Rob West: We know that God owns everything, and that what we have is simply entrusted to us. But do we apply that everywhere? I am Rob West. Today Harlaun Accola joins us to talk about why the equity in your home should be considered as a part of your overall stewardship plan. And he's brought some surprising stats to make the point. Then we'll take your phone calls today at 800-525-7000. That's 800-525-7000. This is Faith & Finance on American Family Radio, biblical wisdom for your financial decisions.
Well, Harlaun Accola leads the reverse mortgage team at Movement Mortgage, and underwriter of this program. Movement is a national mortgage lender committed not only to helping families with home financing, but also to investing in communities through its charitable work, most notably the Movement Schools all over the country. Harlaun, great to have you with us.
Harlan Accola: So good to be here, Rob. Thank you.
Rob West: By the way, Harlaun is going to stick around today, and although we'll try to sneak in a few questions off-topic, we will prioritize those questions specifically related to reverse mortgages. We know so many of you have questions around things you've heard. Does it apply to you? How does it actually work? If that's you today, today is the day to call 800-525-7000. Again, reverse mortgages will be the focus of our topic today as we think about these—this product as a tool as a part of your overall stewardship plan. We'll also be happy to send you a copy of Harlaun's book as our gift to you for every call on topic today. Again, that number 800-525-7000. Harlaun, we say often on this program—because it's true—that God owns it all and we're stewards of what He's entrusted to us. And we tend to think about that in terms of our income, and our savings, and our investments, certainly our giving. Why do you think we often leave out the equity in our homes as a part of that equation?
Harlan Accola: Well, it's strange really when you think about it, but it's completely influenced by our tradition and culture going back to, really, the Depression-era thinking of our parents and our grandparents. And we've just simply been taught from the time we're little that you work hard, you pay off your house, you leave it to your children. But home equity is part of our wealth, just like money in an IRA or an investment account or savings account. It's part of what God has given us. And that doesn't mean that everyone should use the money inside their house and take that money and do something with it, but we should make it part of our planning as to how it fits into the larger stewardship, giving, and legacy picture.
Rob West: Mm, yeah, I think that's well said. There's also a deeply held assumption that, you know, when we think about parenting, that good parents should leave the family home to their children free and clear. But I know you're encouraging Christians to at least think through that, perhaps reconsider it. Why is that idea worth examining?
Harlan Accola: Well, I've seen it in thousands of our clients over the last 20 years, and I've practiced it myself. We've heard the phrase "be giving while you're living so you're knowing where it's going."
Rob West: Yeah.
Harlan Accola: And, certainly, that's what I look at now. My children—our four sons and their wives and our seven grandkids—have big needs right now. One of our grandsons has a severe disability, and they need help worse now than maybe if we live another 20 years and then leave something to them. And we can also be giving now when there are so many great needs in the Kingdom, rather than just saving it all up until the end after we pass away. So, I think it's just something that, just like we would look at our IRAs and our savings accounts, we should also factor that in, because there's $14 trillion of wealth sitting in seniors' houses. And most people just don't think about using it. In fact, half the people over 62 are still making mortgage payments, so they're taking more money and putting it into their house instead of using any of it. And that isn't always the wisest and most prudent thing to do.
Rob West: Yeah. Let's go back to the data for a second. For many home—homeowners that are older, that equity we talked about in their homes represents a significant portion of their wealth, especially after years of rising home values. Just how important has home equity become in the retirement planning conversation?
Harlan Accola: Well, you know, according to Harvard did a big Joint—their Joint Center for Housing Studies did a big research on this back in 2022. And they found that the median homeowner has a quarter of a million dollars in home equity. And that's way up from about $150,000–$160,000 5–10 years earlier before COVID changed a lot of things. And it's usually, for the average person, one of the largest assets on their balance sheet. And yet there's almost 30% of people over the age of 62 that are living in relative poverty. It doesn't really make sense when there's that much wealth that has been entrusted to that—those ages.
Rob West: More with Harlaun Accola, we're talking reverse mortgages right after this.
SEGMENT 2
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. You know, as we think about stewarding what God has entrusted to us, we look at our complete financial picture. And for those in the fourth quarter of life, often their home equity is their biggest asset, even though more and more are entering retirement still with a mortgage payment. And especially for those who have not saved enough, or those who just want to be thoughtful about which asset we're tapping at which time, a reverse mortgage can be one of those tools to consider—not for everyone, but certainly something to take a look at. That's what we're talking about today as we consider the significant amount of home equity that exists in the homes of retirees across this country today. Harlaun Accola is here. Harlaun leads the reverse mortgage team at Movement Mortgage. If you want to learn more, just go to faithfi.com/movement. That's faithfi.com/movement. Harlaun is also here to take your questions today. So, if this is a topic you'd like to know more about—perhaps you've heard things that have been concerning about reverse mortgages in the past, or you're just wondering how it might apply to your situation—those will be the calls we'll prioritize today when you call 800-525-7000. Pat in taking your calls today. We'd love to hear from you at 800-525-7000. Every call on topic, we'll send you a copy of Harlaun's book as our gift to you. Harlaun, before the break, we were talking about just the significant equity that represents a massive portion of most Americans' wealth in their homes, especially after what's happened over the last number of years. But having that equity in your home doesn't necessarily mean you have the cash flow to live comfortably, right?
Harlan Accola: Well, that's so true. I was just on yesterday morning with a CKA advisor and one of his clients who is 73, a widow. I certainly have a heart for widows. I know Jesus talked a lot about widows and orphans, and so every time we get a chance to help a widow—and she's not destitute, she's doing okay, but her husband died completely as a surprise, no illness or anything else, in January. And all of a sudden, it changed everything in the plan. And they only have about $350,000 in an IRA, and yet she has over $300,000 worth of equity in her home, and she's still making mortgage payments of almost $1,600 a month. And so, of course, the CKA discovered this and said, "Hey, let's talk about this." And she said, "I just had no idea. I just thought that's not something you do, not something a Christian does, certainly." And it's going to make sure that all of her money lasts until the end, because she has a substantial amount left in the Social Security and her husband's pension that she can live in comfortably, but not if there's a $1,600 mortgage payment. And when that can go to zero, it changed the complete picture. And you could just almost see the weight lifting off her shoulders on the Zoom call. And so, it doesn't do any good to have a lot of equity in the house if it still requires you to put hundreds of dollars into that—continue to put it into—and she had 20 years left on her mortgage. So, just so happy that we can be of help to people in that situation, because life happens, and things change rather dramatically like it did for her.
Rob West: Yeah, no question about it. We're going to dive into these questions here in just a moment. So now's the time to call; lines are open. Questions on reverse mortgages today will be prioritized while Harlaun is here at 800-525-7000. Perhaps you've heard something in the past that you're wanting to understand more about. Maybe you're wondering, does this work for your situation? If you haven't saved enough, maybe you're struggling just to make ends meet in retirement, this could be a game changer by either eliminating that mortgage payment or giving you some access to perhaps a line of credit, which is the most common way people tap into home equity in this season of life. And, of course, you still own the home with a home equity conversion mortgage. Harlaun, before we dive into these questions here, for someone 62 or older with significant home equity, just talk us through the factors that they should consider before deciding whether to make this a part of their retirement strategy.
Harlan Accola: Well, I'm a big fan of the, in The 7 Habits of Highly Effective People, the term "begin with the end in mind." And so we start with, what we started with this lady yesterday, is what does it look like for your health outlook, your longevity? What about your three daughters? What are your plans for them? What are your plans for the grandchildren? And when we went through everything, then it was easy to come back to what her monthly income is, what her budget is, how much money needs to be taken out of the taxable account, and then what should be done with the mortgage portion. We always look at those three components. And that's really what I'd recommend to anyone is, does the cash flow make sense as to how they have it planned out in retirement, even if they can afford to make a mortgage payment, should they? Does that hurt something in the end? Are you going to run out of money sooner, or pay more in taxes, or more in Medicare with the IRMAA calculations? So, really what it comes down to is it's different for everyone. For some people, it's just to minimize taxes. For another person like this lady, it's simply to change the cash flow so she doesn't have to take as much money out of her investments and it can last longer. For some people, it is simply to be able to afford healthcare or take care of an aging spouse that has health problems. So, what it comes down to is an assessment. We don't tell everybody to do this. We tell a number of people not to. But they should look at how this fits in as part of the stewardship that we talked about in the beginning of the call. Let's just look at what could or should be done for the best way to do it. Because it is true that a lot of people, Rob, don't have to do a reverse mortgage, but they do it anyhow simply because it makes the road easier, reduces their taxes, passes more on to their children while they're alive. So, it really depends on what is the goal. Begin with the end in mind is what we start with.
Rob West: Yeah, I love that. All right, let's take some phone calls here today. The lines are open at 800-525-7000. If you have a question for Harlaun Accola today, call right now. Let's go to Mississippi. Karen, go ahead.
Karen: Yes, my question is, can I do a reverse mortgage on a house I own free and clear, I am using it now as a rental house?
Rob West: Mm, yeah, great question. Harlaun?
