A Tale of Two Widows

If anyone does not provide for his own and especially for those of his household, he is denied the faith and is worse than an unbeliever. That's 1 Timothy 5.8. Hi, I'm Rob West. Women live longer than men by several years on average.

That means there are far more widows than widowers in the U.S., and many of them struggle financially after their husband's passing. Harlan Akkala joins us today with a possible solution. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well it's a pleasure to welcome Harlan Akkala back to the program. Harlan is with Movement Mortgage, an underwriter of this program, but Harlan has another feather in his cap.

He's also an author. His book is Home Equity and Reverse Mortgages, the Cinderella of the Baby Boomer retirement. Let me mention right up front, we will be taking your questions today for the broadcast, specifically on reverse mortgages. We'd love to hear from you if you have questions about these products.

I know they're often misunderstood and a lot of folks struggle to just understand exactly what they are and how they can be beneficial, even some of the dangers associated with them. So if you have a question today, lines are open for reverse mortgage questions with Harlan at 800-525-7000. Harlan, great to have you back on the program. Glad to be here. Thank you, Rob.

Harlan, let's start with your book title. You said these are the Cinderella of the Baby Boomer retirement. Why are reverse mortgages the Cinderella of retirement planning? Well, Cinderella was not very well accepted at the beginning of the story. She was not supposed to be at the ball. She certainly was not supposed to be the star of the ball. Reverse mortgages are a lot the same and that's why I use that comparison.

In fact, the definition of a Cinderella is that someone who has defined a person or a thing is defined as something that unexpectedly achieves recognition or success after a period of obscurity and neglect. Reverse mortgages are kind of obscure and certainly neglected as a retirement tool and in fact, people are really against them like I was 20 years ago before I understood them. We know now that home equity is such a huge amount of wealth, over $13 trillion of just people over 62 in the United States.

It's a huge amount of wealth that is there that can be safely unlocked and used for things that are very important. And so the fact that they should just be pushed aside is the thing that we are really trying to get the news out, especially to the Christian community that it can be of help to so many, not only those that are in need, but just simply those that are looking for other options. And we're especially concerned at movement mortgage, our mantra is to love and value, that that's why we're in existence to love and value people. And we especially love and value widows because many times widows are in a difficult situation and in poverty when they don't have to be there. And that's one of the things that we work very hard to get the news out that this is something that can make sure that even as a husband, when you pass, your wife is going to be okay. I know that was a big part of my planning.

Yeah. Well, as a part of our broadcast today, we're going to unpack reverse mortgages, help you understand what you need to know. But staying on this for a moment, because we hear from a lot of widows on this program, I know you've done quite a bit of research on this. Tell us about the financial condition of many widows. Well, what most people don't realize is once you get past 85, 71% of the population is women. And 20% currently of women over 65 are in poverty.

And like I said, most of them have never been there before. And that number is unfortunately increasing because half of women over 65 are single. Most of them are living in social security. 50% live into their 90s. Only 30% of men make it to their 90s. And women are four times more likely to outlive their spouses. And 85% of people that are over 85 are widows. The biggest issue is after a spouse's death, income almost always decreases by at least 40% because now there's only one social security check instead of two. This is a recipe for disaster and fortunately can be planned for. In my book, I talked about Diane and Bob and Linda and David and what they planned for in their 60s. So once they got to their 80s and Bob and David were gone, how Linda could be in better position because of the reverse mortgage planning that had been done earlier. Yeah, that's really helpful. Well, we're just getting started here, folks.

Harlan Akula here today. We're talking reverse mortgages. How do we look at these through the lens of scripture? I'll weigh in on that. What are reverse mortgages?

How do they work? A lot more to come just around the corner today. Plus your questions at 800-525-7000. This is Faith and Finance Live back with much more.

Stick around. Well, it's great to have you with us today on Faith and Finance Live. I'm Rob West. We're taking your calls and questions today specifically on reverse mortgages for this portion of the broadcast.

800-525-7000. With me today is Harlan Akula. He's with Movement Mortgage, an underwriter of this program. He's also the author of Home Equity and Reverse Mortgages, The Cinderella of the Baby Boomer Retirement.

