharlanda, if you want to hang on the line, our team could get you connected. You could also go to faithfi.com/movement, and we will be sure to send you a copy of that book as well. Thanks for your call today. We appreciate that great question. Well, folks, a quick break, and then back with our final segment. We've got some great questions holding. We'll get to as many of those as we can. Harlan Accola here. Stay with us.
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Rob West: So thankful to have you with us today on Faith & Finance. You know, Harlan, it never ceases to amaze me. When you're here, the lines are jammed from start to finish, and I think it's just evidence that there's so many people who just don't understand these products or are interested, but perhaps have not considered them. And I love that you're providing this education, and I know that so many people when you do are surprised at what they hear, aren't they?
Harlan Accola: Well, they sure are. There's so many people, even after our initial hour usually that we take to just find out whether or not it makes sense and whether or not we should go further, at the end of the hour they say, "I had no idea. I did not understand any of this." And these are people that are very smart people and have made all kinds of very smart decisions and run their finances for decades, and they just didn't know, and they were relying on outdated, incorrect information in most cases.
Rob West: Yeah, no question about it. Charlanda had a follow-up question. She wanted to know: Is it possible to be denied when you seek one of these reverse mortgages? Give us a sense of how that works.
Harlan Accola: Well, yes, it is. A property can not qualify if there is a problem specifically with the property not being—if there's commercial things going on with the property, if it's not something that will fit into the FHA guidelines. Some manufactured homes do not qualify, some condominiums do not qualify. But that's rare; most of the time the home will qualify.
And then there's some people that will qualify, but we can't come up with enough money to pay off an existing mortgage because you're always getting less than 50% of the value of the house. So if somebody owes 200 and their house is worth 300, they have to reduce their balance before we can do it. So we don't disqualify them, we just tell them, "You have to come up with $50,000," or something, which may or may not be possible.
So those are some things. If somebody has bad credit, we usually can work around that because sometimes they just got behind on things because of health issues or whatever. So there's very few people that end up getting denied, but yes, it is possible depending upon their situation.
Rob West: Yeah, very good. That's helpful. All right, back to the phones. We go to Arkansas. Tom, how can we help you, sir?
Tom: Good morning, sir. Thank you. And you know, I've always heard this expression that "Fool me once, shame on you. Fool me twice, shame on me." But what happens when you get fooled three times? I've never heard that extrapolated out to that point.
Rob West: Right! It's a good question.
Tom: Yeah, I lost all my equity back in the housing crisis. And now you hear so much about trying to create affordable housing, which makes me fearful that my equity might again be stolen if they start making housing more affordable. But I am very interested in knowing about this home equity loan. Does it function like a home equity line, or does it not? I have to actually borrow the money; I can't just have it in there as a credit line, can I?
Rob West: Yeah, good question. And Harlan, this is one of the most misunderstood pieces of this, where a lot of people don't understand the most common form of a home equity conversion mortgage is in fact a line of credit, right?
Harlan Accola: Well, that's so true, Rob. We don't encourage people to take money out that they're not going to use so that interest accrues on money that they just have sitting in their checking account. That doesn't make sense and is not good stewardship. So you just take out the money that you need.
But one of the important things, Tom, is that this is not like a typical credit line at your bank or credit union that you might have been used to in the past. This is something that is a guaranteed increasing line of credit. So if it starts at 100,000, for example, and you don't use it, next year it's worth about 106, and the year after that 112, and so on. It just keeps going up as you get older, regardless of what happens to the value of the house.
The concern you have about values of houses in the future because you lived through 2008 is a very good one, and one reason why we encourage people—because this is non-recourse—get the reverse mortgage, buy the umbrella when it's not raining, so that money is in place. Because if the value of your house goes down, your line of credit is still guaranteed to increase no matter what happens to the overall market.
And so there's a lot of people that are just hedging against a future value decrease. And if everything goes great and your home is worth a lot more, well then you're fine. There's just more that gets passed on to the next generation. So your concern is real. It happened from 2008 to 2012, but people that had reverse mortgages did not get the money taken away; the line of credit was still there, and it continued to increase, sometimes above the value of the house.
Rob West: Is that helpful, Tom?
Tom: Yes. If I could just ask two more very variations on this. I always understood that if you had a reverse mortgage and you went out for—stayed in a rehab center for two months or something like that, they called the mortgage because you weren't actually living in the house. And the other half of my question is, is this somehow a way to—if I wind up in a nursing home, is this somehow to protect my house from the IRS taking it in the end and my kids winding up with nothing?
Rob West: Yeah, both of those questions are good ones. Harlan?
Harlan Accola: Yeah, the Medicaid issue is—I do a one-hour presentation for attorneys on that, so that's how complicated that is. But can you protect more of the equity by using a reverse mortgage? The short answer is yes. But it is something that needs to be worked together with what your plan is for the attorney and for the kids.
The first question that you asked, if you're out of the home, can they take it? We're not in a hurry to kick you out of the house. My dad had a stroke and he was out of the house in rehab and back and forth in nursing homes for over a year. You have to be permanently out of the house before the loan can be called due according to federal regulations. And we don't want to call it due because the interest that is continuing to accrue is essentially what we're in the business for. So we're not in a hurry to take your house or kick you out.