Harlan Accola: The first answer is yes, any house that is free and clear can be used for a stream of income or a line of credit. However, the major requirement of a reverse mortgage is it's your primary residence, the place where you live. So we can do regular mortgages, of course, that require payments on a rental property, and we do a lot of those at Movement, but for a reverse mortgage, you must live in the house as your primary residence. So, that would not qualify, but the house where you live would be something that qualifies. So that's a great question, because a lot of people are wondering about that because they own multiple properties.
Rob West: Mm, yeah. Great question, Karen. We appreciate your call today. Harlaun, I mentioned it a moment ago, we've got just a minute before the break. The most common way people access the equity in their homes is not a monthly income stream, although that's an option, certainly, it's most commonly a line of credit, right?
Harlan Accola: It is, because it's the most flexible. You can take money out, you can put money back in, kind of turns part of your house into a cash account that is a cash management account, so to speak, of some of your equity, and it has a lot more flexibility than just getting a certain amount of a check every month or a lump sum that you don't know exactly what to do with, and you should not borrow money to invest anyway. And so, really the best way, and the way that most people use it, is the line of credit because of the flexibility and how easy it is to put money in, take money out as you need it. Because like one lady said, "I only pull money out twice a year: once for my vacation and then for Christmas. And otherwise, I don't need any money, I'm fine with the rest of the year." So, it doesn't make sense to give her something monthly when she only needs money a couple of times a year. That's the most important thing for people to realize, is we're not stripping all of the equity out, we're only using it when they need it.
Rob West: Harlaun Accola is here today. We're talking reverse mortgages as a part of your overall stewardship plan in retirement. Much more just around the corner. Lines are open, 800-525-7000. Stick around.
SEGMENT 3
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. We're talking—we're talking about stewarding the wealth in your home today, and specifically how a reverse mortgage can allow you to tap into that. Harlan, what a lot of people don't realize is, although it makes sense when you hear it, is this is after-tax dollars. So, to your point earlier about the various ways and assets we can tap into in retirement, often those assets create taxable income, which then has other implications, including how much of your Social Security is taxable, even additional premiums on Medicare, which is not the case when we're talking home equity through a reverse, right?
Harlan Accola: Well, that's true, and it also takes care of bracket creep. In fact, I was working with a CKA group up here in Minneapolis where we just had a little workshop clinic where we spent a couple of hours reviewing tax implications of a reverse mortgage. And one of the big things was how not only just how we can keep the taxable income down so that IRMAA Medicare premiums don't go up, but also in bracket creep that we never go above the 12% bracket so that all of the money coming out of other places would be taxed at a lower rate. And there's tax deductions involved, we do things with Roth conversions, so—I mean, we spent two hours together with this team just figuring out all the ways that we could be of help to their clients. And the thing is, when people save money on taxes, specifically Christians, they tend to give more to the Kingdom. And it's certainly better for charity to take care of things, Christian charity to take care of things, than for the government to do it. And that's—certainly, we're not trying to not pay taxes; we're just trying to pay the least amount possible so we can be of help to people in other areas. Taxes are a big part of the reverse mortgage planning, especially for people that have wealth.
Rob West: Yeah, very good. Taking your questions today for Harlan Accola. Anything related to reverse mortgage, we'd love to get those questions on; we'd send you a copy of Harlan's book just as our gift to you. 800-525-7000. Let's go down to Florida. Richard, thanks for your patience. Go ahead.
Richard: Yeah, Rob, thanks so much for your ministry. We appreciate it. And I have a $21,000 mortgage, about 10 years left, 3.25% interest. I am getting, I think, a gift from family that I can pay that off. Am I wise to pay that off, or reinvest that 20 grand or so into CDs or something like that? What's your opinion?
Rob West: Yeah. Well, you'd be hard-pressed just from a math standpoint to, you know, make the case to pay it off, because you have such an attractive rate. A lot of people listening right now are envious of that 3 and a quarter that that we had to say goodbye to from several years back. You've got a modest amount. I mean, the nice thing is that the non-financial side of this is, if you've got enough to pay it off, you'd eliminate that mortgage payment entirely, which means you could then take that money and systematically invest it. So, you get the kind of the win of the guaranteed 3 and a quarter that you're not paying anymore on interest, you get the kind of non-financial win of, "Now I own my home," and that's nice. And, you know, depending on whether you're single or married, you know, one or both of you may be more excited about that piece of it than the other. Often it's the wife, but doesn't mean it always is. But I think, you know, we ought to consider beyond just the financial side of it. But if you're going to put it to work for you in something that has a a higher potential long-term return, whether that's something, you know, with less risk like a CD, where after tax maybe you're, you know, squeaking out three-quarters of a point to a percentage point above your mortgage interest rate, but you're also hanging on to the money in case you needed it for something else, I think there's a case to be made for that. There's also a case to be made for you investing this and trying to get 6, 7, 8-plus percent, which would be double or triple, you know, what you're paying on the interest. So, I think from a a liquidity standpoint and a just return on investment standpoint, there's a real strong case for you not to pay it off. But I don't want you to miss the other consideration of how important is it to you and/or your spouse to own this home free and clear. Does that make sense?
Richard: Yes, sir. Can I add this, that my age, I am 73 this year, and we're both retired. We had to—we had to do some changing, and the house was paid—paid off at one time, and we had to get a small mortgage of 27,000 a few years back. So, would that change your opinion in any way?
Rob West: No, I don't think so. I mean, other than just underscoring this idea that liquidity matters. So, we haven't talked about what other assets you have access to, but the idea that you could hang on to that money in case you needed it for something else unforeseen, especially if your emergency funds were not, you know, 6 to 12 months' worth of expenses—if they were, great. And then I think you could make the even stronger case that you ought to put this to work for you in investments, but make sure you have at least a 5-year time horizon on it. But I think there's something to be said about maintaining that liquidity, especially if you're at least, you know, covering the interest, if not a little bit more.
Richard: Okay. All right. Well, thanks so much as always for your advice. We appreciate your show. Praise the Lord for you.
Rob West: Thank you, Richard. That means a lot. Lord bless you, my friend. 800-525-7000. Harlan Accola here today. We're talking reverse mortgages among other things. Let's go to Illinois. Doreen, how can we help?
Doreen: Hi, Rob. Thank you so much for taking my call and and your show. I love it, and I've learned so much, and...
Rob West: Well, thank you.
Doreen: I'm in a difficult situation because my husband and I were planning to separate. We bought me another house, and very soon after we closed, I got a cancer—brain tumor cancer diagnosis. So, kind of everything's changed, and I have been inundated with, I guess in the state of Illinois, they—I don't know, but they got my public records that I bought this house, and they want me to buy mortgage insurance to pay off the mortgage. And I did ask the gentleman last night, "Well, wouldn't I be disqualified?" And he said, "Yes." And I said, "Okay, now I don't want to even talk to you about it." So, I'm calling you, Rob, and I forget the gentleman's name, but I didn't even know you were talking about reverse mortgage, but we do have—our other mortgage is completely paid off.
Rob West: Okay. That's great. We're up against a break here, Doreen. It's a great question. I'll get Harlan to weigh in on it right after the break, so you hang up and listen on the air, and we appreciate your call. We'll be right back.
SEGMENT 4
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. We're talking—we're talking about stewarding the wealth in your home today, and specifically how a reverse mortgage can allow you to tap into that. Harlan, what a lot of people don't realize is, although it makes sense when you hear it, is this is after-tax dollars. So, to your point earlier about the various ways and assets we can tap into in retirement, often those assets create taxable income, which then has other implications, including how much of your Social Security is taxable, even additional premiums on Medicare, which is not the case when we're talking home equity through a reverse, right?
Harlan Accola: Well, that's true, and it also takes care of bracket creep. In fact, I was working with a CKA group up here in Minneapolis where we just had a little workshop clinic where we spent a couple of hours reviewing tax implications of a reverse mortgage. And one of the big things was how not only just how we can keep the taxable income down so that IRMAA Medicare premiums don't go up, but also in bracket creep that we never go above the 12% bracket so that all of the money coming out of other places would be taxed at a lower rate. And there's tax deductions involved, we do things with Roth conversions, so—I mean, we spent two hours together with this team just figuring out all the ways that we could be of help to their clients. And the thing is, when people save money on taxes, specifically Christians, they tend to give more to the Kingdom. And it's certainly better for charity to take care of things, Christian charity to take care of things, than for the government to do it. And that's—certainly, we're not trying to not pay taxes; we're just trying to pay the least amount possible so we can be of help to people in other areas. Taxes are a big part of the reverse mortgage planning, especially for people that have wealth.
Rob West: Yeah, very good. Taking your questions today for Harlan Accola. Anything related to reverse mortgage, we'd love to get those questions on; we'd send you a copy of Harlan's book just as our gift to you. 800-525-7000. Let's go down to Florida. Richard, thanks for your patience. Go ahead.
Richard: Yeah, Rob, thanks so much for your ministry. We appreciate it. And I have a $21,000 mortgage, about 10 years left, 3.25% interest. I am getting, I think, a gift from family that I can pay that off. Am I wise to pay that off, or reinvest that 20 grand or so into CDs or something like that? What's your opinion?