You can learn more at movement.com slash faith. And before the break, we were sharing a bit about reverse mortgage and specifically in light of widows and where many widows find themselves in a difficult financial situation after their husbands pass and the opportunity with a reverse mortgage. Now, let me say, and we'll continue to unpack what these are during this broadcast, but let me just say from a biblical perspective, which is how we look at everything on this program, you know, we talk, I talk often about the importance of being debt free, you know, looking at debt as not a sin to borrow, but the clear warnings that are in scripture around this topic. I mean, we're all very familiar with Proverbs 22-7, the rich rules over the poor and the borrower is slave of the lender. And so for that reason, we want to purpose ourselves to get out of debt over time. I often encourage folks to be completely out of debt, including their homes, by the time they're entering retirement, because debt can deny God an opportunity to work. It presumes upon the future. And we say that there are some questions you need to answer before taking on debt, including, is my spouse on board with this?

Do I have a community? Is there any better alternatives? And is there a guaranteed way to repay? Well, the interesting thing about reverse mortgages is that often there is no better alternative because folks are sitting in this season of life, as Harlan said, with very little income. They haven't saved for retirement. Their only asset is their home.

They want to stay there. And this is an opportunity to tap into that. Also, specifically related to a guaranteed way to repay. This is one of the unique features about a reverse mortgage that I think is often misunderstood. And Harlan, I'd love for you to explain that now, just about the guarantees related to a reverse mortgage that's different from a traditional mortgage.

Well, yes, and quite frankly, this is what I misunderstood because 20 years ago I told people not to get these because I didn't understand this feature because I didn't want to presume on the future and was worried about what would happen to housing prices years down the road. And when I signed my reverse mortgage a couple of years ago, when I turned 62, I signed a form that said release of personal liability. That's a very interesting and a huge issue that people forget about is I'm no longer personally liable for the mortgage on my house. I'm pledging my equity in the house, and it's guaranteed by the federal government that if there's not enough equity, they will pay it, not my children, not my estate, or my life insurance policy, or anything else. Technically, legally, this is called non-recourse. A non-recourse loan is something that cannot be changed, and it guarantees the borrower a certain situation, which is I always live my life, and the borrower is the servant of the lender in Proverbs, and so I don't want to be a servant, and I don't want my children to be a servant at the end.

If this was not the case, I would not be associated, and neither would movement, be associated with something that would be so uncertain. But because this guarantee is in place, and we are not saddling the children or an older person with something that they cannot afford to pay, that is why we use it as part of the overall retirement planning because of that safety and because of that safety net. Yeah, and that's a really important distinction. In fact, you can't even outlive this in terms of if they continue to pay you, you can live, is it all the way to 150, and the home is still the only collateral that can satisfy the loan? That's exactly correct. When we signed our reverse mortgage, it was something like it's due in 2110 or something like that.

It's on my 150th birthday, so I'm not too worried about it, to tell you the truth. Interesting. All right, we're going to continue to talk about this. Here's my thought is that if you have a conviction to be debt-free, by all means, go for it. I've talked to countless listeners to this program who have said, I want to get out of debt and stay there, and that's phenomenal. But I want you to see the truth about reverse mortgages, understand this tool, and the big idea is that in the context of just wise planning and wise counsel to see this as a legitimate alternative, as a planning tool that factors into your overall retirement plan.

Harlan, anything else before we dive into some questions from callers today that you would want our listeners to know just about how these products work, the age that you have to be, anything else? Well, yes, but in general, I think the big thing is that we need to look at our home equity as any other type of wealth that we can use starting at age 62, just like you can get Social Security from 62 to 70, Medicare at 65. You are able to unlock the equity in your house and get a refund, so to speak, on your payments once you get to be 62. That should be considered along with all of your other assets, what you're going to do with your IRAs, whether or not you're going to do a Roth conversion, when you're going to draw Social Security, and it comes down to stewardship. How should I handle my IRA?

How should I handle my Social Security? Also, how should I handle all of this wealth that I've built in my house? It should be part of an overall financial plan, not just something that is a purchase of a product or a knee-jerk reaction to a single problem, but it is part of an overall plan. That's the biggest mistake that I think people make as they try to look at things in a silo instead of, how does this fit with everything together?

