Using a Reverse Mortgage for an Early Inheritance with Harlan Accola

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dot org. Well, Harlan Ackle is back with us today. He's a faithful Christ follower and an expert on reverse mortgages with Movement Mortgage, an underwriter of this program. Harlan, great to have you back. It's good to be here, Rob.

Thanks for the opportunity. Harlan, there are so many uses for a reverse mortgage and giving an early inheritance is one of them. But we should probably start with a definition. We're talking about a home equity conversion mortgage or what's often called a HECM for short.

What is that? And how does it differ from other types of reverse mortgages that some of our listeners may have heard about in the past? Well, the big thing is, is that the reverse mortgage HECM is insured. So it's non-recourse. It's guaranteed by the Federal Housing Administration. So never can be called due while the borrowers are alive as long as taxes and insurance are paid. There's no ownership change the house. So people are not giving up their ownership in exchange for money.

All the equity belongs to the borrowers, their heirs. It's just the difference of the amount that's used and everything coming out of it is tax free. So it helps with tax planning, especially for people that are going into retirement with a certain amount.

With a significant amount of money or they're still working. So it's an ideal planning tool from that perspective. Yeah. And I think it's important to say, you know, we talk a lot about getting out of debt completely and staying there. And I think that's a great thing, especially if that's your conviction. But I think a lot of folks, two things. Number one have thought about reverse mortgages in light of the reverse mortgages of years ago, which is entirely different than what you just described. And number two, it is an often overlooked financial planning tool. It's an asset that should be considered in retirement, just like all of our other assets.

And I think that's what we're getting at here today. So let's dial into this specific topic of an early inheritance. How can a reverse mortgage be used there? Well, the clear goal with any parent is to give away their wealth with their wisdom, we believe, obviously, from a biblical wisdom standpoint, it's far easier to teach and control to your children, especially adult children, when wealth is given during your lifetime. We try to guide them when they're little with allowances and teach them how to spend and give and save.

But what about when they're older, we can do it then as well. And most people figure they're going to give their house to their kids. Well, reverse mortgage proceeds are usually between 30 and 50 60% depending upon the interest rate. And so you can give away part of your home value while you're alive without risking the ownership or the ability for you to live in the home. There's less equity at the end, but you're giving more while you're living as we often talk about. Yeah, that's exactly right. Ron blues known for that phrase, do you're given while you're living so you're knowing where it's going. And I think that's exactly what we're speaking about here.

What might some of those needs be? What are we talking about here? Well, many of our clients have actually helped their adult children because the prices have went up so high in houses and interest rates being so high. Many of them are struggling with even being able to afford a house and they're still running and parents can use some of the massive amount of equity that they've seen a gain on and give some to their children now as down payments so that it will decrease the amount of debt that the kids need to use. And they borrow less money so that and then the children can afford the payments.

And, you know, sometimes there's other things like private Christian schools, we're all concerned about a lot of things in the public schools. And sometimes you can help out the grandchildren when the parents don't have enough money to pay the tuition. And then there's kind of some fun things like reverse mortgage vacations or mission trips, that you can build relationships with your children and your grandchildren and use some of that extra money to be able to do that to pass on values while you're together with them on a trip. Now, Harlan, are there any potential risks for using a reverse mortgage for an early inheritance? Well, it's really no different than any money that you have, you got to make sure that you take care of first things first. No one wants to be a burden to their children, you want to make sure that long term health care planning is in place, you have enough money for the things that you normally do just needs to be part of an overall plan and not spent in a way that is simply not fruitful for the family and for the kingdom.

Yeah, that's exactly right. And the great news about this is there's no taxation involved in for the vast majority of people. All right, how do they make sure they're making the right decision here?

We've just got about 15 seconds. Always work with a trusted Christian advisor. And I guess the best advice I can give to anyone is pray about it. How does this fit in with your goals and the goals that God has for you? Folks, the team at Movement Mortgage would love to talk more with you about this. You can check them out at movement.com slash faith. That's movement.com slash faith. Harlan Akula with us today.

Reverse mortgages for an early inheritance. Back with your questions after this. Stick around.

Stick around. We're grateful for support from Movement Mortgage, who provides residential home loans in all 50 states guided by a mission to love and value people and a goal to redefine the mortgage process. Movement seeks to help others achieve their financial goals. You can find out more at movement.com slash faith. Movement Mortgage LLC supports equal housing opportunity and MLS number 39179.