Rob West: Yeah. Well, you'd be hard-pressed just from a math standpoint to, you know, make the case to pay it off, because you have such an attractive rate. A lot of people listening right now are envious of that 3 and a quarter that that we had to say goodbye to from several years back. You've got a modest amount. I mean, the nice thing is that the non-financial side of this is, if you've got enough to pay it off, you'd eliminate that mortgage payment entirely, which means you could then take that money and systematically invest it. So, you get the kind of the win of the guaranteed 3 and a quarter that you're not paying anymore on interest, you get the kind of non-financial win of, "Now I own my home," and that's nice. And, you know, depending on whether you're single or married, you know, one or both of you may be more excited about that piece of it than the other. Often it's the wife, but doesn't mean it always is. But I think, you know, we ought to consider beyond just the financial side of it. But if you're going to put it to work for you in something that has a a higher potential long-term return, whether that's something, you know, with less risk like a CD, where after tax maybe you're, you know, squeaking out three-quarters of a point to a percentage point above your mortgage interest rate, but you're also hanging on to the money in case you needed it for something else, I think there's a case to be made for that. There's also a case to be made for you investing this and trying to get 6, 7, 8-plus percent, which would be double or triple, you know, what you're paying on the interest. So, I think from a a liquidity standpoint and a just return on investment standpoint, there's a real strong case for you not to pay it off. But I don't want you to miss the other consideration of how important is it to you and/or your spouse to own this home free and clear. Does that make sense?
Richard: Yes, sir. Can I add this, that my age, I am 73 this year, and we're both retired. We had to—we had to do some changing, and the house was paid—paid off at one time, and we had to get a small mortgage of 27,000 a few years back. So, would that change your opinion in any way?
Rob West: No, I don't think so. I mean, other than just underscoring this idea that liquidity matters. So, we haven't talked about what other assets you have access to, but the idea that you could hang on to that money in case you needed it for something else unforeseen, especially if your emergency funds were not, you know, 6 to 12 months' worth of expenses—if they were, great. And then I think you could make the even stronger case that you ought to put this to work for you in investments, but make sure you have at least a 5-year time horizon on it. But I think there's something to be said about maintaining that liquidity, especially if you're at least, you know, covering the interest, if not a little bit more.
Richard: Okay. All right. Well, thanks so much as always for your advice. We appreciate your show. Praise the Lord for you.
Rob West: Thank you, Richard. That means a lot. Lord bless you, my friend. 800-525-7000. Harlan Accola here today. We're talking reverse mortgages among other things. Let's go to Illinois. Doreen, how can we help?
Doreen: Hi, Rob. Thank you so much for taking my call and and your show. I love it, and I've learned so much, and...
Rob West: Well, thank you.
Doreen: I'm in a difficult situation because my husband and I were planning to separate. We bought me another house, and very soon after we closed, I got a cancer—brain tumor cancer diagnosis. So, kind of everything's changed, and I have been inundated with, I guess in the state of Illinois, they—I don't know, but they got my public records that I bought this house, and they want me to buy mortgage insurance to pay off the mortgage. And I did ask the gentleman last night, "Well, wouldn't I be disqualified?" And he said, "Yes." And I said, "Okay, now I don't want to even talk to you about it." So, I'm calling you, Rob, and I forget the gentleman's name, but I didn't even know you were talking about reverse mortgage, but we do have—our other mortgage is completely paid off.
Rob West: Okay. That's great. We're up against a break here, Doreen. It's a great question. I'll get Harlan to weigh in on it right after the break, so you hang up and listen on the air, and we appreciate your call. We'll be right back.
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. I'm Rob West. We're taking your calls and questions today, specifically on reverse mortgages. Why? Well, Harlan Accola's here today, and he's our go-to guy. He leads the reverse mortgage team at Movement Mortgage. By the way, if you want to learn more or connect with Harlan or someone from his team, you can go to faithfi.com/movement, that's faithfi.com/movement. All questions on topic today related to this subject, we'll send you a copy of Harlan's book just as our way of saying thanks, and I think it really just represents Harlan's heart, which is to educate God's people about stewarding all that has been entrusted to us, including our home equity. Let's go out to North Carolina. Adrian, thanks for your patience. Go ahead.
Adrian: All right, thank you, Rob. Thank you, Rob. I have a question for the area regarding a person that's a 72-year-old. And she's in a pretty bad situation. She's barely surviving off of her Social Security, and she's living off credit card debt. But she does own her home free and clear. And I was kind of seeing if there's any options for her with this reverse mortgage. But I will note that since she can't afford her repairs, I know her AC is not working, and I know there are some stipulations with that. I'm just wondering if there are any options for her here.
Rob West: Hmm. Yeah, Harlan?
Harlan Accola: Well, unfortunately, those things happen all the time, and a lot of people resort to credit cards long before they talk to us about a reverse mortgage, and it's a difficult situation because she has wealth to take care of things because obviously she has her house paid off. Sometimes credit gets damaged to too great of a degree, or sometimes she is behind on her taxes, her real estate taxes. As long as she's not behind in her real estate taxes and she's on time on most other things, we would be able to get rid of those other payments so that she could survive on just Social Security. Many people can survive on Social Security as long as they don't have those other obligations, and she's got something that will take care of it. The other thing that you mentioned about deferred maintenance—we just dealt with a lady last month when I was on the show here specifically, and she had let a lot of things go and there's almost $50,000 to $70,000 worth of work that needs to be done. We're using the reverse mortgage to take care of those things, to bring her house up to the level to make it livable and to make sure the roof doesn't leak, and so on and so forth. So, it's very possible that we could help, and the sooner that we would talk to her, the better before things get too bad where it's gone too far that we can't help. So, thank you for calling in and being concerned about her, and we'll certainly let you know what your options are if you reach out to us. So, thanks for the opportunity to be of help.
Rob West: Mm, faithfi.com/movement would be the place to go. You can connect with Harlan's team there. Harlan, I meant to come back after the break and address the caller from prior to the break about the mortgage insurance. Any thoughts for her on that situation?
Harlan Accola: Yes, there's a massive amount of direct mail that comes out of any public filing of a mortgage. We deal with a question on that almost every day because there's just all kinds of things that are slammed out there. There's not necessarily anything wrong with those companies, but I would probably go to a certified Kingdom advisor before I would make a purchase on that life insurance because sometimes there's more options. So, I would just check that out. But in her situation, you know, dealing with cancer and some of the other costs, a bad thing for her would be to have too much money tied up in equity. I don't know how much equity is in her house and her husband's—ex-husband's house or if they're separated and what their plans are, but certainly that should be part of the planning as she's fighting this health goal. My sister had colon cancer and used some of the reverse mortgage proceeds to be able to help beat it, and she's 76 and alive today. So, certainly be glad to talk to Doreen and address those different issues because she needs, as you talked about with Richard from Florida, she needs liquidity in a time like this. And it's a scary time and a treacherous time, and she knows that, and we'd be glad to help out to see if there's anything we could do to lighten her load financially.
Rob West: Yeah, that's great. Thanks for that. Faithfi.com/movement. Let me go out to Louisiana. Michael, how can we help you?
Michael: Yes, sir. So, I got a question. So, my mom's bedridden, my dad lives with me, and I got a mortgage, and I've always heard about reverse mortgages. And I got debt from known companies and stuff. So, I'm 61. I could retire early next year. So, what are my options right now pursuing, you know, reverse mortgage or just taking the, you know...
Rob West: Yes, Harlan, your thoughts?
Harlan Accola: Yes, Michael, you're calling at probably the best time. There's so many people that wait until they're in their 70s or 80s to get their financial house in order for the fourth quarter of life. You're doing it at the perfect time. You know you have some debt, there's some income that's going to change obviously when you retire, if you retire early. The best time—you're not qualified for a reverse mortgage until next year unless there's a product that's available at 55, but you're most likely better off waiting until next year, almost for sure. And so what we would do, and what we do with everyone, is say, "Okay, what's going on with your income? How's that going to change? What's going on with the debt that you're paying out now and the cash flow? Then what's going on with any investments or retirement accounts that you have, the bucket two? And then we look at your house and say, 'Okay, what can we do with that to make things work so that you won't have continued credit card debt or debt with finance companies and that you'll be able to actually live on the Social Security or the money that you receive in retirement?'" So, you've brought up a very important point that really everyone on this call should—the best time to do planning is before there's a crisis. And I'm so thankful that you called in, and I don't know if it makes sense for you to do it next year, but we'll certainly take a look at your options and give you some ideas of the best route to go. So, thanks for calling in and showing how important that is to everyone else that's listening.
Rob West: Yeah, very good. Any follow-up questions on that for Harlan?
Michael: No, no, sir. That's it.
Rob West: Okay, excellent. We appreciate your call today. 800-525-7000 is the number to call. Let's go to Pennsylvania. Joyce, you've been very patient. How can I help you?
Joyce: Hi, thank you for taking my call.
Rob West: Sure.
Joyce: I don't have a question about reverse mortgage, but I'm... I'm sorry. Take your time. I'm kind of stuck. Excuse me, just a second. Let me take a sip of water. I am... I'm 65. I don't have a lot of money, and I do have a full-time job. And I'm trying to plan for a place to live in my future when I retire. I did check out the apartment situation that is supplied by HUD in the area and found out that there is a three- to four-year waiting period, which is average. I've looked all over the areas. Except that the income max that you can have to apply for the apartment is about just shy of $1,000 less than what I'm making, which means I cannot apply for my future to take care of myself and live in a HUD apartment. So, what do I do if I keep on my current full-time job, which I've been there many years, I'm always going to be just over the amount that I'm allowed to even apply and get on a waiting list?