The biggest thing I encourage people is, like me 20 years ago, don't throw the baby out with the bathwater, so to speak. Don't compare this with a credit card debt or compare it with a home equity loan that you borrow $100,000 and you have to pay back $200,000. This is something that operates completely differently and should be compared with something that is a threat and is dangerous. I always tell everybody, don't have a payment in retirement. Nothing wrong with having a mortgage in retirement, but don't have a payment in retirement. There's too much uncertainty. The only thing certain about retirement is that it's uncertain.

Health and all of the other things that go with it. Yeah. Now, in terms of the possible scenarios after you get a reverse mortgage, obviously, if you pass away, then whatever balance is owed would be satisfied only by the home, not by beyond your home. Then, obviously, one other scenario is you could sell it. Explain what happens in either of those situations.

Yes. Those are the only two ending points to a reverse mortgage is either you pass away and then, of course, your children either refinance it into their name or they sell it. If you do it while you're alive, let's say your house is worth $400,000 and you've used $100,000 in the reverse mortgage proceeds and interest, well, then you sell the house, you walk away with $300,000. Just before this call, I was talking to a realtor who was helping a client move from California to North Carolina to be by her children because her husband had passed away. She was selling her house out in California, was getting $300,000 out of it coming here. The house that she wanted to get in the 55-plus community was $500,000. She was putting down that $300,000, doing a reverse mortgage for the other $200,000, and then that was something that she's done making payments for the rest of her life and being closer to her children. That's a typical situation of how that works together in making things work. At the end, whatever money is left belongs to the children or the borrower, not the bank.

The bank never owns the house. Yeah. That's a whole different perspective than a lot of people have.

You mean I could buy a house, get a mortgage, and not have a payment? Well, that's how you could use this particular tool in that scenario during these retirement years. Fascinating. We'll talk about how to think of this in light of your giving, Social Security, drawing from retirement assets, and your questions just around the corner. Harlan Akula here today, much more on reverse mortgages right around the corner. This is Faith in Finance Live. Stick around. The opinions offered during this program represent the personal or professional opinions of the participants given for informational purposes only.

Any information provided is not intended to replace advice from a financial, medical, legal, or other professional who understands your specific situation. Great to have you with us today on Faith in Finance Live. I'm Rob West. With me today, Harlan Akula, Movement Mortgage.

You can learn more at movement.com. We're talking about an often misunderstood planning tool, reverse mortgages, that in the context of a well-thought-out financial plan can be an effective tool during your retirement season of life. They're not a one-size-fits-all like perhaps some of the commercials you've seen on television, but as long as you are thinking about it as a tool alongside other vehicles, they can be very effective. I think that brings us to Harlan, how you've actually used a reverse mortgage in your life. You got one when you turned 62 specifically so you could let your other retirement assets grow, right? Yes, I always explain to people that everybody has three buckets of wealth who owns a house. Bucket one is Social Security and their income ability to earn income if they're still working, run a business. Bucket two is what they have with their financial advisor, the IRAs and annuities or whatever they put aside for savings.

Then bucket three is their house. What I did is I took a look at it and said, if I do not put more money into bucket three into my house, I will be able to put more money into bucket two. As a result, I did the numbers and my net worth and cash flow will actually be higher, so I will pass away with less money, less equity in bucket three in my house, but I'll have more in other places that I can share while I'm alive and also after I'm gone. It really is something that is much easier to increase my giving and my generosity when I'm not trying to store a bunch of money in bucket three. The more money that's in bucket three, the less in the house, the less money I have to give, the less money I have to handle my cash flow. It just makes sense as just like I would sit down with an advisor and say, should I take money out of an IRA or should I take it out of a life insurance policy or should I take it out of my savings? I need $10,000 to buy a car. Well, the advisor would go through that and say, well, you're better off taking it here because of tax purposes.

I wanted to make sure that I started taking money out of bucket three as soon as possible because it's tax free and it allows bucket two to grow more. Yeah, yeah, really helpful and again, a different perspective than a lot of folks realize. Let's take some phone calls today. We're taking your questions specifically for Harlan during the broadcast today on reverse mortgages.

