This Faith and Finance podcast is underwritten in part by Movement Mortgage. Movement provides residential home loans and reverse mortgage options in all 50 states. Founded in 2008 during a major financial crisis, Movement was created to love, value, and serve people and communities. Learn more at faithfy.com/slash movement. Movement Mortgage LLC supports equal housing opportunity, NMLS number 39179.
For licensing information, visit NMLSconsumerAccess.org. Uh Reverse mortgages may still raise eyebrows in the church, but do they deserve to? Hi, I'm Rob West. Reverse mortgages continue to carry a negative reputation, but faithful stewardship means evaluating financial tools based on how they work today. Arlen Akola joins us to explain why many Christians remain hesitant and how a modern FHA-insured reverse mortgage could fit into a thoughtful retirement plan.
And then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith in Finance: biblical wisdom for your financial decisions.
Well, our guest Harlan Akola leads the reverse mortgage team at Movement Mortgage, one of our valued FaithFi underwriters. Movement Mortgage helps families explore home financing solutions, including reverse mortgages, designed to help eligible homeowners make thoughtful use of their home equity in retirement. Harlan is here today to help us separate fact from fear and better understand how these tools work. Harlan, great to have you back. Thanks for having me, Ron.
Harlan, uh many believers who want to steward their finances wisely are hesitant when they hear the term reverse mortgage. Maybe they've been told these loans are expensive or risky or just simply unwise.
So why do you think reverse mortgages still carry such a negative perception, and and I'll say especially among Christians?
Well, I felt the same way in the past before I understood them. And most still picture the old versions and the bad reputation and even the new dangerous versions, the HEIs and the HEAs are not the same that have high fees and no spousal protections, loss of ownership and little regulation. And rob debt of any kind always feels unspiritual.
So the idea of tapping equity really rubs against our stewardship instincts. And headlines dwell on the few horse stories, not the million households who already use modern hackums responsibly. After all, far more people lost homes and damaged their credit with forward mortgages. And I think also they haven't heard any trusted voices inside the church explain where a reverse mortgage might fit. Yeah, I think that's exactly right.
So what makes then today's home equity conversion mortgage, what you called a hecum, different from the reverse mortgage products people may remember from years ago?
Well, I think the biggest single issue is that the borrower is not the servant to the lender. There's never required payment until the end. You cannot be upside down because it's federally insured by the FHA. The non-recourse factor makes it the only safe mortgage in the arena. And there's mandatory third-party counseling that there isn't anything that is hidden.
And a big issue that changed is eligible non-borrowing spouses that are younger can stay in the house even after their older spouses pass. And we can even set aside funds for cover taxes and covering taxes and insurance that cuts default risk, quite frankly. Yeah. Uh so let's look at this through the lens of stewardship for a moment. In what ways, Harlan, could a hecum actually help someone manage their resources more wisely and and I'll say faithfully?
Well, freeing up cash flow so that there is no required mortgage payment allows them to balance a budget that otherwise not work with their decreased income and keep them from using other forms of debt like credit cards and consumer debt that's very expensive. And the proceeds are tax-free, and so that can cover living or long-term care costs and even preserve an IRA for later for their spouse or for their heirs. And the line of credit grows that allows people to not pull money out of their stocks and bonds when it's low. And, you know, Luke 16:10 reminds us that one who is faithful in a very little is also faithful in much. And using your home equity is really part of that, especially when it's used faithfully and not recklessly.
And I've seen many cases where unlocking equity lets folks give more generously today instead of waiting until death to pass on their assets. Mm, yeah. Uh for someone considering a reverse mortgage, Harlan, what questions should they ask? And then what due diligence should they complete before moving forward? We've got just about thirty seconds.
Well, they should look at the big picture and begin with the end in mind. How does this fit in with their overall plan? It should be part of a financial retirement plan, not just buying a product. And if they work with a specialist who gets both the product and the biblical stewardship and how it fits in with their plan is absolutely critical. Yeah, that's well said.
Folks, here's the bottom line: a reverse mortgage isn't for every household. Harlan would tell you that. But in the right circumstances, it really can turn home equity into a flexible financial tool, perhaps bring resources for living, planning, or perhaps even, as Harlan said, even greater generosity.