There's some people that go on mission trips and are gone for a year or two that have house sitters take care of things. You just have to let us know what's going on. We just don't want an empty house that—that's where things get bad and things get damaged, and that's the only issue. You're just required to let us know. But there's a lot of people that even winter—that are in the north country and they winter in the south and they're gone for six months at a time. And so, no, that is not a correct thing. That will happen with some HEIs and HEAs, but that is not something—we're federally regulated to keep you in your house until you've permanently moved out, both you and your spouse, if there is one. So that's an important question and a myth that we've got to get rid of, because people think as soon as you're gone for a few days, we're going to swoop in and change the locks. It does not happen.
Rob West: Tom, thanks for your call today. We'll get you a copy of Harlan's book. We're going to head down to Louisiana next and talk to Kenneth. Kenneth, go ahead.
Kenneth: Hello there.
Rob West: Hi!
Kenneth: Glad to talk to y'all. I've been chewing on doing a reverse mortgage for a while, but I live in Louisiana where we have Napoleonic law, and I have six daughters and I've run into issues in the past with that. Do y'all have any comment on Napoleonic law?
Harlan Accola: Well, we do a lot of work in Louisiana, and so I'm not familiar with specifically what you're talking about. But do you own the house yourself personally, or is it in a family trust, or are the daughters on the title with you?
Kenneth: No, I own the house outright. And most of the daughters do well. I have one that I help, but I'm also looking to move to—well, not to move, but to continue to visit the mission field, and would love to have these funds available to help accomplish that.
Harlan Accola: Well, God bless you for doing that. That's very selfless and that's just wonderful to hear. There is no issue in Louisiana or any of the 50 states that preempts this federal program. So I'll look more into the specifics from the Napoleonic scenario, but you are allowed to do the reverse mortgage, take the money out as an owner of the house, and you're allowed to pass it on to whoever you wish, either through a trust or a will, however you want to make sure that it goes to your six daughters. So I'd be happy to discuss that further with what some of your concerns are, but we've never run into a problem doing the reverse mortgages in Louisiana.
Rob West: Thanks for your call today, Kenneth. We appreciate you being on the program. Quickly to Ohio. This will be our final caller. Go ahead. Hi Linda, are you there?
Linda: Yes, I'm here.
Rob West: How can we help you today?
Linda: Well, it seems like you've maybe answered some of my questions, because I was concerned with the cost. Somebody told me that they were unaffordable. But I also didn't realize that there was like the conversion, or where you don't have to take a lump sum.
I'm 74, and we've been trying to buy another house because we're in a two-story house, for two years. And although we have somewhere between $350,000 and $375,000 in equity, we can't find anything because everything here is like $450,000–$500,000, still needing improvements, and it's more than we want to take on in a mortgage with the interest rate.
Harlan Accola: Linda, there's a few million people in your situation that are in two-story houses that should not be there and are looking at a different house. What most people don't realize is you can use the money in your current house when you sell it as a down payment on a reverse mortgage, which allows you to, for example, buy a $300,000 house for only $150,000, or something on that order. So you just use some of your equity, we come in with the rest, so that you do not have a payment and there is no mortgage on it for the rest of your life that you have to make a payment on.
And then it's, of course, paid at the end. So many, many people, even if they have plenty of money, many people should move using the reverse mortgage to get that next house that is more suited for their lifestyle in that age. And it's something that will make a dramatic difference for you and your husband. And so I'd love to visit with you about what your options are so that you can start looking at houses and shopping for houses in a different way than what you're doing it now—thinking about a regular mortgage with a payment, because at 6% or 7% interest rates, your mortgage payment could put you into a situation that simply does not work.
Rob West: Linda, thanks for your call today. Folks, if you were holding and didn't get on, we're still going to send you a copy of Harlan's book, and let's see if we can get you next time he's with us. I apologize we didn't get to every call. Harlan, thanks for your time today, my friend.
Harlan Accola: Appreciate the opportunity. Thank you, Rob.
Rob West: All right. Faithfi.com/movement to learn more. I'm Rob West. Thanks to my team today. See you tomorrow!
Announcer: The views and opinions expressed in this broadcast may not necessarily reflect those of the American Family Association or American Family Radio.
Rob West: Reverse mortgages may still raise eyebrows in the church, but do they deserve to? Hi, I'm Rob West. Reverse mortgages continue to carry a negative reputation, but faithful stewardship means evaluating financial tools based on how they work today. Harlan Accola joins us to explain why many Christians remain hesitant and how a modern FHA-insured reverse mortgage could fit into a thoughtful retirement plan. And then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith & Finance on American Family Radio: Biblical Wisdom for Your Financial Decisions.
Well, so glad to have you with us today. Harlan Accola is here. We're going to be talking about reverse mortgages, and he is gracious with his time. He's going to be sticking around today, and although we will take questions on any topic, we will prioritize those questions specifically on reverse mortgages. Perhaps you have a question about whether this is right for you. Maybe you've been considering it, you have some questions, maybe there's been some misunderstandings or things that you've been concerned about. Well, today's the day Harlan will educate you, walk you through your situation, and get into the specifics in your mind. So call right now. We will begin taking those calls in just a moment: 800-525-7000. Again, that's 800-525-7000. Harlan Accola, of course, leads the reverse mortgage team at Movement Mortgage, one of our valued FaithFi underwriters. They help families explore home financing solutions, including reverse mortgages designed to help eligible homeowners use their home equity thoughtfully in retirement. He's here today to help us separate fact from fear. And Harlan, great to have you back.