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My name is Rob West. I'm your host today, and I'd love to take your calls and questions helping you apply God's wisdom to your financial decisions and choices. The number to call to be on the program today, 800-525-7000. With whatever you're thinking about in your financial life, 800-525-7000.

You can call right now. Hey, before we head to the phones in just a bit, let me remind you, if you've found value in the broadcast, maybe you've benefited from something you've heard, you've called in, you've visited our website, and you'd like to be a part of supporting this work so we can reach more people with this message of wise and faithful stewardship. Well, we call those our faith five partners, you can become a partner quickly and easily on our website, faithfi.com. Just click give as a partner at $35 a month. Not only will you help us reach more people, but we'll be able to send you, as our thank you, our quarterly magazine and all of our new studies and devotionals, faithfi.com. Just click give.

Let's see, we're going to head to Texas and welcome Kes. Go ahead. Yeah, my question is, is it ideal for husband and wife to share the same checking account? And how do we manage to avoid conflict? Yes, it's a great, it's a great question. Because, you know, this is something that comes up a lot.

We've actually, you know, dealt with this a good bit on the program over the years. You know, here's the reality is that two become one flesh in marriage. And that includes everything. That includes, you know, your finances as well. And so I think, you know, having one account, as opposed to separate, is really going to foster the kind of unity that you're looking for. Because so often when we keep everything separate, it really begins to foster or develop the mine and yours mentality. But when we put everything together, and we have jointly set goals, starting with our values, and then we create a spending plan that reflects those those deeply held values and priorities as Christ followers, and where God is leading you as a couple and as a family, and then the money, the spending plan is actually how you work that out, because money is a tool to accomplish God's purposes. And you do that jointly, that really then promotes the trust by making sure there's no hidden purchases. And, you know, we're looking at this as something that really is for the two of us as one flesh. You know, you remain individuals, but marriage really is a partnership that requires that trust and openness and communication.

And God's design is, of course, unity. So how do you go there if one spouse is just resistant or hesitant? Well, I think the first thing is to make sure that both of you are on the same page that the jointly held assets with joint accounts, not separate, and a spending plan that you all work on together is not about controlling anyone or limiting anyone. It really is about finding God's heart for you as a couple, and seeing money as a tool and then pursuing what God has for you together and working on it together. Now, there's probably going to be one bookkeeper, the person that's more administratively and detail oriented first. And then secondly, I would say there's still room in that spending plan for each of your unique personalities and interests and passions to be reflected. It's not like you're trying to just control everything. But at the same time, I do recommend that you bring everything together, because the moment you start saying, Well, that's your money, and this is mine, and you pay those expenses, and I'll pay these, it just doesn't foster that unity that I think God desires.

Does that make sense, though? Yes, it does. Thank you so much. You're welcome.

Let me do this. I'd like to send you a book, yes, that I think perhaps maybe you you ask your wife, say, Listen, honey, I'd like to just explore God's heart for how we can have more unity with regard to every facet of our marriage, but certainly including this area of money management. And there's a book that Howard Dayton wrote, my good friend and mentor and former host of this program. It's called money and marriage God's way. And if you and your wife would commit to reading that together, maybe you go through it, you know, every week, you do a different chapter or something, and then talk about it. I think that may paint a picture for the unity in marriage that I'm describing and, and give you a roadmap for the mechanics of what that looks like.

And I think if you start with your values and priorities, and then, you know, allow the money management to be a reflection of that, and you use money and marriage God's way is, is kind of the the course that you'll chart to get there. I think it'll be a blessing to you. So you stay on the line cast, we'll get your information. We'll get that book right out to you. We appreciate your call today, sir. God bless you. To Texas, Lisette, thanks for calling.

How can I help? Yes, I have a debt of about $4,300. And I also owe $4,000. And I was thinking if I should get a balance transfer and a new card or have a loan from our 401k.

Yeah, you know, I'm not a big fan of either of those, even though they're both options. So the nice part about the 401k loan is you're just paying that back with interest to yourself and no one else. However, I don't want that money to come out of there, because I want it to stay in there. So it can keep growing for you and for you to use, you know, down the road when you retire. And if we pull it out and use it to pay off debt, it's not in there, and it's not growing.

And secondly, if you were to separate from your employer, then it would become a taxable distribution at that point. So that's the first issue that would cause me not to have you take out a 401k loan. With regard to the balance transfer.