Let's go to Coral Springs, Florida. Hi, Tracy. Thanks for your patience. What are your thoughts? Thank you for taking my call. My thoughts are I'm so glad that I happen to be listening because for whatever reason I have been entrusted with the elderly.

I am not a caregiver, but I find them and they all had reverse mortgages. And so my thought 10, 15 years ago is like I had to get involved and they're terrible, terrible, terrible. I'm listening to Harlan and I'm like, this sounds really good.

So I guess my question is, help me understand the features like the process better. Even to help myself because I would, I would never touch them because of what happened to my ladies. Yeah. So what are the most common misunderstandings, Harlan, that you think could help here in this situation, get Tracy further up to speed? Yeah, well, Tracy, one of the bad things about a reverse mortgage is many people take them out and never talk to anybody else about them. And then when they die, they're not around to explain what they did, why they did it, who they dealt with, what the situation was. And it can be a real mess at the end.

And that's what people remember is, oh my goodness, it was just such a mess at the end. And nobody has ever said when a IRA was empty at the end of their life, those IRAs are terrible. You should never get one because this lady died and there was nothing left in her IRA.

Nobody would say that they know they use the money in the IRA to live a better life and to give or whatever they did with the money. The important thing to remember at the end is that there is a required time period, a month, to notify the servicer, the mortgage company, that the person has passed away. And this is what we're going to do with the house. Then there is a six month period of time that you're allowed to clean out the house and do whatever.

And then you can get two more three month extensions up to a year. Some people don't know that and they think the house has to be paid off in 30 days and it has to be taken care of immediately. Any time that confusion happens with the people that are left behind that were never explained, they need to reach out for counsel. And even if it's not a mortgage of ours, we provide counseling and help and information on any of those things when that happens at the end. So to you and anyone else on this call, please reach out because like anything else, if it's not handled correctly at the end or it's not explained correctly, it can be an absolute mess. And that's the last thing we want to have happen at a very difficult time when somebody loses a parent, a sister, whatever the situation is, we want to be of help in those scenarios so it's not a bad thing at the end.

Yeah, that's really helpful. Harlan, will you explain the difference between how you can tap into the funds or to the equity in your house through a reverse mortgage? You don't have to take it out as a monthly payment, which is typically how we think about it, although many people do and that's what they're looking for. But there are other options.

So break those down for us. Yes, there's three ways to get money out of your house. Well, actually, with a reverse mortgage. Obviously, one way to get money out of the house is to sell it.

But of course, then you have to move. So when you're doing a reverse mortgage and you want to turn some of that equity into cash, we give between 30 and 50 percent depending upon age. So it's not like you get all of it. And then we give you the option of taking it out monthly or you can take it out in a big lump sum if you need it for something big or you can simply get a line of credit and use it as you need it when you need it.

Three different options depending upon your needs. Yeah. And the key there is non-recourse debt. So all guaranteed by the government, no personal guarantees.

So the house will satisfy the loan no matter how long you live, which is often misunderstood. All right. A quick break and back with more right after this. Thanks for joining us today on Faith and Finance Live. With me today, Harlan Akula, Movement Mortgage.

You can learn more at movement.com slash faith. Before we get back to our topic today of reverse mortgages, let me mention here at the start of the year, if you're looking to get yourself on budget, perhaps you've said this is the year that I'm going to get that spending plan in place. I'm going to stick to it.

I'm actually going to free up the resources on a monthly basis to accomplish my goals through my budget so I can give more or save more or pay down debt, whatever it is. We'd love to help you with that with the FaithFi app. You can download it today at faithfi.com. Just click app or search for FaithFi in your app store. It will help you get a plan and stick to it. And it's built on Larry Burkett's tried and true envelope system, but in a beautiful, simple smartphone expression.

So check it out today at faithfi.com. We're talking today about reverse mortgages and often misunderstood planning tool for those in the retirement season of life. Taking your questions today at 800-525-7000. It looks like we have one or two lines open. Let's go right back to the phones.