Rob West: I totally get it. I'm up against a break, but I'm going to give you my thoughts, so just hang on the line. We'll be right back.
SEGMENT 5
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. Harlan Accola is here today. If you have a question on reverse mortgages, call right now 800-525-7000. Before the break, we had a privilege of talking with Joyce in Pennsylvania. Joyce is near retirement, she doesn't have a whole lot to her name, and she's wanting to move into a HUD (Housing and Urban Development) supported apartment, but she makes just slightly over that threshold for being able to qualify, not to mention there's a waiting period there, and she's just wondering whether she should make a change in her employment to try to qualify.
And I would just be careful there, Joyce. Number one, you know, the bigger issue is normally the trade-off. If you give up a certain amount of annual earnings to obtain a housing subsidy, it might not be worth as much. You could end up financially worse off because you might lose employer benefits, or Social Security earnings, or retirement contributions, future earning opportunity. So, before changing employment, I would ask the housing authority for three numbers. The first is the exact income limit for your household. Second, how far over the limit you currently are. It sounds like you know that, and if so, great. Third, what your expected rent would be if you qualified. They generally use what are called anticipated annual income, and they verify wages, so I wouldn't assume simply by reducing your hours or leaving the job you'd automatically create eligibility.
And then you're going to want to compare your annual housing savings to the annual income and benefits you're giving up, because if you're only slightly over the limit, you know, you may want to ask the public housing authority who makes this determination whether there are other subsidized properties or project-based vouchers or senior housing options or programs with different eligibility limits that might allow you to have some assistance, but not have to leave that employer that you already have right now and that obviously is paying you a decent wage. Many of those have waitlists, the project-based voucher properties, but I would at least get all of your options.
So, I think the next step is a conversation, further conversation perhaps with the local public housing agency to see what your options are, and then just really do the analysis. And by the way, I'd love to help with that in the sense that we would be willing to make a certified Christian financial counselor available to you. We'll cover the cost of it; it won't cost you anything, but this will be somebody that'll meet with you several times to help you work through your budget, help you answer these questions, and maybe make a decision on, you know, what would be the best move for you moving forward, especially in light of perhaps you nearing retirement and what that might mean once you transition to Social Security.
So, I hope that helps. Our team will get you connected with a certified Christian financial counselor. I'm going to ask the Faith & Finance community to be praying for you, Joyce. I certainly will. And if we can help further along the way, let us know. Lord bless you. Thanks for being on the program today.
800-525-7000. Let's go, I believe, to Illinois. Chuck, go ahead.
Chuck: Yes. I'm 80 years old, my wife turns 80 in a couple days. We own our home outright. Lord blessed me with some really good jobs, and I have two retirements, one with the Air Force and one with an major airline, but when I die—if I die first, my retirement gets cut in half for her. I don't understand reverse mortgages. I just thought, "Well, you got to pay it back sometime." So, I haven't looked into it, but listening to your program, is it better for us to... Oh, and I have a condo in Florida that we owe $77,000 on. I was thinking about trying to pay that off, but I talked to one of my advisors, and he said, "Well, that might bump, you know, take it out of my savings in our accounts. That might bump us up too high and then for that one year, and then I'd have to pay more in Social Security, or they would reduce my Medicare."
So, what—what should I do to be sure that my wife is taken care of once I die if—if I die first, since we're both 80?
Rob West: Yeah, that's a great question, Chuck. And Harlan, I know this is something you encounter very often, don't you?
Harlan Accola: Yes, it's a regular situation, and Chuck, I want to congratulate you. There are so many husbands that love their wives, but completely forget about the fact that there's going to be a problem after they're gone, and typically income goes down by 40%. It sounds like in your case, 50%. The time to plan is—is now for sure, and because of the equity that you have in your home, there's a possibility that you might want to use some of the reverse mortgage money to pay off the Florida condo to increase your cash flow. I'm not saying for sure you should do that, but either way there should be some liquidity. There's a possibility that your wife would want to do a reverse mortgage after you're gone, and we would not be able to help her depending upon what happens then. We know that we can help now because you own the home free and clear, and you're in good shape now financially. And so the best time to fix that is to change the oil in the car, as I always say, before it's smoking on the side of the road.
And so, you're wise to consider this because, as we've mentioned several times just during this hour, liquidity is the key situation. You have no liquidity in your current house even though you have it paid off. So, even if you didn't start using the money, even if you didn't pay off the Florida condo—by the way, all the money coming out is tax-free, so it will not affect your Medicare deduction from your Social Security. And so, what we would do is talk together with you and looking at all of those options and say, "What is the best thing to do?" If it's nothing more than setting up a line of credit that increases by 7% plus every year, that may be the wisest thing because then your wife would have some place to replace your income after you would be gone if you went first. You are very wise in asking these questions, and this is a great way to show your love for your wife because unfortunately widows many times are in a situation they never anticipated to be in. So thankful that we could be of help to you. So, certainly reach out, and we'll give you some different options. I'm not saying for sure you should do it, but let's—let's look at the whole picture and see what your options are to make sure that your wife is taken care of no matter what.
Rob West: That's great. Chuck, any follow-up questions on that?
Chuck: Yes, one. In the state of Illinois, the—the deed, they—they've changed changed it to where you can say transfer on death. So, the deed to our house, keep it out of probate, I've got my three sons listed. So, when both my wife and I die, the house goes to them. And so, if we have a reverse mortgage and we've taken, you know, she's been taking some out and then she passes away, does that affect anything?
Harlan Accola: Great question. The TOD deeds, the transfer on death deeds, are an awesome and wise and very inexpensive way to make sure that you avoid probate on the house. And so, nothing would change. Your three sons would still inherit the house. If the house is worth $500,000 when you passed and your wife has used $100,000, well then the—the boys would just get $400,000 instead of $500,000, but the house would still pass to them just like it did before. Nothing changes in ownership. The deed is in your name, the transfer on death deed is still in place, and your wife is guaranteed to be there no matter what. And obviously, just like a 401(k) or an IRA, if you have $500,000 and then you use $100,000, well, there's still $400,000 left. They're the beneficiaries; the kids are the beneficiaries of it. So, the same thing would apply to the house. Whatever she used would simply be subtracted, but it might leave more money in other places. So, the short answer to your question is it does not hurt the plan that you have to pass on to the next generation.
Rob West: Chuck, stay on the line. We'll get you a copy of Harlan's book, and the team can make the connection if that's helpful. You can also go to faithfi.com/movement. Thanks for your call. Out to North Carolina, Sandra, you'll be our final caller. Go ahead.
Sandra: Oh, I'm 82 years old, and I need a few repairs because I was flooded twice in a lifetime. I wasn't able to make the—all the repairs with what money I got, and I had to borrow flood insurance. I got a few repairs that need... I was wanting, would I qualify for the reverse mortgage?
Rob West: Harlan?
Harlan Accola: Yes, it's very likely you would, Sandra. There's a lot of people that either didn't have proper insurance or the insurance they had didn't pay for everything and they still need repairs. I'm a big fan of saying the house should always pay for its—pay for the house. And so, if you have—you have a lot of equity in your home, if you don't have a big mortgage, and so then we would just use some of the money to repair the house, which quite frankly would increase the value of the house. And so, if you needed $50,000 worth of repairs and the house is worth, let's say, $300,000 today, it'd probably worth—be worth quite a bit more in the future after those other things are taken care of. So, you should definitely consider that. There's other things that go into qualification like your income and your credit, but it's not stringent requirements like it is with a forward mortgage, traditional mortgage. So, we'd be happy to discuss whether or not we could help, but certainly it'll increase the value of your house, and it makes sense to take money out of the house to make sure that you're living in the house that is complete and the repairs are done. So, thank you for calling in. There's a lot of people that are in that situation with the fires and the hurricanes, and we certainly look forward to being of help.
Rob West: Excellent. Sandra, thanks for your call today. Hang on; our team can get you connected over to Harlan. Well, Harlan, always just a wealth of information. So appreciate your heart to just educate God's people, and you've been a great partner of ours here at Faith & Finance. We're really thankful for you, my friend.
Harlan Accola: Well, thank you. Feeling's mutual. There's so many people that need help, and we're glad to reach out.
Rob West: Lord bless you. We'll do it again real soon. Take care.
All right, well that's going to do it for us today, folks. We're so thankful for each of you, also my team today: Michael, Pat, Devin, Taylor, and everybody here at Faith & Finance that makes this possible. We're headed toward the end of the month, which is a critical time for us at Faith & Finance as a listener-supported ministry. If you'd like to make a one-time gift or consider becoming a Faith & Finance partner, it's a key part of how we fund this work and serve you as a faithful steward. Just go to faithfi.com/give. Faithfi.com/give and then come back and join us tomorrow. We'll see you then. Bye-bye.