It's kind of a quick fix. I mean, you know, is it effective to get that interest rate down to zero? It can be the problem is it's kind of a trap where, you know, you get in the cycle of balance transfers, which keep in mind, every time you do one of those transfers, you typically have to pay a, you know, a two or 3% fee. So if you've got $4,000 in credit card debt, I mean, you could pay, you know, $120 right up front, just for the privilege of transferring that balance. And then if you have to do that, you know, every year that could add up.

So what would I do instead? Well, you've probably if you listen to the program heard me talk about our friends at Christian Credit Counselors, if you have 4000 or more, and that happens to be right where you're at, that's my preferred way to get out of debt, because it's going to restart with your budget. And make sure you can afford the payment and help you get that budget situated, which, by the way, is a better long term fix for this, because the, you know, the the opportunity for you to get out of debt and stay out of debt is going to hinge on your ability to live within your means moving forward. Now, it doesn't mean you won't have something that comes out of left field that you you just don't have the savings for that could happen. But if we can get you out of debt, get an emergency fund built up of three to six months expenses, and have you living on a budget, the goal would be that you never go back into credit card debt again. And some of these quick fixes, like the balance transfer, or the 401k loan often fail to get you to change the behavior that ultimately led to the debt in the first place. Now, with debt management, what's going to happen is the credit card interest rate is going to be dropped, and you would make one monthly payment through the credit counseling agency, and they would pass it on to your creditor. And the combination of that lower interest rate would allow you to pay it off 80% faster on average.

So if I were you, what I would do is head to christiancreditcounselors.org, and let them get you set up in that program. Okay, well, thank you so much. That's fine to do that quick. Awesome. Glad to hear it.

Yes, ma'am. Thank you for calling today. May the Lord bless you. We appreciate you being on the program today. Before we head into our break, let me remind you, if you'd like to find a financial professional who shares your values and priorities, who's been trained to bring a biblical worldview of financial decision making, well, we'd encourage you to look for a certified kingdom advisor in your area. There's more than 1500 men and women who have earned CKA all across the US, you can find one at faithfi.com.

Just click find a professional. We'll be right back. financial resources and interact with a community of like minded believers where you can ask questions, get answers and share what you're learning.

Go to faithfi.com and click the word app to get started. to those getting ready for retirement. More information, including a short video webinar on profit and peace of mind, no matter what's happening in the market is available at soundmindinvesting.org. Great to have you with us today on faith and finance. I'm Rob West. We're taking your calls and questions. We'd love to hear from you today. 800-525-7000. That's 800-525-7000. You can call right now.

Let's see, we're going to go to Tennessee next. Hi, Jenny, go ahead. Yes, my sister. I'm a POA of my sister. She is 76 and she has disabilities.

We have gotten letters from medical facilities saying that their systems have been breached. And I was trying to freeze her credit. Do I need to be concerned about that? She's never had credit and never will have credit. I just don't know what if I'm trying to leave it as is or I need to go in and try to freeze her credit, which I've done for myself. Yes, no, I absolutely would. It's free to do and it can't hurt.

And here's what it's going to do. It's going to protect her from identity theft and fraud, especially since her personal information may have been compromised in the data breach. And it's really not about you trying to protect her credit, because to your point, she doesn't have credit, doesn't have probably any kind of score that's going to be helpful to her. But the last thing you'd want to have to deal with is somebody assuming her identity and then, you know, they don't, you know, they go out and take a loan out in her name and then it doesn't get paid and then they sue her. And although it would be fraudulent, you would have to defend it and prove that it wasn't you and you just don't want to have to deal with all that. So I would contact each of the three major credit bureaus, Equifax, Experian and TransUnion. You'll need to provide, you know, her full name, date of birth, social security number, address, a copy of your POA if you're doing it, and then otherwise she could do it herself and then confirm the freeze.

They would send you a letter or an email once it's in place. And you should be able to do it online. You could also just place a fraud alert on her file, which is again free and easy to do.

And then I would just check her credit report periodically, annualcreditreport.com and make sure that nothing pops up that's not hers. But, you know, it's just a good best practice and it, you know, it's certainly, it'll take you a little bit of time, but I think it's worth it. Okay.