Harlan Accola: So good to be here, Rob. Thanks for the opportunity.
Rob West: Harlan, many believers who want to steward their finances wisely are hesitant when they hear this term, reverse mortgage. Maybe they've been told these loans are expensive, risky, or simply unwise. I know years ago the products were much different than they are today, so maybe it's just kind of a holdover from some of those older products that even you wouldn't have recommended. But why do you think, at the core, reverse mortgages still carry such a negative perception?
Harlan Accola: Well, you know, Rob, debt of any kind feels unspiritual. It's been blacklisted because it's got so many Christians in trouble with credit card debt and overspending and doing things that are simply foolish financial decisions that debt has caused people to be in a corner and hurt them. And that certainly happened with forward mortgages before 2008, before the crash. And there have been bad things that happened with both traditional forward mortgages and reverse mortgages. But the fact is that most people are relying on something that is just rumor, something that they've heard. The vast majority of people that actually have them have a high satisfaction. But the other thing is they really haven't heard trusted voices inside the church like yourself explain the pros and cons and where a reverse mortgage might fit into retirement to make things better.
Rob West: Yeah. Yeah, I think that's certainly true. And we're quick to say here on this program, listen, if you want to get out of debt completely, including your home, and stay that way, that's great. You know, there's plenty of warnings in Scripture around the use of debt. I think to Harlan's point, I think the key is, we just encounter so many folks who maybe are living paycheck to paycheck in retirement, or they've carried a forward mortgage into retirement, and because they didn't save enough, they're just feeling the squeeze to even put food on the table. And yet they're staying in a home that's got significant home equity, and it could be converted to an income stream, to a line of credit with an optional payment. And the kids probably don't want the house anyway; they'd much rather Mom and Dad be able to have a little breathing room and enjoy the fourth quarter of life. That's where these products can shine, especially the products of today, which are much different than the products from years ago, and certainly much different than something like an HEI. I'd love for you to explain that, Harlan.
Harlan Accola: Yes, there's a lot of programs out there that have given us a bad name and a reputation that we don't, quite frankly, deserve, because we only deal at Movement with mortgages—reverse mortgages, home equity conversion mortgages that specifically are non-recourse loans. I was just talking to someone yesterday that was thinking about an HEI, home equity investment, home equity agreement. They're not regulated by FHA or any mortgage regulator. They're simply investors that give you a certain amount of money and then expect a certain amount back. Usually the term is only 10 years. If you don't pass away within 10 years or you don't sell your house within 10 years, you can be forced to repay it or lose your house if you don't. That is where we get a really bad name, and a lot of those products are still out there and actually gaining in popularity because people think that they are safe when they often are very dangerous.
Rob West: Very true. Back with Harlan Accola and your questions after this. Stick around.
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Rob West: We're separating fact from fear related to reverse mortgages today on Faith & Finance. I'm Rob West. He's Harlan Accola. He's our go-to guy on this topic. He leads the reverse mortgage team at Movement Mortgage. By the way, if you have a question on topic today, something related to reverse mortgages—maybe you've heard some things that are concerning to you, or you're wondering whether this might be a fit for you—Harlan's going to stick around and take your calls today at 800-525-7000. Every call on that topic will get a copy of Harlan's book. It's our gift to you. We'd be delighted to send it to you just to give you a primer on this topic, but then he can also get into your specific questions today. Again, 800-525-7000. We will dive into those questions here in just a moment, so call right now. Patty's standing by to take those calls today. Harlan, we talked about, you know, the products—the older products in the reverse mortgage category from, you know, 10 or 20 years ago—were much different than the products of today. I'd love for you to dig into specifically what makes today's home equity conversion mortgage different from those products people may remember.
Harlan Accola: Biggest thing is that they are non-recourse, which is a fancy word for an absolute guarantee from the Federal Housing Administration that you can never be upside down in the house as far as owing more than what the house is worth. So, contrary to popular opinion, it is impossible to leave a debt behind for your children. There will always either be equity left or the difference will be forgiven because of the guarantees that come from the federal government with the insurance. It also guarantees that you never have to move. As long as you're paying your taxes and insurance, which you would have to do anyway, you never have to worry about moving, even up to age 150, which is in writing on the mortgage document. My personal loan is one on my 150th birthday is when it's due. So the peace of mind that I never have to worry about making a payment, I never have to worry about our four sons getting a debt left behind that they're responsible for, is a huge reassurance and something that simply was not available to many of those early programs until there was reforms that came from the Federal Housing Administration. I think one of the other big things is a lot of people felt that if they did it and they passed, that their spouse would get kicked out of their home. And that sometimes happened in the past because of the fact that some husbands would do the loan without their wife's information or their wife's age, or she wasn't involved in the process, and she didn't even know. And after he passed away, she was kicked out of the house. That was a horrible situation, and really not the fault of the industry, it was the fault of the husband that made the wrong choice. But that has been completely fixed. Nobody can do a loan without including their wife or their husband.
Rob West: Mm, yeah, that's really helpful and I think clears up a lot. Taking your calls today, 800-525-7000. Every call on this topic gets a copy of Harlan's book. Let's dive in today. We'll begin in Ohio. Matthew, go ahead.