Rob West: We know that God owns everything, and that what we have is simply entrusted to us. But do we apply that everywhere? I am Rob West. Today Harlaun Accola joins us to talk about why the equity in your home should be considered as a part of your overall stewardship plan. And he's brought some surprising stats to make the point. Then we'll take your phone calls today at 800-525-7000. That's 800-525-7000. This is Faith & Finance on American Family Radio, biblical wisdom for your financial decisions.
Well, Harlaun Accola leads the reverse mortgage team at Movement Mortgage, and underwriter of this program. Movement is a national mortgage lender committed not only to helping families with home financing, but also to investing in communities through its charitable work, most notably the Movement Schools all over the country. Harlaun, great to have you with us.
Harlan Accola: So good to be here, Rob. Thank you.
Rob West: By the way, Harlaun is going to stick around today, and although we'll try to sneak in a few questions off-topic, we will prioritize those questions specifically related to reverse mortgages. We know so many of you have questions around things you've heard. Does it apply to you? How does it actually work? If that's you today, today is the day to call 800-525-7000. Again, reverse mortgages will be the focus of our topic today as we think about these—this product as a tool as a part of your overall stewardship plan. We'll also be happy to send you a copy of Harlaun's book as our gift to you for every call on topic today. Again, that number 800-525-7000. Harlaun, we say often on this program—because it's true—that God owns it all and we're stewards of what He's entrusted to us. And we tend to think about that in terms of our income, and our savings, and our investments, certainly our giving. Why do you think we often leave out the equity in our homes as a part of that equation?
Harlan Accola: Well, it's strange really when you think about it, but it's completely influenced by our tradition and culture going back to, really, the Depression-era thinking of our parents and our grandparents. And we've just simply been taught from the time we're little that you work hard, you pay off your house, you leave it to your children. But home equity is part of our wealth, just like money in an IRA or an investment account or savings account. It's part of what God has given us. And that doesn't mean that everyone should use the money inside their house and take that money and do something with it, but we should make it part of our planning as to how it fits into the larger stewardship, giving, and legacy picture.
Rob West: Mm, yeah, I think that's well said. There's also a deeply held assumption that, you know, when we think about parenting, that good parents should leave the family home to their children free and clear. But I know you're encouraging Christians to at least think through that, perhaps reconsider it. Why is that idea worth examining?
Harlan Accola: Well, I've seen it in thousands of our clients over the last 20 years, and I've practiced it myself. We've heard the phrase "be giving while you're living so you're knowing where it's going."
Rob West: Yeah.
Harlan Accola: And, certainly, that's what I look at now. My children—our four sons and their wives and our seven grandkids—have big needs right now. One of our grandsons has a severe disability, and they need help worse now than maybe if we live another 20 years and then leave something to them. And we can also be giving now when there are so many great needs in the Kingdom, rather than just saving it all up until the end after we pass away. So, I think it's just something that, just like we would look at our IRAs and our savings accounts, we should also factor that in, because there's $14 trillion of wealth sitting in seniors' houses. And most people just don't think about using it. In fact, half the people over 62 are still making mortgage payments, so they're taking more money and putting it into their house instead of using any of it. And that isn't always the wisest and most prudent thing to do.
Rob West: Yeah. Let's go back to the data for a second. For many home—homeowners that are older, that equity we talked about in their homes represents a significant portion of their wealth, especially after years of rising home values. Just how important has home equity become in the retirement planning conversation?
Harlan Accola: Well, you know, according to Harvard did a big Joint—their Joint Center for Housing Studies did a big research on this back in 2022. And they found that the median homeowner has a quarter of a million dollars in home equity. And that's way up from about $150,000–$160,000 5–10 years earlier before COVID changed a lot of things. And it's usually, for the average person, one of the largest assets on their balance sheet. And yet there's almost 30% of people over the age of 62 that are living in relative poverty. It doesn't really make sense when there's that much wealth that has been entrusted to that—those ages.
Rob West: More with Harlaun Accola, we're talking reverse mortgages right after this.
SEGMENT 2
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. You know, as we think about stewarding what God has entrusted to us, we look at our complete financial picture. And for those in the fourth quarter of life, often their home equity is their biggest asset, even though more and more are entering retirement still with a mortgage payment. And especially for those who have not saved enough, or those who just want to be thoughtful about which asset we're tapping at which time, a reverse mortgage can be one of those tools to consider—not for everyone, but certainly something to take a look at. That's what we're talking about today as we consider the significant amount of home equity that exists in the homes of retirees across this country today. Harlaun Accola is here. Harlaun leads the reverse mortgage team at Movement Mortgage. If you want to learn more, just go to faithfi.com/movement. That's faithfi.com/movement. Harlaun is also here to take your questions today. So, if this is a topic you'd like to know more about—perhaps you've heard things that have been concerning about reverse mortgages in the past, or you're just wondering how it might apply to your situation—those will be the calls we'll prioritize today when you call 800-525-7000. Pat in taking your calls today. We'd love to hear from you at 800-525-7000. Every call on topic, we'll send you a copy of Harlaun's book as our gift to you. Harlaun, before the break, we were talking about just the significant equity that represents a massive portion of most Americans' wealth in their homes, especially after what's happened over the last number of years. But having that equity in your home doesn't necessarily mean you have the cash flow to live comfortably, right?
Harlan Accola: Well, that's so true. I was just on yesterday morning with a CKA advisor and one of his clients who is 73, a widow. I certainly have a heart for widows. I know Jesus talked a lot about widows and orphans, and so every time we get a chance to help a widow—and she's not destitute, she's doing okay, but her husband died completely as a surprise, no illness or anything else, in January. And all of a sudden, it changed everything in the plan. And they only have about $350,000 in an IRA, and yet she has over $300,000 worth of equity in her home, and she's still making mortgage payments of almost $1,600 a month. And so, of course, the CKA discovered this and said, "Hey, let's talk about this." And she said, "I just had no idea. I just thought that's not something you do, not something a Christian does, certainly." And it's going to make sure that all of her money lasts until the end, because she has a substantial amount left in the Social Security and her husband's pension that she can live in comfortably, but not if there's a $1,600 mortgage payment. And when that can go to zero, it changed the complete picture. And you could just almost see the weight lifting off her shoulders on the Zoom call. And so, it doesn't do any good to have a lot of equity in the house if it still requires you to put hundreds of dollars into that—continue to put it into—and she had 20 years left on her mortgage. So, just so happy that we can be of help to people in that situation, because life happens, and things change rather dramatically like it did for her.
Rob West: Yeah, no question about it. We're going to dive into these questions here in just a moment. So now's the time to call; lines are open. Questions on reverse mortgages today will be prioritized while Harlaun is here at 800-525-7000. Perhaps you've heard something in the past that you're wanting to understand more about. Maybe you're wondering, does this work for your situation? If you haven't saved enough, maybe you're struggling just to make ends meet in retirement, this could be a game changer by either eliminating that mortgage payment or giving you some access to perhaps a line of credit, which is the most common way people tap into home equity in this season of life. And, of course, you still own the home with a home equity conversion mortgage. Harlaun, before we dive into these questions here, for someone 62 or older with significant home equity, just talk us through the factors that they should consider before deciding whether to make this a part of their retirement strategy.
Harlan Accola: Well, I'm a big fan of the, in The 7 Habits of Highly Effective People, the term "begin with the end in mind." And so we start with, what we started with this lady yesterday, is what does it look like for your health outlook, your longevity? What about your three daughters? What are your plans for them? What are your plans for the grandchildren? And when we went through everything, then it was easy to come back to what her monthly income is, what her budget is, how much money needs to be taken out of the taxable account, and then what should be done with the mortgage portion. We always look at those three components. And that's really what I'd recommend to anyone is, does the cash flow make sense as to how they have it planned out in retirement, even if they can afford to make a mortgage payment, should they? Does that hurt something in the end? Are you going to run out of money sooner, or pay more in taxes, or more in Medicare with the IRMAA calculations? So, really what it comes down to is it's different for everyone. For some people, it's just to minimize taxes. For another person like this lady, it's simply to change the cash flow so she doesn't have to take as much money out of her investments and it can last longer. For some people, it is simply to be able to afford healthcare or take care of an aging spouse that has health problems. So, what it comes down to is an assessment. We don't tell everybody to do this. We tell a number of people not to. But they should look at how this fits in as part of the stewardship that we talked about in the beginning of the call. Let's just look at what could or should be done for the best way to do it. Because it is true that a lot of people, Rob, don't have to do a reverse mortgage, but they do it anyhow simply because it makes the road easier, reduces their taxes, passes more on to their children while they're alive. So, it really depends on what is the goal. Begin with the end in mind is what we start with.
Rob West: Yeah, I love that. All right, let's take some phone calls here today. The lines are open at 800-525-7000. If you have a question for Harlaun Accola today, call right now. Let's go to Mississippi. Karen, go ahead.
Karen: Yes, my question is, can I do a reverse mortgage on a house I own free and clear, I am using it now as a rental house?
Rob West: Mm, yeah, great question. Harlaun?
Harlan Accola: The first answer is yes, any house that is free and clear can be used for a stream of income or a line of credit. However, the major requirement of a reverse mortgage is it's your primary residence, the place where you live. So we can do regular mortgages, of course, that require payments on a rental property, and we do a lot of those at Movement, but for a reverse mortgage, you must live in the house as your primary residence. So, that would not qualify, but the house where you live would be something that qualifies. So that's a great question, because a lot of people are wondering about that because they own multiple properties.