Something to look at if you're in that season of life and our friends at Movement Mortgage could help walk you through all the details. Just go to faithfi.com/slash movement to learn more. That's faithfi.com/slash movement. Harlan, thanks for your partnership, my friend. My pleasure, Rob.
Back with your calls after this, 800-525-7000. Stick around. We are grateful for support from Guidestone, whose diversified suite of investment solutions align with Christian values to create positive change in the world. More information is available at faithfy.com/slash Guidestone. Investing involves risk, including potential loss of principal.
Carefully consider the investment objectives, risks, charges, and expenses of Guidestone funds before investing. They are distributed by Forside Funds Distributors LLC, which is not an advisor affiliate, a registered investment advisor, nor do they provide investment advice. We are grateful for support from Movement Mortgage, who provides residential home loans and reverse mortgage options in all 50 states. Guided by a mission to love and value people, Movement seeks to help individuals and families make informed financial decisions from buying a home to planning for retirement. More information is available at faithfy.com/slash movement.
Movement Mortgage LLC supports equal housing opportunity. NMLS number 39179. For licensing information, visit nmlsconsumeraccess.org. Great to have you with us today on Faith and Finance. Hey, do you love the ministry?
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That's faithfi.com slash give. Before we head to the phones, in the news, a new report from Bankrate suggests that many Americans are finding it difficult to build a financial cushion. Even as inflation has eased from its peak.
Now, let me stop there for a moment. Inflation easing doesn't write the challenges of high inflation from the past. Remember, inflation is cumulative.
So that 9% we had, and then 4%, and then 4, and now 3. Is all on top of the prior year. And so, even though we're headed down toward the Fed's target of two, that's on top of the increases from the last several years and the increases from the years before those. And so, that means that prices are not going down. We just have the rate of increase slowing, which means we're still in a difficult environment.
And I get it, and that's what this data from BankRate is tapping into.
Now, you hear me talk all the time about having three to six months' worth of expenses in emergencies. The survey found that millions of households still have little or no emergency savings. That, of course, leaves many families vulnerable when an unexpected expense or loss of income occurs. Here's some of the data: they found that 58% of Americans have either the same amount of emergency savings as a year ago or even less, while only about one in five reported increasing their emergency fund. One in four Americans no emergency savings at all, and fewer than half say they have enough set aside to cover at least three months of expenses.
It also found in this bank rate study, 47% believe they could readily cover a $1,000 emergency expense with available cash or accessible funds. But remember, that's less than half.
So that just shows how quickly an unexpected car repair or medical bill could create financial stress. Interestingly, while many respondents said they're balancing two competing priorities, paying down high interest credit card debt and building savings, those goals both matter. And so it's important to determine the right approach for you. My typical recommendation is this. If you don't have any emergency savings and you have high interest credit card, let's start by working toward $1,000 in emergency savings.
Maybe you trim your budget, cut some discretionary spending, you free up $200 extra a month.
Well, let's set up an automatic transfer to your savings. And when you get to $1,000 five months later, now we take that extra $200 and redirect it toward the credit card. Card with the lowest balance. And then we really work on getting those credit cards payoff. Once that's done, we go back over to building the emergency fund of the three-month goal, then on to six months after that.
So that's how we balance two very worthwhile but competing priorities: paying down debt and building savings. I realize both very productive, but we have to decide what is the order of priority. You know, the bottom line is this: related to the emergency fund. It isn't designed to make you wealthy. It's really there to keep a financial setback from becoming a financial crisis.
And as Proverbs 21:20 reminds us, precious treasure and oil are in a wise man's dwelling, but a foolish man devours it.
So, an emergency fund is one practical way to live out that principle of wise stewardship. And having that margin is really going to help. By the way, there's another benefit to margin, and it's related to money and marriage. Here's what the data uncovered from my friend Shanti Feldhan. She found that in her study of couples related to money, that in addition to understanding kind of how your spouse is wired and how money was handled growing up.
And in addition to good communication, that the third leg of that stool for healthy marital communications around money was, in fact, this idea of margin. That those couples who could communicate well about money, it wasn't a matter of their income. It was that whatever their income was, they were living below it. They had something left over at the end of the month.
So just think about the importance of that, not only in your ability to reach your savings goals, but also in terms of having a healthy relationship to money and marriage.
Something to think about today. By the way, there are lines open at the moment, even though the calls are building. The number is 800-525-7000. We'll begin today in Florida. Go right ahead.