Alice in Miami, go right ahead with your question for Harlan. Yes, thanks for taking my call. My question is that I have a reverse mortgage that I took it out. I was, I had financial problems and I needed some immediate money. At that time I did not know that much about reverse mortgage.

Afterwards I was very sorry that I took it out. However, I have benefited. I have been in my condo for the last 10, 12 years with a reverse mortgage. And the only thing that I have to pay is my taxes and my condo association fees. My question is, should I, my grandson is very, that will be in charge of me when something happens. I am 85 years old now, 86 rather. And if, when something happens to me, um, what can he, um, purchase the home?

How shall he handle that? Yeah, very good. Thank you, Alice. Go ahead, sir.

Yes, Alice. Thank you for that. And by the way, I have to spend a lot of time with folks, uh, telling them that they should never be sorry that they use their home equity, uh, when it has given them a better life and a better opportunity as compared to renting or having to move in with, uh, in a situation that's not safe or whatever. So, um, don't feel guilty that you use the money that you put into the house over the years.

Um, because as you said, it certainly has helped you at the end. Um, your grandson, uh, would simply get in contact with the servicer of the mortgage company and say, I, I, we are not interested in moving into the house. We're going to sell it. Uh, if that is the goal at that time, or he may say, we want to turn it into a rental property and I want to refinance that. Then the mortgage company should give them an option to refinance it into his name. So, because he inherited the house or whoever the heirs are, are given the opportunity to refinance into a regular mortgage because they're younger.

If they're older, they could refinance into another reverse mortgage. But always we give that choice and up to a year is taken to take care of things. It's not like we show up at the funeral home and ask for a check.

There's very orderly and plenty of time to be able to put everything together. And, uh, it's good that your grandson would know some of that now and we'd be happy to share some of those things, um, with, uh, him or with anyone who is wondering what happens at the end, because I'm a, I'm a big believer in the seven habits of highly effective people is making sure that you begin with the end in mind. And that's what we do when we work with any clients is this is how it's going to end up. What should we do then?

Yeah. Great question, Alice. Thanks for your call to Chicago. Hi Ted.

Go ahead with your question for Harlan. Um, I, uh, I'm 62. My house is worth about 200,000. I owe about 55,000. Now my question is, should I pay the mortgage off to get the reverse mortgage or should I take a reverse mortgage in a couple of years when I retire? Yeah, very good.

Harlan. Talk about just the role of planning in a situation like this and then obviously your thoughts on his question. Yeah, that's a great question. I would ask you all kinds of questions before I'd give you a direct answer. Um, if I was sitting down with you and doing planning or working with your financial advisor, um, what I did in my situation is I paid off my forward mortgage with a reverse mortgage when I was 62 even though I was not retired and even though I could afford to make the payment because as I mentioned before, I wanted to put more money into my investments and take less out, um, and increase my giving. And so that may be the same situation for you.

Um, that's not one size fits all as no products are. And so I would ask you, when are you going to draw social security? Um, how much money do you have in investments?

How much longer are you going to work? Um, but one of the things you always have to think about is when you get to 62, what is the purpose of, and really we always have to look at what the purpose of our money is and what we're trying to accomplish. And what is the purpose of sending another $55,000 to bucket three, so to speak. Maybe you could use that in giving or to be able to help others or to increase your net, your investments if you don't have enough for retirement. So, uh, the, the question, every person who gets to retirement, just like when you get to 62 and you look at social security, you should say, well, should I drive social security at 62, 65, 67, wait till 70, whatever. Um, uh, and you should do the same thing with your house.

Now I'm 62. I don't have to make a mortgage payment anymore. If I don't want to, should I stop?

Should I make a smaller payment? Um, and because the question always is, well, there's only a certain place where our money can go. Should we send it to bucket three, our house, or should we send it to bucket two, our investments, or if we have plenty of money, uh, and we're okay with giving, maybe we can give it all away and be of help to, uh, um, any, any of our Christian, uh, goals that we want to accomplish there. So, uh, it's a, I know I didn't answer your question directly and I can't, unless I know a whole lot more, but there's a whole lot, let's put it this way. There's a whole lot of people that are paying off their house that don't need to, and probably should not if they look at the planning overall.