Rob West: Mm, yeah. Great question, Karen. We appreciate your call today. Harlaun, I mentioned it a moment ago, we've got just a minute before the break. The most common way people access the equity in their homes is not a monthly income stream, although that's an option, certainly, it's most commonly a line of credit, right?
Harlan Accola: It is, because it's the most flexible. You can take money out, you can put money back in, kind of turns part of your house into a cash account that is a cash management account, so to speak, of some of your equity, and it has a lot more flexibility than just getting a certain amount of a check every month or a lump sum that you don't know exactly what to do with, and you should not borrow money to invest anyway. And so, really the best way, and the way that most people use it, is the line of credit because of the flexibility and how easy it is to put money in, take money out as you need it. Because like one lady said, "I only pull money out twice a year: once for my vacation and then for Christmas. And otherwise, I don't need any money, I'm fine with the rest of the year." So, it doesn't make sense to give her something monthly when she only needs money a couple of times a year. That's the most important thing for people to realize, is we're not stripping all of the equity out, we're only using it when they need it.
Rob West: Harlaun Accola is here today. We're talking reverse mortgages as a part of your overall stewardship plan in retirement. Much more just around the corner. Lines are open, 800-525-7000. Stick around.
SEGMENT 3
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. We're talking—we're talking about stewarding the wealth in your home today, and specifically how a reverse mortgage can allow you to tap into that. Harlan, what a lot of people don't realize is, although it makes sense when you hear it, is this is after-tax dollars. So, to your point earlier about the various ways and assets we can tap into in retirement, often those assets create taxable income, which then has other implications, including how much of your Social Security is taxable, even additional premiums on Medicare, which is not the case when we're talking home equity through a reverse, right?
Harlan Accola: Well, that's true, and it also takes care of bracket creep. In fact, I was working with a CKA group up here in Minneapolis where we just had a little workshop clinic where we spent a couple of hours reviewing tax implications of a reverse mortgage. And one of the big things was how not only just how we can keep the taxable income down so that IRMAA Medicare premiums don't go up, but also in bracket creep that we never go above the 12% bracket so that all of the money coming out of other places would be taxed at a lower rate. And there's tax deductions involved, we do things with Roth conversions, so—I mean, we spent two hours together with this team just figuring out all the ways that we could be of help to their clients. And the thing is, when people save money on taxes, specifically Christians, they tend to give more to the Kingdom. And it's certainly better for charity to take care of things, Christian charity to take care of things, than for the government to do it. And that's—certainly, we're not trying to not pay taxes; we're just trying to pay the least amount possible so we can be of help to people in other areas. Taxes are a big part of the reverse mortgage planning, especially for people that have wealth.
Rob West: Yeah, very good. Taking your questions today for Harlan Accola. Anything related to reverse mortgage, we'd love to get those questions on; we'd send you a copy of Harlan's book just as our gift to you. 800-525-7000. Let's go down to Florida. Richard, thanks for your patience. Go ahead.
Richard: Yeah, Rob, thanks so much for your ministry. We appreciate it. And I have a $21,000 mortgage, about 10 years left, 3.25% interest. I am getting, I think, a gift from family that I can pay that off. Am I wise to pay that off, or reinvest that 20 grand or so into CDs or something like that? What's your opinion?
Rob West: Yeah. Well, you'd be hard-pressed just from a math standpoint to, you know, make the case to pay it off, because you have such an attractive rate. A lot of people listening right now are envious of that 3 and a quarter that that we had to say goodbye to from several years back. You've got a modest amount. I mean, the nice thing is that the non-financial side of this is, if you've got enough to pay it off, you'd eliminate that mortgage payment entirely, which means you could then take that money and systematically invest it. So, you get the kind of the win of the guaranteed 3 and a quarter that you're not paying anymore on interest, you get the kind of non-financial win of, "Now I own my home," and that's nice. And, you know, depending on whether you're single or married, you know, one or both of you may be more excited about that piece of it than the other. Often it's the wife, but doesn't mean it always is. But I think, you know, we ought to consider beyond just the financial side of it. But if you're going to put it to work for you in something that has a a higher potential long-term return, whether that's something, you know, with less risk like a CD, where after tax maybe you're, you know, squeaking out three-quarters of a point to a percentage point above your mortgage interest rate, but you're also hanging on to the money in case you needed it for something else, I think there's a case to be made for that. There's also a case to be made for you investing this and trying to get 6, 7, 8-plus percent, which would be double or triple, you know, what you're paying on the interest. So, I think from a a liquidity standpoint and a just return on investment standpoint, there's a real strong case for you not to pay it off. But I don't want you to miss the other consideration of how important is it to you and/or your spouse to own this home free and clear. Does that make sense?
Richard: Yes, sir. Can I add this, that my age, I am 73 this year, and we're both retired. We had to—we had to do some changing, and the house was paid—paid off at one time, and we had to get a small mortgage of 27,000 a few years back. So, would that change your opinion in any way?
Rob West: No, I don't think so. I mean, other than just underscoring this idea that liquidity matters. So, we haven't talked about what other assets you have access to, but the idea that you could hang on to that money in case you needed it for something else unforeseen, especially if your emergency funds were not, you know, 6 to 12 months' worth of expenses—if they were, great. And then I think you could make the even stronger case that you ought to put this to work for you in investments, but make sure you have at least a 5-year time horizon on it. But I think there's something to be said about maintaining that liquidity, especially if you're at least, you know, covering the interest, if not a little bit more.
Richard: Okay. All right. Well, thanks so much as always for your advice. We appreciate your show. Praise the Lord for you.
Rob West: Thank you, Richard. That means a lot. Lord bless you, my friend. 800-525-7000. Harlan Accola here today. We're talking reverse mortgages among other things. Let's go to Illinois. Doreen, how can we help?
Doreen: Hi, Rob. Thank you so much for taking my call and and your show. I love it, and I've learned so much, and...
Rob West: Well, thank you.
Doreen: I'm in a difficult situation because my husband and I were planning to separate. We bought me another house, and very soon after we closed, I got a cancer—brain tumor cancer diagnosis. So, kind of everything's changed, and I have been inundated with, I guess in the state of Illinois, they—I don't know, but they got my public records that I bought this house, and they want me to buy mortgage insurance to pay off the mortgage. And I did ask the gentleman last night, "Well, wouldn't I be disqualified?" And he said, "Yes." And I said, "Okay, now I don't want to even talk to you about it." So, I'm calling you, Rob, and I forget the gentleman's name, but I didn't even know you were talking about reverse mortgage, but we do have—our other mortgage is completely paid off.
Rob West: Okay. That's great. We're up against a break here, Doreen. It's a great question. I'll get Harlan to weigh in on it right after the break, so you hang up and listen on the air, and we appreciate your call. We'll be right back.
SEGMENT 4
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. We're talking—we're talking about stewarding the wealth in your home today, and specifically how a reverse mortgage can allow you to tap into that. Harlan, what a lot of people don't realize is, although it makes sense when you hear it, is this is after-tax dollars. So, to your point earlier about the various ways and assets we can tap into in retirement, often those assets create taxable income, which then has other implications, including how much of your Social Security is taxable, even additional premiums on Medicare, which is not the case when we're talking home equity through a reverse, right?
Harlan Accola: Well, that's true, and it also takes care of bracket creep. In fact, I was working with a CKA group up here in Minneapolis where we just had a little workshop clinic where we spent a couple of hours reviewing tax implications of a reverse mortgage. And one of the big things was how not only just how we can keep the taxable income down so that IRMAA Medicare premiums don't go up, but also in bracket creep that we never go above the 12% bracket so that all of the money coming out of other places would be taxed at a lower rate. And there's tax deductions involved, we do things with Roth conversions, so—I mean, we spent two hours together with this team just figuring out all the ways that we could be of help to their clients. And the thing is, when people save money on taxes, specifically Christians, they tend to give more to the Kingdom. And it's certainly better for charity to take care of things, Christian charity to take care of things, than for the government to do it. And that's—certainly, we're not trying to not pay taxes; we're just trying to pay the least amount possible so we can be of help to people in other areas. Taxes are a big part of the reverse mortgage planning, especially for people that have wealth.
Rob West: Yeah, very good. Taking your questions today for Harlan Accola. Anything related to reverse mortgage, we'd love to get those questions on; we'd send you a copy of Harlan's book just as our gift to you. 800-525-7000. Let's go down to Florida. Richard, thanks for your patience. Go ahead.
Richard: Yeah, Rob, thanks so much for your ministry. We appreciate it. And I have a $21,000 mortgage, about 10 years left, 3.25% interest. I am getting, I think, a gift from family that I can pay that off. Am I wise to pay that off, or reinvest that 20 grand or so into CDs or something like that? What's your opinion?