Matthew: Yeah, hi folks, thanks for taking my call. My question is this about the reverse mortgages: My sister and I are co-owners of the family house. She lives there, I do not. It's in New York State. And we're both retired. I'm 74, she's 78. She's in a good place financially with her retirement, and I am not. And we'd like to take some money out of the property such that I can have a more, you know, better quality of life. A couple of things that have come up in my research is that we would both have to live there if we were both, you know, the people assigned on the reverse mortgage. And then also I was concerned about, what about preservation of asset if, for instance, I go into a nursing home and have to have Medicare assistance? Don't they claw back and try and take some of that asset to pay them back for what they would have to pay for my nursing?
Rob West: Yeah, great questions. No, no, those are really good, Matthew. Harlan, dive in.
Harlan Accola: Yeah, those are excellent questions. It's kind of multifaceted. Let's take the first scenario. You do not have to live in the house. However, when your sister would pass, the loan is due. So if you're both co-owners on the house, that's okay. You're simply a non-occupying borrower, and so it is possible to do that. It's just that the trigger of the repayment happens when your sister would pass, because she's the one that lives there. So if she passed first, the loan would be due, and you would inherit the house—the way it sounds, that you'd be the only one that would inherit the house—and then you would receive whatever's left in the equity that wasn't used. But this is a typical situation that is done between children, between spouses that are getting a divorce—unfortunate situation like that—is she effectively buys out some of your ownership of the house by giving you money from the reverse mortgage. It's a very common thing that we do on a regular basis. So it would be of help to you, does not hurt her, does not create payments like a lot of people do in doing a loan, so this would be kind of tailor-made for your situation, so it would be of help to you. When it comes to Medicaid later in life, that's a whole 'nother discussion, but it would protect—the asset can be protected, and the money that is in the house is not something that Medicaid is going to go after, but simply money that you've used to live. If you took out a big chunk, like $100,000, and put it into your account, that can be subject to Medicaid. But the smartest way to do it would be to be taking out a little bit at a time so that you could—would not put the money in danger on that situation. So in combination with an elder law attorney, we've done many of these situations to protect not only the asset, but to create cash flow while you're alive. So there's two different birds that can be killed, so to speak, on the same plan in putting this together of getting some of the cash out. So, excellent question, Matthew, and something that would fit very well for your scenario in combination with an estate plan that would protect her, your sister, and you.
Rob West: Matthew, does that make sense?
Matthew: Yeah, it does. And I think I'll be looking to follow up with Harlan in the near future here, if that's okay.
Rob West: Absolutely. Yep, hold the line. Our team will get your information, we'll get his book out to you, and they can help you make that connection. Also, folks, if you want to learn more, just go to faithfi.com/movement. That's faithfi.com/movement. Let's go to Arkansas. Hi Roger, go ahead. Roger, are you there? All right, we're going to see if we can get Roger back on the line. We'll come back to him. Let me go to Tennessee. Randy, how can we help?
Randy: Yeah, sir. I'm a 75, retired, and own my own home, and I was curious about this reverse mortgage. I have a question as far as, if you get a reverse mortgage, can it be taken out all at once?
Rob West: Mm, yeah. Good, good question. Harlan, let me let you tackle that one, and then we'll hit the break, and if Randy has any follow-up questions, we'll get to that.
Harlan Accola: Sounds great. Yes, Randy, there's three ways to get money out of a reverse mortgage. You can take it out in a lump sum, as you just alluded to, which isn't always the best way to do it, because you don't want to take money out that you don't need until you need it, just like taking money out of an IRA. You take it out a little bit at a time. But you can, because some people use it to pay off a loan or buy a motor home or car or something like that, so it's your money, you can use it for whatever you want. Secondly, if you want to set up a line of credit and just pull money out as you need it, whenever you need it, it's guaranteed to be available no matter what for the rest of your life, and it grows by about 6%. So that's often the smartest way to take the money out. And the third way is to just set up an annuity-type payment—it's not an annuity, but you just take a monthly check and every month you receive a certain amount guaranteed for the rest of your life or for a certain period of time.
Rob West: Randy, stay on the line. We'll see if you have any more questions after this.
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Rob West: Great to have you with us today on Faith and Finance here on American Family Radio. We're talking home equity conversion mortgages. You might say, "I'm not familiar with that term." Well, it's basically the new form of reverse mortgage that allows you to tap into the home equity, as long as you're 62 or older and you have—generally speaking—50% or more equity in your home, to be able to pull some of that out with an optional payment, and that's key, or refinance an existing mortgage and then make that equity available as a lump sum or a line of credit or a monthly check, which again, can be a game changer in that season of life, or can be used—and this is where more and more advisors are leaning into this conversation.
Harlan, I'd love for you to weigh in on this, and then we'll head back to Tennessee and talk to Randy. But more advisors are seeing this as a part of the financial planning tools in the toolbelt to think about the best timing in terms of how to access the various assets that are in the retirement portfolio, right?
Harlan Accola: Well, that's so true. I was just working with a Kingdom Advisor that I met in Florida at the conference earlier in the year, and here in Minnesota, and we're doing some training for his entire team in how this helps with tax planning, helps some of his clients buy second homes, and also helps with the overall giving plan because there's several of his clients have more than $1 million in their paid-off homes and they want to give to their family or to charities or their church. And so, this isn't something that's just for poor people. We certainly want to help people that are in poverty that need money for food and the basic things of life, but it also works in the other area for the people that just want to be more generous, want to save money in taxes, and more carefully steward all of their resources. So, that's an excellent point. It's something that we sometimes forget as stewards, that we have a lot of money sitting in our house. What are we doing with that? And that's something that we can be very helpful with when we work with financial advisors in the comprehensive planning.