Okay. Well, I had started in on the endeavor and they were making it very hard for me having to get a selfie picture of her and all those, all the red tape stuff. Yeah, I just think, yeah, I think it's worth it just because as much of a hassle as it is now, it could really be a hassle if there's true identity theft that you have to deal with legally. We appreciate your call today.

Thanks for being on the program, by the way. And this is really interesting. You know, a lot of people don't realize that you should freeze a child's credit. And here's why they are prime targets for fraudsters because kids don't typically use credit thieves then can misuse their social security number for years before the fraud is detected or discovered. And so, you know, what you'd want to do is go in and freeze the child's credit and anybody with a social security, you can freeze the credit. And we're actually going to be doing an episode coming up here in the next couple of weeks as we open the program here on faith and finance, talking about what steps do you need to take when you have a child financially? And one of those, a lot of people are surprised about this, is to freeze their credit. So perhaps something not on your radar. No, it wasn't on mine as I was a new dad.

And yet it's a best practice. If you have a question today, we're taking your calls and questions. So the number to call with lines open right now, any financial topic in play today, 800-525-7000. Again, that's 800-525-7000.

We'd love to tackle those questions that you have today. By the way, when it comes to thinking about credit and protecting our credit file and protecting our credit score, you know, it's just there are some best practices that you need to employ when it comes to your own protection. Now, here's the thing, unless your data has been compromised, and it seems like that happens pretty much, you know, every six months or even more frequently, somebody is allowing our information to be shared as a breach occurs, and they're willing to pay for credit monitoring for you, well then take full advantage of it. Now, make sure you don't click on a link in an email, go to that company's website that's claiming they had a breach, get the information directly from their site, and then pursue it that way.

Don't, you know, provide your information through a phishing scam. But if it's being provided for you, why not have that extra layer security? Now for me, unless somebody else is paying for it, I just don't think you need credit monitoring, as long as you're willing to put your own best practices in place. And what I mean by that is, you know, we're talking about making sure you're pulling your credit report, I would say three to four times a year, annualcreditreport.com.

It's free. What are you looking for? Erroneous, incorrect information, accounts that aren't yours that you don't recognize that you want to dispute and get to the bottom of. So that would, I think, be key.

Secondly, you want to make sure you're just using general best practices. So don't log into your bank account on the internet on public Wi Fi. Somebody could compromise that connection and steal that the credentials. Don't ever click on links and emails and provide information. I got a text message the other day, said it was from SunPass, which is the toll service in the state of Florida, said my account was past due. They were going to pursue legal action. I had a toll that I owed for a second. I thought, you know what, this might be legitimate because I'd been driving in Florida recently and I wondered if maybe I was on a toll road and didn't realize it.

But you know what? It's a scam. And what they're doing is they're getting you to click the link, provide your information to pay a small charge, might be five or six dollars. And you might think, well, I'll just pay it.

Who cares if it's real or not? And that way, if it is, I don't have to worry about somebody coming after me. Well, as soon as you do, they grab your information and here's what they'll do.

And I talked to somebody about this recently. As soon as they get it, they'll add it to a device like an iPhone with Apple Pay and then they'll take it without the physical card and start immediately charging it. And if your company, your credit card company doesn't pick up on it, well, by the time they do, there's hundreds or thousands of dollars in charges. Now you can dispute it, but it's a hassle. You're going to get a new credit card number. You're going to have to dispute everything. You're going to have to follow up, make sure they take it off. Better just not to click that link in a text message or an email.

Or if somebody calls you, even if they sound legit, don't give it out unless you contact them directly. I know I sound passionate. I am.

Well, that's going to do it for us. Before we go, let me remind you to check out the Faithfi app on our website at faithfi.com. It's the best money management app out there to get godly counsel, encouragement, great content rooted in Scripture, but also what I believe is the very best money management system as well. You know, with expenses up everywhere and high inflation, you're probably struggling like I am to stay on budget.

Well, having a plan and a system to control the flow of money is essential. The Faithfi app was built on Larry Burkett's tried and true envelope system, but in a modern, beautiful and simple interface right there in the palm of your hand. Julie and I use it every day and we wouldn't be able to stay on budget without it because whether we're taking one of our kids shopping or we're checking our vacation category or anything else in our financial lives, we know exactly where we stand with the Faithfi app. You can check it out in your app store or at faithfi.com. On behalf of our team here at Faithfi, thanks for being along with us. Come back and join us next time. May God bless you. Faith and Finance is provided by Faithfi and listeners like you.