Rob West: Yeah. Well, you'd be hard-pressed just from a math standpoint to, you know, make the case to pay it off, because you have such an attractive rate. A lot of people listening right now are envious of that 3 and a quarter that that we had to say goodbye to from several years back. You've got a modest amount. I mean, the nice thing is that the non-financial side of this is, if you've got enough to pay it off, you'd eliminate that mortgage payment entirely, which means you could then take that money and systematically invest it. So, you get the kind of the win of the guaranteed 3 and a quarter that you're not paying anymore on interest, you get the kind of non-financial win of, "Now I own my home," and that's nice. And, you know, depending on whether you're single or married, you know, one or both of you may be more excited about that piece of it than the other. Often it's the wife, but doesn't mean it always is. But I think, you know, we ought to consider beyond just the financial side of it. But if you're going to put it to work for you in something that has a a higher potential long-term return, whether that's something, you know, with less risk like a CD, where after tax maybe you're, you know, squeaking out three-quarters of a point to a percentage point above your mortgage interest rate, but you're also hanging on to the money in case you needed it for something else, I think there's a case to be made for that. There's also a case to be made for you investing this and trying to get 6, 7, 8-plus percent, which would be double or triple, you know, what you're paying on the interest. So, I think from a a liquidity standpoint and a just return on investment standpoint, there's a real strong case for you not to pay it off. But I don't want you to miss the other consideration of how important is it to you and/or your spouse to own this home free and clear. Does that make sense?
Richard: Yes, sir. Can I add this, that my age, I am 73 this year, and we're both retired. We had to—we had to do some changing, and the house was paid—paid off at one time, and we had to get a small mortgage of 27,000 a few years back. So, would that change your opinion in any way?
Rob West: No, I don't think so. I mean, other than just underscoring this idea that liquidity matters. So, we haven't talked about what other assets you have access to, but the idea that you could hang on to that money in case you needed it for something else unforeseen, especially if your emergency funds were not, you know, 6 to 12 months' worth of expenses—if they were, great. And then I think you could make the even stronger case that you ought to put this to work for you in investments, but make sure you have at least a 5-year time horizon on it. But I think there's something to be said about maintaining that liquidity, especially if you're at least, you know, covering the interest, if not a little bit more.
Richard: Okay. All right. Well, thanks so much as always for your advice. We appreciate your show. Praise the Lord for you.
Rob West: Thank you, Richard. That means a lot. Lord bless you, my friend. 800-525-7000. Harlan Accola here today. We're talking reverse mortgages among other things. Let's go to Illinois. Doreen, how can we help?
Doreen: Hi, Rob. Thank you so much for taking my call and and your show. I love it, and I've learned so much, and...
Rob West: Well, thank you.
Doreen: I'm in a difficult situation because my husband and I were planning to separate. We bought me another house, and very soon after we closed, I got a cancer—brain tumor cancer diagnosis. So, kind of everything's changed, and I have been inundated with, I guess in the state of Illinois, they—I don't know, but they got my public records that I bought this house, and they want me to buy mortgage insurance to pay off the mortgage. And I did ask the gentleman last night, "Well, wouldn't I be disqualified?" And he said, "Yes." And I said, "Okay, now I don't want to even talk to you about it." So, I'm calling you, Rob, and I forget the gentleman's name, but I didn't even know you were talking about reverse mortgage, but we do have—our other mortgage is completely paid off.
Rob West: Okay. That's great. We're up against a break here, Doreen. It's a great question. I'll get Harlan to weigh in on it right after the break, so you hang up and listen on the air, and we appreciate your call. We'll be right back.
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. I'm Rob West. We're taking your calls and questions today, specifically on reverse mortgages. Why? Well, Harlan Accola's here today, and he's our go-to guy. He leads the reverse mortgage team at Movement Mortgage. By the way, if you want to learn more or connect with Harlan or someone from his team, you can go to faithfi.com/movement, that's faithfi.com/movement. All questions on topic today related to this subject, we'll send you a copy of Harlan's book just as our way of saying thanks, and I think it really just represents Harlan's heart, which is to educate God's people about stewarding all that has been entrusted to us, including our home equity. Let's go out to North Carolina. Adrian, thanks for your patience. Go ahead.
Adrian: All right, thank you, Rob. Thank you, Rob. I have a question for the area regarding a person that's a 72-year-old. And she's in a pretty bad situation. She's barely surviving off of her Social Security, and she's living off credit card debt. But she does own her home free and clear. And I was kind of seeing if there's any options for her with this reverse mortgage. But I will note that since she can't afford her repairs, I know her AC is not working, and I know there are some stipulations with that. I'm just wondering if there are any options for her here.
Rob West: Hmm. Yeah, Harlan?
Harlan Accola: Well, unfortunately, those things happen all the time, and a lot of people resort to credit cards long before they talk to us about a reverse mortgage, and it's a difficult situation because she has wealth to take care of things because obviously she has her house paid off. Sometimes credit gets damaged to too great of a degree, or sometimes she is behind on her taxes, her real estate taxes. As long as she's not behind in her real estate taxes and she's on time on most other things, we would be able to get rid of those other payments so that she could survive on just Social Security. Many people can survive on Social Security as long as they don't have those other obligations, and she's got something that will take care of it. The other thing that you mentioned about deferred maintenance—we just dealt with a lady last month when I was on the show here specifically, and she had let a lot of things go and there's almost $50,000 to $70,000 worth of work that needs to be done. We're using the reverse mortgage to take care of those things, to bring her house up to the level to make it livable and to make sure the roof doesn't leak, and so on and so forth. So, it's very possible that we could help, and the sooner that we would talk to her, the better before things get too bad where it's gone too far that we can't help. So, thank you for calling in and being concerned about her, and we'll certainly let you know what your options are if you reach out to us. So, thanks for the opportunity to be of help.
Rob West: Mm, faithfi.com/movement would be the place to go. You can connect with Harlan's team there. Harlan, I meant to come back after the break and address the caller from prior to the break about the mortgage insurance. Any thoughts for her on that situation?
Harlan Accola: Yes, there's a massive amount of direct mail that comes out of any public filing of a mortgage. We deal with a question on that almost every day because there's just all kinds of things that are slammed out there. There's not necessarily anything wrong with those companies, but I would probably go to a certified Kingdom advisor before I would make a purchase on that life insurance because sometimes there's more options. So, I would just check that out. But in her situation, you know, dealing with cancer and some of the other costs, a bad thing for her would be to have too much money tied up in equity. I don't know how much equity is in her house and her husband's—ex-husband's house or if they're separated and what their plans are, but certainly that should be part of the planning as she's fighting this health goal. My sister had colon cancer and used some of the reverse mortgage proceeds to be able to help beat it, and she's 76 and alive today. So, certainly be glad to talk to Doreen and address those different issues because she needs, as you talked about with Richard from Florida, she needs liquidity in a time like this. And it's a scary time and a treacherous time, and she knows that, and we'd be glad to help out to see if there's anything we could do to lighten her load financially.
Rob West: Yeah, that's great. Thanks for that. Faithfi.com/movement. Let me go out to Louisiana. Michael, how can we help you?
Michael: Yes, sir. So, I got a question. So, my mom's bedridden, my dad lives with me, and I got a mortgage, and I've always heard about reverse mortgages. And I got debt from known companies and stuff. So, I'm 61. I could retire early next year. So, what are my options right now pursuing, you know, reverse mortgage or just taking the, you know...
Rob West: Yes, Harlan, your thoughts?
Harlan Accola: Yes, Michael, you're calling at probably the best time. There's so many people that wait until they're in their 70s or 80s to get their financial house in order for the fourth quarter of life. You're doing it at the perfect time. You know you have some debt, there's some income that's going to change obviously when you retire, if you retire early. The best time—you're not qualified for a reverse mortgage until next year unless there's a product that's available at 55, but you're most likely better off waiting until next year, almost for sure. And so what we would do, and what we do with everyone, is say, "Okay, what's going on with your income? How's that going to change? What's going on with the debt that you're paying out now and the cash flow? Then what's going on with any investments or retirement accounts that you have, the bucket two? And then we look at your house and say, 'Okay, what can we do with that to make things work so that you won't have continued credit card debt or debt with finance companies and that you'll be able to actually live on the Social Security or the money that you receive in retirement?'" So, you've brought up a very important point that really everyone on this call should—the best time to do planning is before there's a crisis. And I'm so thankful that you called in, and I don't know if it makes sense for you to do it next year, but we'll certainly take a look at your options and give you some ideas of the best route to go. So, thanks for calling in and showing how important that is to everyone else that's listening.
Rob West: Yeah, very good. Any follow-up questions on that for Harlan?
Michael: No, no, sir. That's it.
Rob West: Okay, excellent. We appreciate your call today. 800-525-7000 is the number to call. Let's go to Pennsylvania. Joyce, you've been very patient. How can I help you?
Joyce: Hi, thank you for taking my call.
Rob West: Sure.
Joyce: I don't have a question about reverse mortgage, but I'm... I'm sorry. Take your time. I'm kind of stuck. Excuse me, just a second. Let me take a sip of water. I am... I'm 65. I don't have a lot of money, and I do have a full-time job. And I'm trying to plan for a place to live in my future when I retire. I did check out the apartment situation that is supplied by HUD in the area and found out that there is a three- to four-year waiting period, which is average. I've looked all over the areas. Except that the income max that you can have to apply for the apartment is about just shy of $1,000 less than what I'm making, which means I cannot apply for my future to take care of myself and live in a HUD apartment. So, what do I do if I keep on my current full-time job, which I've been there many years, I'm always going to be just over the amount that I'm allowed to even apply and get on a waiting list?