Rob West: Yeah, very good. Thanks for that. Back to the phones. By the way, Harlan's going to stick around for the entire broadcast today. If you have a question on reverse mortgages, we will prioritize those questions, and every question on-topic gets a copy of his book as our gift to you. Randy in Tennessee, I know Harlan responded to your first question. Did you have any follow-up questions on that?
Randy: Yes, I do. My mother-in-law died a several years ago, and the state—and she went, first she was in the a home, and the state took her her home and and and everything, including a—she had a a thing to for her burial insurance. They even took that, so I had to pay for everything. That's why I was asking about taking that out and just giving it to the church and my relatives and that. Is Is that Is that legal, or I mean...
Rob West: Yeah. Great question, Randy. Harlan, any thoughts on that?
Harlan Accola: Well, yes. A lot of people, I call that giving with a warm hand instead of a cold hand. Everybody just automatically believes that you should pay off your house and you should give it away when you pass away, and that's okay. That's one way to do it. But I've had a lot of people that know that they're completely fine and they've pulled money out of their house specifically for giving because they get a tax deduction and they don't need the money in their house and they said, "Hey, God needs things done in other countries and right here in the US right now, so I'm going to pull money out and and give it while I can," because yes, there are many houses that are gobbled up by medical costs at the end.
And so, there is a 5-year lookback whenever you're doing taking any money out and giving it away, but in the normal course of business, it's completely legal to give away anything, whether it's in a house or whether it's in an IRA or whether it's in a savings account. That's up to you as to how you want to spend it. They're just trying to stop people from specifically taking it out as soon as they go into a nursing home in the Medicaid situation. But it's it's something that's completely legal, and I certainly plan on not having that much equity in my house when I pass away because I'd rather give to my family and to the church and to Christian causes while I'm alive rather than waiting—I might not be dead for 20 or 30 years. So, I want to do something now. So, your thought process is is is very accurate, and I think that that's something that more people should consider from a stewardship standpoint of what can they give.
Rob West: Very good, Randy. Thanks for your call today. We'll get you that book. Lines are open: 800-525-7000. That's 800-525-7000. Let's go down to Missouri. Mike, go right ahead, sir.
Mike: Good morning. Yeah, I talked to Harlan. So, I guess—well, my wife and I, we talked to Harlan last August, and then I followed it up with a talk with you, Rob, about two weeks later. And we did go through with it. Went with Movement Mortgage, and Harlan set us up set us up with George, and it was a—it was a very good process. It was it was kind of lengthy, but... but it was very... what's that? Yeah. But it was—there was a there was a few difficulties on our end as far as we had to get some things done because it was an FHA loan, but aside from that, you know, we've got our reverse mortgage, and we're sitting on quite a big chunk of change.
Rob West: Wow. Well, Mike, thanks. You didn't have to take the time to make that call, but I appreciate that encouragement, and Harlan, that's got to be good to hear, huh?
Harlan Accola: Well, it is. There's so many people that we can change. The fear thing keeps so many people away from it, and there's so many people that say, "I wish we would've done this earlier." I just thought it was—one person said, "I thought it was a sin, so I never went any further." And so, we're so thankful to be able to get that news out.
And Mike brings up a good point: it does take time because we ask a lot of questions and go through the underwriting and make sure that it's right, because it's the biggest decision that many people make in their retirement. And some people get a little bit frustrated with the amount of time because it is an issue with going through a lot of paperwork and everything else, but once you get through it, you don't ever have to do it again. So, we certainly appreciate the opportunity to be of help to to Mike and and his family.
Rob West: Excellent. Mike, we appreciate your call today. Thanks for that testimony. Well, every line is full. Harlan Accola is here. We're going to get to as many calls as we can. We've still got plenty of time, so if you're holding, stay right there, and we'll be sure, Mike, to get you a copy of Harlan's book, and anybody else who calls today with a question on-topic, we'll send you Home Equity and Reverse Mortgages, really the primer on this topic written by Harlan Accola. Much more to come just around the corner. This is Faith and Finance on American Family Radio. I'm Rob West, and we'll be right back. Stay with us.
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Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. I'm Rob West. Well, we've got Harlan Accola here today, and we're taking your calls on, specifically, reverse mortgages. You know, our perspective on this topic is this: You know, I talk a lot about the principles that we see in God's word related to money management, starting with "God owns it all" and money is a tool, and Jesus is our ultimate treasure. And then those wise money management principles include living within your means and avoiding debt, and setting long-term goals and having—giving generously and having some margin, or something left over at the end of the month. You know, those are key, and they're wise.
And, you know, we go back to this idea of debt. We say that, you know, debt can mortgage the future, and we have to be careful. You know, it can rob God of an opportunity to provide, and we can get overextended and pre-commit funds in the future that we don't have. I think one of the differences is with what we're talking about today is for those who have not saved enough for retirement in this fourth quarter of life, or they need more flexibility, or they just want to be able to control the timing of when they tap various retirement assets because of tax implications, and IRMAA, and Medicare, and all the things. You know, often leveraging your home equity can be a game changer, because, you know, it's tax-free money. It's money that you can then tap into when you need it, and that payment is optional.