Hi there, Rob. My name's Kathleen, and I thanks for taking my call. I'm shocked that I got right through on the first call. Anyway, my question is. My daughter's purchasing a home.
She got her loan for $325,000. It was granted to her well over a month ago, maybe two months ago. She was okay for that amount. And she has found the home. And she called me briefly and said she was told her rate is not locked in.
Which I thought it would be the date she signed and got the loan, but they said no, she has to watch the rates every day and to call back. whomever it is to her realtor, this finance fellow, and tell him when she's ready to lock in. And he said it could go anywhere from five what is it, five point six point six to six point seven five percent. That's the rate he told her today. It couldn't go to.
Uh yeah. And and did she understand that she had it locked previously? I thought she did. Yeah. I mean, that's ultimately what it's going to come down to.
You see, if the rate wasn't locked, then yes, it changes before closing based on market rates. And so it sounds like if she can lock the rate at any point, I would go ahead and do that. And you'd want to request a written loan estimate showing the current rate, the points, the closing costs. If she's uncomfortable with the change, she could look at another lender. But if closing is only days away, switching lenders could really delay that purchase.
Now, keep in mind the difference between 6.6 and 6.75 is real, but it's relatively modest. And if rates fall later, she's going to have the opportunity to refinance. I would want her to wait until she could save at least a point and a half. But that spread of 15 basis points, I don't think is worth. Pushing this closing out.
But at the end of the day, you have to make sure that that rate is locked. And until they tell you that the rate is locked and they will hold it through your due date, it is going to bounce around until that time. All right.
Well, since it's about three weeks away, I think it had less stress. Maybe she ought to let him know maybe tomorrow to lock it in at that rate. I think so. You know, there's just no way to know which direction it's going to go. And so I think if this is the home that she wants, it fits her budget.
She's counted the cost. The numbers work and aren't going to add too much pressure to her financially at the current rates. I wouldn't try to hold out for something a few basis points lower, you know, when it could go the other way on her. I think go ahead and lock it in and just know that she can always refinance down the road and she'll want to, you know, once she can save one and a half to two percent, perhaps a couple of years from now. Kathleen, thanks for your call.
Folks, we're going to take a quick break. We come back. More of your questions. We've got lines open. You can call right now: 800-525-7000.
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A short video webinar about that is available at soundmindinvesting.org. Financial wisdom for living well, soundmindinvesting.org. Great to have you with us today on Faith and Finance. Our hope each day is to provide wisdom from God's Word on financial decision-making, to be reverent as we approach the scriptures, to be hopeful and encouraging, also empathetic, knowing that, listen, we all make mistakes in our financial lives and we can put those at the foot of the cross. The goal is to move forward, seeking to be that wise and faithful steward.
We want to be your partner in that each day, providing you encouragement and great, sound, practical advice.
So, if you have questions today, call right now, 800-525-7000. Let's go to Indianapolis. Nancy, go ahead. I have a I'm moving out of where I'm living right now. I'm living with someone, and I'd like to get my own place.
So I was looking at a fifty five plus. I have a rental I've had for about thirteen years. My renters just moved out. I've had to do a lot of updates because they've been there ten years.
So I have new flooring, I had to put in new carpet, I had to update the bathrooms, I had to repaint and everything.
So it's cost me at least ten thousand dollars to do that. You know, and that comes out of my rental fund. My rental money goes in and it pays for whatever.
So I am 78 years old. I have about eighty eight thousand on that at a very low interest rate, maybe four percent. And I can get a very good rent now because of its being updated and refreshed. Yes. And uh fifty five and over is around three hundred thousand.
And I I won't be able to put I won't be able to pay into the rental, that'll give me that extra to make up for what I. Half. You know, my mortgage payment right now is about $1,300. Got it. I would say, Nancy, this is really a lifestyle decision first.
and a financial decision second.
So at 78, I'd encourage you to think about which option will provide the most peace of mind over the next 10 to 20 years as a primary consideration.
So for instance, in the 55 plus community, it sounds like you'll clearly have less maintenance, fewer day-to-day responsibilities, perhaps an opportunity for more community and amenities. You can afford it without taking on debt, still leaves you with roughly a quarter of a million dollars in savings. Those are all pretty good. You move into the rental, it saves the cost of buying another home. It eliminates being a landlord on that property, which even though you don't have the upkeep of the snow, there are responsibilities with being a landlord unless you have a property management company.