Rob West: I totally get it. I'm up against a break, but I'm going to give you my thoughts, so just hang on the line. We'll be right back.
SEGMENT 5
Rob West: Thanks for joining us today on Faith & Finance here on American Family Radio. Harlan Accola is here today. If you have a question on reverse mortgages, call right now 800-525-7000. Before the break, we had a privilege of talking with Joyce in Pennsylvania. Joyce is near retirement, she doesn't have a whole lot to her name, and she's wanting to move into a HUD (Housing and Urban Development) supported apartment, but she makes just slightly over that threshold for being able to qualify, not to mention there's a waiting period there, and she's just wondering whether she should make a change in her employment to try to qualify.
And I would just be careful there, Joyce. Number one, you know, the bigger issue is normally the trade-off. If you give up a certain amount of annual earnings to obtain a housing subsidy, it might not be worth as much. You could end up financially worse off because you might lose employer benefits, or Social Security earnings, or retirement contributions, future earning opportunity. So, before changing employment, I would ask the housing authority for three numbers. The first is the exact income limit for your household. Second, how far over the limit you currently are. It sounds like you know that, and if so, great. Third, what your expected rent would be if you qualified. They generally use what are called anticipated annual income, and they verify wages, so I wouldn't assume simply by reducing your hours or leaving the job you'd automatically create eligibility.
And then you're going to want to compare your annual housing savings to the annual income and benefits you're giving up, because if you're only slightly over the limit, you know, you may want to ask the public housing authority who makes this determination whether there are other subsidized properties or project-based vouchers or senior housing options or programs with different eligibility limits that might allow you to have some assistance, but not have to leave that employer that you already have right now and that obviously is paying you a decent wage. Many of those have waitlists, the project-based voucher properties, but I would at least get all of your options.
So, I think the next step is a conversation, further conversation perhaps with the local public housing agency to see what your options are, and then just really do the analysis. And by the way, I'd love to help with that in the sense that we would be willing to make a certified Christian financial counselor available to you. We'll cover the cost of it; it won't cost you anything, but this will be somebody that'll meet with you several times to help you work through your budget, help you answer these questions, and maybe make a decision on, you know, what would be the best move for you moving forward, especially in light of perhaps you nearing retirement and what that might mean once you transition to Social Security.
So, I hope that helps. Our team will get you connected with a certified Christian financial counselor. I'm going to ask the Faith & Finance community to be praying for you, Joyce. I certainly will. And if we can help further along the way, let us know. Lord bless you. Thanks for being on the program today.
800-525-7000. Let's go, I believe, to Illinois. Chuck, go ahead.
Chuck: Yes. I'm 80 years old, my wife turns 80 in a couple days. We own our home outright. Lord blessed me with some really good jobs, and I have two retirements, one with the Air Force and one with an major airline, but when I die—if I die first, my retirement gets cut in half for her. I don't understand reverse mortgages. I just thought, "Well, you got to pay it back sometime." So, I haven't looked into it, but listening to your program, is it better for us to... Oh, and I have a condo in Florida that we owe $77,000 on. I was thinking about trying to pay that off, but I talked to one of my advisors, and he said, "Well, that might bump, you know, take it out of my savings in our accounts. That might bump us up too high and then for that one year, and then I'd have to pay more in Social Security, or they would reduce my Medicare."
So, what—what should I do to be sure that my wife is taken care of once I die if—if I die first, since we're both 80?
Rob West: Yeah, that's a great question, Chuck. And Harlan, I know this is something you encounter very often, don't you?
Harlan Accola: Yes, it's a regular situation, and Chuck, I want to congratulate you. There are so many husbands that love their wives, but completely forget about the fact that there's going to be a problem after they're gone, and typically income goes down by 40%. It sounds like in your case, 50%. The time to plan is—is now for sure, and because of the equity that you have in your home, there's a possibility that you might want to use some of the reverse mortgage money to pay off the Florida condo to increase your cash flow. I'm not saying for sure you should do that, but either way there should be some liquidity. There's a possibility that your wife would want to do a reverse mortgage after you're gone, and we would not be able to help her depending upon what happens then. We know that we can help now because you own the home free and clear, and you're in good shape now financially. And so the best time to fix that is to change the oil in the car, as I always say, before it's smoking on the side of the road.
And so, you're wise to consider this because, as we've mentioned several times just during this hour, liquidity is the key situation. You have no liquidity in your current house even though you have it paid off. So, even if you didn't start using the money, even if you didn't pay off the Florida condo—by the way, all the money coming out is tax-free, so it will not affect your Medicare deduction from your Social Security. And so, what we would do is talk together with you and looking at all of those options and say, "What is the best thing to do?" If it's nothing more than setting up a line of credit that increases by 7% plus every year, that may be the wisest thing because then your wife would have some place to replace your income after you would be gone if you went first. You are very wise in asking these questions, and this is a great way to show your love for your wife because unfortunately widows many times are in a situation they never anticipated to be in. So thankful that we could be of help to you. So, certainly reach out, and we'll give you some different options. I'm not saying for sure you should do it, but let's—let's look at the whole picture and see what your options are to make sure that your wife is taken care of no matter what.
Rob West: That's great. Chuck, any follow-up questions on that?
Chuck: Yes, one. In the state of Illinois, the—the deed, they—they've changed changed it to where you can say transfer on death. So, the deed to our house, keep it out of probate, I've got my three sons listed. So, when both my wife and I die, the house goes to them. And so, if we have a reverse mortgage and we've taken, you know, she's been taking some out and then she passes away, does that affect anything?
Harlan Accola: Great question. The TOD deeds, the transfer on death deeds, are an awesome and wise and very inexpensive way to make sure that you avoid probate on the house. And so, nothing would change. Your three sons would still inherit the house. If the house is worth $500,000 when you passed and your wife has used $100,000, well then the—the boys would just get $400,000 instead of $500,000, but the house would still pass to them just like it did before. Nothing changes in ownership. The deed is in your name, the transfer on death deed is still in place, and your wife is guaranteed to be there no matter what. And obviously, just like a 401(k) or an IRA, if you have $500,000 and then you use $100,000, well, there's still $400,000 left. They're the beneficiaries; the kids are the beneficiaries of it. So, the same thing would apply to the house. Whatever she used would simply be subtracted, but it might leave more money in other places. So, the short answer to your question is it does not hurt the plan that you have to pass on to the next generation.
Rob West: Chuck, stay on the line. We'll get you a copy of Harlan's book, and the team can make the connection if that's helpful. You can also go to faithfi.com/movement. Thanks for your call. Out to North Carolina, Sandra, you'll be our final caller. Go ahead.
Sandra: Oh, I'm 82 years old, and I need a few repairs because I was flooded twice in a lifetime. I wasn't able to make the—all the repairs with what money I got, and I had to borrow flood insurance. I got a few repairs that need... I was wanting, would I qualify for the reverse mortgage?
Rob West: Harlan?
Harlan Accola: Yes, it's very likely you would, Sandra. There's a lot of people that either didn't have proper insurance or the insurance they had didn't pay for everything and they still need repairs. I'm a big fan of saying the house should always pay for its—pay for the house. And so, if you have—you have a lot of equity in your home, if you don't have a big mortgage, and so then we would just use some of the money to repair the house, which quite frankly would increase the value of the house. And so, if you needed $50,000 worth of repairs and the house is worth, let's say, $300,000 today, it'd probably worth—be worth quite a bit more in the future after those other things are taken care of. So, you should definitely consider that. There's other things that go into qualification like your income and your credit, but it's not stringent requirements like it is with a forward mortgage, traditional mortgage. So, we'd be happy to discuss whether or not we could help, but certainly it'll increase the value of your house, and it makes sense to take money out of the house to make sure that you're living in the house that is complete and the repairs are done. So, thank you for calling in. There's a lot of people that are in that situation with the fires and the hurricanes, and we certainly look forward to being of help.
Rob West: Excellent. Sandra, thanks for your call today. Hang on; our team can get you connected over to Harlan. Well, Harlan, always just a wealth of information. So appreciate your heart to just educate God's people, and you've been a great partner of ours here at Faith & Finance. We're really thankful for you, my friend.
Harlan Accola: Well, thank you. Feeling's mutual. There's so many people that need help, and we're glad to reach out.
Rob West: Lord bless you. We'll do it again real soon. Take care.
All right, well that's going to do it for us today, folks. We're so thankful for each of you, also my team today: Michael, Pat, Devin, Taylor, and everybody here at Faith & Finance that makes this possible. We're headed toward the end of the month, which is a critical time for us at Faith & Finance as a listener-supported ministry. If you'd like to make a one-time gift or consider becoming a Faith & Finance partner, it's a key part of how we fund this work and serve you as a faithful steward. Just go to faithfi.com/give. Faithfi.com/give and then come back and join us tomorrow. We'll see you then. Bye-bye.
On this Faith & Finance Live, Harlan Accola joins Rob West to talk about why the equity in your home should be considered as part of your overall stewardship plan. You’ll also hear some stats that might surprise you. Then, it’s on to calls.
Live
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