Also, keep in mind that your home continues to grow in value, and so often, when you leave your home to your heirs, they don't want the family home—they're just going to sell it anyway—and then they'll pay off whatever mortgage exists. Whatever's left is available for them, unless you decide to give that away, and everybody wins, including you, because you had more flexibility—access to a line of credit or a monthly check in retirement. Now again, that's not for everybody. These products are not inexpensive in the sense that, yeah, you're going to have the FHA fee up front, you're going to have interest on top of the money borrowed, but at the same time, it really could be a game changer for many people. And that's why a lot of people are saying in this season of life, "Yeah, I think this makes sense for me."
We're taking your questions today because we realize, with these products, there's a lot of misunderstanding, and Harlan has been gracious with his time to answer those questions today. So, let's dive back in. Roger in Arkansas, you've been waiting patiently. Go ahead, sir.
Roger: Yes, sir. You hear—can you hear me now?
Rob West: We sure can. Go right ahead.
Roger: Okay. I'm—I'm retired. I'm 79. I pay my tithes, and I—I support some other people. What I was interested in is getting enough money to buy a vehicle. My vehicle is way up in miles, and—and it's not as dependable as it used to be. And I was wanting to buy a vehicle, and my question is, when I go to pay that back, can I pay as much as I want, when I want?
Rob West: Hm. Yeah, great question. Harlan?
Harlan Accola: Yeah, Roger, that—that's a misconception of so many people is that you can't make payments on a reverse mortgage. There's a lot of people that use a reverse mortgage to borrow money for cars, for home improvements, for whatever, and they fully intend to pay it back. But they don't want to be required to pay it back in case they get sick, or lose a spouse, or some hard times come along. It's the safest money to borrow once you're past 62, because you can make a payment if you want, and if you don't want to, you don't have to. You can skip a month, you can skip a year, you can skip several months, or you could never have to pay it back until after you move out of the house.
So, it relieves the borrower being the servant to the lender. You are not a servant to this loan; we are a servant to you. And we give you the money, and you don't have to pay it back. But if you want to, just like any other loan, you make regular payments, and you can make them as big or small as you want every month, or just, you know, run into some money, do a big lump sum. Or if you want one month you want to help someone else that is in need, don't make a payment to us—use that money to help someone else. It's completely up to you, and you can manage the debt as you wish, not according to what the lender makes you do. That's a great question, Roger.
Rob West: Roger, is that helpful?
Roger: Okay. Yeah, another question. How much interest is on that loan?
Rob West: Hm, yeah.
Harlan Accola: Great question. It's regulated by FHA. It's only about above the 10-year Treasury, so it's controlled by FHA, so it's about the same as a 30-year mortgage, which right now is running between and . So, that's the amount of interest that is charged every month, and then we show how much interest is accruing. And if you want to pay it, you can, and if you don't, it just goes on to the balance. So, very reasonable rates. A lot of people say, "Well, it's really high interest rates." It's nothing like—some people borrow from credit cards, which are to . We're very closely controlled on usually the lowest amount that's available for commercial lending anywhere.
Rob West: Roger, we'll send you a copy of Harlan's book. If you want to know more or connect with him, our team can help you do that, or if you're comfortable on the internet, faithfi.com/movement. Harlan, there is also, when we talk about expenses, you mentioned the interest rate, there is also that FHA fee up front. Talk about what that covers.
Harlan Accola: Yes. A lot of people say, "Well, you know, reverse mortgages are expensive." And in one way, they're the cheapest loan you can get, and in another way, they're a more expensive loan. The fee of of the value of the house guarantees three things: It guarantees you'll never have to make a payment, it guarantees that you'll never go upside down so your kids won't owe anything, and it guarantees you'll never have to move—that there's never a time comes where, "Okay, you've been in there long enough." So, you do give that up, but you give it up in the form of equity, not in cash. So, you don't write a check for it, so it's very inexpensive cash flow-wise to get into a reverse mortgage; it just comes off from future equity.
And like one client told me the other day, "So, I've been watching my house on Zillow, and it goes up and down by , , every month, it seems." So, it's kind of a moving target, and you're not paying for it with real money, but it is still something that is paid back and is tacked onto the balance. And we are very clear about how much that is, and it shows up line by line exactly what the closing costs are so that people know what is paid back in the future.
Rob West: Hm, very good. Thanks for that. And Roger, again, thank you for your call, sir. Let's see. Sharlanda in Texas, go ahead.
Sharlanda: Okay. My question is that I am looking into a reverse mortgage. I have started a process with a company, and there are tremendous fees involved with it, up to about $11,000. Is that unusual? And are other companies—are their fees less?
Rob West: Yes, great question. Harlan, your thoughts on that?
Harlan Accola: Yes. We're a national lender, and because of our volume, typically our fees end up being a little bit less. But it is more expensive, as we just talked about, because the is non-negotiable and has to be—that's not our fee, that's not anybody's fee—that has to go to the Federal Housing Administration. But it all depends on just exactly how you're doing things and what your costs are in your local area for title fees, origination costs, and so on. We'd be happy to give you a second opinion. The company that you're with might be fine, but we'd be happy to give you a second opinion as to, is that the best option that's available, or are there some things that should be trimmed off from there? So, it's always good to get a second opinion that we can look at it and be of help.