You're responsible for taking the phone calls when something's broken and the maintenance and the repairs. But you've been doing that for 10 years.
So I would imagine you have a pretty good list of contractors that could step in there and handle just about anything that comes your way. But here would be my question. questions for you in light of that. Number one would be, do you enjoy being a landlord at 78, or is that something you're wanting to get rid of? And then, second, do you have enough retirement income without relying on that rental income to be able to pay your bills?
Okay. I have enough income. I don't have to worry about that. I do have someone who manages it for me. What I was thinking of doing was applying for a mortgage for the fifty-five.
I don't like the effect of taking all my money out because once you take it out, it's gone. You know, so I was thinking of a mortgage. I know the mortgages are 6.5 or probably up.
So what's your thoughts on that? Yeah, I think that's a a good option. And if you've got enough income to cover it, I think that could be great. I mean, the other option is you could buy it with a conventional mortgage and then you have the payment and you just have to make sure that fits in your budget. You could also buy it at 78 with a reverse mortgage where the payment is optional.
Now, what does that mean?
Well, it just means that the amount that you borrow. Because the payment is optional and you're not making any progress toward it, it's gonna grow with interest and fees over time. But your property should be appreciating anyway. And if your heirs or whoever you want to leave this property to at your death, You know, don't want the property anyway, and they're just gonna take the equity that remains. It doesn't really matter whether there's a mortgage on it or not, because whoever gets it is gonna sell the house.
Whatever balance of the mortgage is remaining will be paid, and the balance would be then made available to whoever that is, your heirs, the next steward. But the benefit of the reverse mortgage is you don't impact your monthly cash flow. And you preserve more of your liquid capital because you don't have to buy the home with cash and sink a full $350,000 in it. Does that make sense? Yes, yes, yes, yes.
I didn't even think reverse. I was just thinking of uh uh uh taking out a regular mortgage uh on a not the full amount. But does some of it. And you certainly could do that. And you may have more peace of mind knowing that you're making progress toward paying it down.
But a lot of people in this season of life are saying, listen, you know, the home's appreciating every year. And even though the balance is growing with interest, the home is growing on its own. And I would rather not have to make that $1,200, $1,500, $2,000 mortgage payment every month. And the reverse allows me not to have to do that. And a lot of people think about reverse in terms of adding it to an existing property.
Most people don't think about it in terms of buying. But at the end of the day, I mean, that's not the main point. I think the main point for you is: do you feel comfortable continuing as a landlord? And so long as you do, I like the idea, especially given the experience you have of you, you know, getting some cash flow coming out of that property. You've got somebody looking after it for you.
So that takes the burden and stress off you. And if you could go in with either a forward or a reverse mortgage on the 55 plus property, you wouldn't deplete as much of your cash and you get all the benefits of the community and less upkeep.
So that seems like perhaps the best option for you at this point. What would you recommend as far as an amount for that? You know, yeah. Yeah, it really I mean if you're going with a conventional mortgage that would really be a budget decision. You know I would look at you know what's not going to be any more than let's say 20 to 25 percent of your income every month.
Now, if you could cover principal, interest, taxes, and insurance and not go over 25%. Then I think you're in great shape. Perhaps it's gonna be much less than that. We haven't talked about how much income you have, but I would probably let that be the driver. Um, you know, more than anything.
Uh, apart from that, I think, you know, ultimately it's going to come down to how much do you want liquid in reserves? You could buy it for cash and still have a quarter of a million. Would you like to have a half a million?
Well, if so, then you know, that would tell you how much you have available to put into it. But I think it's a combination of what is your goal in reserves, and secondly, how much is you know going to fit into the budget in terms of a mortgage payment?
Okay, thank you so much. All right, Nancy. It's been wonderful. You have answered many of my questions, I've called, and I really appreciate it. You give me something to think about.
I'm so glad. Thank you for your call today. Lord bless you. We appreciate you being on the program. Big thanks to my team today: Devin Patrick, Sandy Dickinson, and Taylor Stanrich, plus to everybody here at Faith Fi.
Couldn't do this without them. Have a great day and come back and join us tomorrow. We'll see you then. Bye-bye. Faith in Finance is provided by FaithFi and listeners like you.