Rob West: Very good. Sharlanda, if you want to hang on the line, our team could get you connected. You could also go to faithfi.com/movement, and we will be sure to send you a copy of that book as well. Thanks for your call today. We appreciate that great question. Well, folks, a quick break, and then back with our final segment. We've got some great questions holding. We'll get to as many of those as we can. Harlan Accola here. Stay with us.
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Rob West: So thankful to have you with us today on Faith & Finance. You know, Harlan, it never ceases to amaze me. When you're here, the lines are jammed from start to finish, and I think it's just evidence that there's so many people who just don't understand these products or are interested, but perhaps have not considered them. And I love that you're providing this education, and I know that so many people when you do are surprised at what they hear, aren't they?
Harlan Accola: Well, they sure are. There's so many people, even after our initial hour usually that we take to just find out whether or not it makes sense and whether or not we should go further, at the end of the hour they say, "I had no idea. I did not understand any of this." And these are people that are very smart people and have made all kinds of very smart decisions and run their finances for decades, and they just didn't know, and they were relying on outdated, incorrect information in most cases.
Rob West: Yeah, no question about it. Charlanda had a follow-up question. She wanted to know: Is it possible to be denied when you seek one of these reverse mortgages? Give us a sense of how that works.
Harlan Accola: Well, yes, it is. A property can not qualify if there is a problem specifically with the property not being—if there's commercial things going on with the property, if it's not something that will fit into the FHA guidelines. Some manufactured homes do not qualify, some condominiums do not qualify. But that's rare; most of the time the home will qualify.
And then there's some people that will qualify, but we can't come up with enough money to pay off an existing mortgage because you're always getting less than 50% of the value of the house. So if somebody owes 200 and their house is worth 300, they have to reduce their balance before we can do it. So we don't disqualify them, we just tell them, "You have to come up with $50,000," or something, which may or may not be possible.
So those are some things. If somebody has bad credit, we usually can work around that because sometimes they just got behind on things because of health issues or whatever. So there's very few people that end up getting denied, but yes, it is possible depending upon their situation.
Rob West: Yeah, very good. That's helpful. All right, back to the phones. We go to Arkansas. Tom, how can we help you, sir?
Tom: Good morning, sir. Thank you. And you know, I've always heard this expression that "Fool me once, shame on you. Fool me twice, shame on me." But what happens when you get fooled three times? I've never heard that extrapolated out to that point.
Rob West: Right! It's a good question.
Tom: Yeah, I lost all my equity back in the housing crisis. And now you hear so much about trying to create affordable housing, which makes me fearful that my equity might again be stolen if they start making housing more affordable. But I am very interested in knowing about this home equity loan. Does it function like a home equity line, or does it not? I have to actually borrow the money; I can't just have it in there as a credit line, can I?
Rob West: Yeah, good question. And Harlan, this is one of the most misunderstood pieces of this, where a lot of people don't understand the most common form of a home equity conversion mortgage is in fact a line of credit, right?
Harlan Accola: Well, that's so true, Rob. We don't encourage people to take money out that they're not going to use so that interest accrues on money that they just have sitting in their checking account. That doesn't make sense and is not good stewardship. So you just take out the money that you need.
But one of the important things, Tom, is that this is not like a typical credit line at your bank or credit union that you might have been used to in the past. This is something that is a guaranteed increasing line of credit. So if it starts at 100,000, for example, and you don't use it, next year it's worth about 106, and the year after that 112, and so on. It just keeps going up as you get older, regardless of what happens to the value of the house.
The concern you have about values of houses in the future because you lived through 2008 is a very good one, and one reason why we encourage people—because this is non-recourse—get the reverse mortgage, buy the umbrella when it's not raining, so that money is in place. Because if the value of your house goes down, your line of credit is still guaranteed to increase no matter what happens to the overall market.
And so there's a lot of people that are just hedging against a future value decrease. And if everything goes great and your home is worth a lot more, well then you're fine. There's just more that gets passed on to the next generation. So your concern is real. It happened from 2008 to 2012, but people that had reverse mortgages did not get the money taken away; the line of credit was still there, and it continued to increase, sometimes above the value of the house.
Rob West: Is that helpful, Tom?
Tom: Yes. If I could just ask two more very variations on this. I always understood that if you had a reverse mortgage and you went out for—stayed in a rehab center for two months or something like that, they called the mortgage because you weren't actually living in the house. And the other half of my question is, is this somehow a way to—if I wind up in a nursing home, is this somehow to protect my house from the IRS taking it in the end and my kids winding up with nothing?
Rob West: Yeah, both of those questions are good ones. Harlan?
Harlan Accola: Yeah, the Medicaid issue is—I do a one-hour presentation for attorneys on that, so that's how complicated that is. But can you protect more of the equity by using a reverse mortgage? The short answer is yes. But it is something that needs to be worked together with what your plan is for the attorney and for the kids.
The first question that you asked, if you're out of the home, can they take it? We're not in a hurry to kick you out of the house. My dad had a stroke and he was out of the house in rehab and back and forth in nursing homes for over a year. You have to be permanently out of the house before the loan can be called due according to federal regulations. And we don't want to call it due because the interest that is continuing to accrue is essentially what we're in the business for. So we're not in a hurry to take your house or kick you out.
There's some people that go on mission trips and are gone for a year or two that have house sitters take care of things. You just have to let us know what's going on. We just don't want an empty house that—that's where things get bad and things get damaged, and that's the only issue. You're just required to let us know. But there's a lot of people that even winter—that are in the north country and they winter in the south and they're gone for six months at a time. And so, no, that is not a correct thing. That will happen with some HEIs and HEAs, but that is not something—we're federally regulated to keep you in your house until you've permanently moved out, both you and your spouse, if there is one. So that's an important question and a myth that we've got to get rid of, because people think as soon as you're gone for a few days, we're going to swoop in and change the locks. It does not happen.
Rob West: Tom, thanks for your call today. We'll get you a copy of Harlan's book. We're going to head down to Louisiana next and talk to Kenneth. Kenneth, go ahead.
Kenneth: Hello there.
Rob West: Hi!
Kenneth: Glad to talk to y'all. I've been chewing on doing a reverse mortgage for a while, but I live in Louisiana where we have Napoleonic law, and I have six daughters and I've run into issues in the past with that. Do y'all have any comment on Napoleonic law?
Harlan Accola: Well, we do a lot of work in Louisiana, and so I'm not familiar with specifically what you're talking about. But do you own the house yourself personally, or is it in a family trust, or are the daughters on the title with you?
Kenneth: No, I own the house outright. And most of the daughters do well. I have one that I help, but I'm also looking to move to—well, not to move, but to continue to visit the mission field, and would love to have these funds available to help accomplish that.
Harlan Accola: Well, God bless you for doing that. That's very selfless and that's just wonderful to hear. There is no issue in Louisiana or any of the 50 states that preempts this federal program. So I'll look more into the specifics from the Napoleonic scenario, but you are allowed to do the reverse mortgage, take the money out as an owner of the house, and you're allowed to pass it on to whoever you wish, either through a trust or a will, however you want to make sure that it goes to your six daughters. So I'd be happy to discuss that further with what some of your concerns are, but we've never run into a problem doing the reverse mortgages in Louisiana.
Rob West: Thanks for your call today, Kenneth. We appreciate you being on the program. Quickly to Ohio. This will be our final caller. Go ahead. Hi Linda, are you there?
Linda: Yes, I'm here.
Rob West: How can we help you today?
Linda: Well, it seems like you've maybe answered some of my questions, because I was concerned with the cost. Somebody told me that they were unaffordable. But I also didn't realize that there was like the conversion, or where you don't have to take a lump sum.
I'm 74, and we've been trying to buy another house because we're in a two-story house, for two years. And although we have somewhere between $350,000 and $375,000 in equity, we can't find anything because everything here is like $450,000–$500,000, still needing improvements, and it's more than we want to take on in a mortgage with the interest rate.
Harlan Accola: Linda, there's a few million people in your situation that are in two-story houses that should not be there and are looking at a different house. What most people don't realize is you can use the money in your current house when you sell it as a down payment on a reverse mortgage, which allows you to, for example, buy a $300,000 house for only $150,000, or something on that order. So you just use some of your equity, we come in with the rest, so that you do not have a payment and there is no mortgage on it for the rest of your life that you have to make a payment on.
And then it's, of course, paid at the end. So many, many people, even if they have plenty of money, many people should move using the reverse mortgage to get that next house that is more suited for their lifestyle in that age. And it's something that will make a dramatic difference for you and your husband. And so I'd love to visit with you about what your options are so that you can start looking at houses and shopping for houses in a different way than what you're doing it now—thinking about a regular mortgage with a payment, because at 6% or 7% interest rates, your mortgage payment could put you into a situation that simply does not work.
Rob West: Linda, thanks for your call today. Folks, if you were holding and didn't get on, we're still going to send you a copy of Harlan's book, and let's see if we can get you next time he's with us. I apologize we didn't get to every call. Harlan, thanks for your time today, my friend.
Harlan Accola: Appreciate the opportunity. Thank you, Rob.
Rob West: All right. Faithfi.com/movement to learn more. I'm Rob West. Thanks to my team today. See you tomorrow!
Announcer: The views and opinions expressed in this broadcast may not necessarily reflect those of the American Family Association or American Family Radio.
Reverse mortgages continue to carry a negative reputation, but faithful stewardship means evaluating financial tools based on how they work today. On this Faith & Finance on AFR, Rob West and Harlan Accola explain why many Christians remain hesitant. They also discuss how a modern, FHA-insured reverse mortgage could fit into a thoughtful retirement plan. Then, it’s on to calls.
(00:00) Rob West and Harlan Accola address the realities of reverse mortgages
(08:30) Current reverse mortgages guarantee heirs will not be left with debt
(11:41) Caller Matthew: Co-owns family home with his sister. She lives in the house, he does not. Is a reverse mortgage possible
(15:57) Caller Randy: Details of how a reverse mortgage works
(21:22) Rob West and Harlan Accola discuss how financial advisors are using reverse mortgages for retirement, tax and giving planning
(22:50) Continue with conversation with Randy on how to use a reverse mortgage as part of a giving plan
(25:35) Caller Mike: Testimony of a good experience provided by Harlan Accola and Movement Mortgage
(31:10) Rob West summarizes reverse mortgages and how they can be used
(33:50) Caller Roger: Can a reverse mortgage be used to purchase a car
(38:14) Caller Sharlanda: What are the fees on a reverse mortgage
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