Yeah, that's really helpful. Again, this is something in con in the context of a well thought out, uh, financial plan with a professional, uh, can be an effective tool, but it's not a one size fits all. It's not for everyone. There's a lot of folks that really have a conviction that they want to be completely debt free and that's great. Uh, but if you're in a situation where you're sitting on a lot of home equity and you either would rather wait and let your investments or your social security increase, uh, and you know, tap into your home equity, this can be an effective tool leveraging this non-recourse debt that comes through a reverse mortgage, which is completely different than a traditional mortgage. Whereas if you were to sell your house with a traditional mortgage and there's not enough home equity there to pay it off, you're personally liable. The government is actually stepping in and guaranteeing anything beyond the value of your home, uh, in the case of a reverse mortgage.

And a lot of people don't understand that. Uh, we're talking with Harlan Alkala today here, uh, for movement mortgage. And when we come back after this break, we'll talk about, uh, generosity and giving as it relates to reverse mortgage.

What about longterm care as well? We'll get Harlan to weigh in on that plus more of your questions. It looks like all the lines are full, so we'll tackle as many as we can just around the corner. This is faith and finance live, looking at your financial situation through the lens of biblical wisdom here each day. Thanks for joining us.

We'll be right back. Thanks for joining us today on faith and finance live here on Moody radio. I'm Rob West with me today, joining me for this portion of the broadcast, Harlan Alkala for movement mortgage. We're talking today about reverse mortgages and often misunderstood planning tool for those in the retirement season of life. Uh, before we go back to the phones, Harlan, uh, talk to us about generosity and how a reverse mortgage can affect our giving because that's obviously an important part of a lot of our listeners stewardship journey.

And it should be. Well, uh, yes, I think that that's something that most Christians, uh, look at the fact that they want to give, uh, obviously they're responsible to make sure that they take care of themselves and they're not a burden to their families and they have enough money for the things that they need to take care of on their own. Um, but I want to talk to a lady, uh, that we were able to do a reverse mortgage for in Arizona that started declining her meetings to Panera Bread for a Bible study launch. Uh, because, uh, she just, uh, was, uh, they always took up a little collection and helped out something and she didn't want to go there anymore because she didn't have enough money to do that yet. She was living in a $600,000 paid off home.

So she had all kinds of money, but it didn't, it wasn't liquid. And, uh, and, and really Russ Crossan talks about this in his new book leverage about reverse compounding, that it's not only about giving money away when we're dead, but it's about giving money away when we're alive and we can give our wealth away with our wisdom. And I, it's much easier for me to be generous when my $3,500 a month mortgage payment went away.

Um, it's, uh, and whether it's $500 or whether it's 5,000, it allows you to have a lot more cash flow and pay a lot less in taxes, which simply allows you to be able to give more. Yeah, really helpful. Uh, let's head to, uh, back to the phones to Frankfurt, Indiana.

Hi Susie. Go ahead. Yeah. Um, I had a whole different impression about the reverse mortgage because I heard of a situation near me that her father got a reversal or mortgage. And then after his death, uh, the house still sits empty. Four years later, the government pays the taxes on it, but no one has ever bought it and moved in and chaos.

Those are just gone like crazy here. Hmm. Interesting.

I'm really glad you brought that up. There was a problem with a servicer that FHA hired that was a very irresponsible servicer. And that happened actually not far from my mom and dad's house. And it was, uh, three years, the pipes froze and it was, uh, a horrible situation.

Um, and that servicer has since been, uh, fired, so to speak and lost their contract with the government because they did a horrible job of servicing reverse mortgages that FHA took over. And it was awful and never should have happened, but it did. And I kind of covered that in my, uh, uh, in a book chapter called sex, drugs, and reverse mortgages, that obviously sex can be good or evil and, and drugs can save your life or it can kill you. And, and anything can be used for good or bad. And when that happened, that really colored a lot of people's attitude about see those reverse mortgages are bad. And that one was because of that servicing. But we, uh, I can tell you if many situations where of course everything went just perfectly and, and it was praised how it worked at the end, but certainly that would color your attitude about reverse mortgages. When you saw one of those horrible servicing things, like I said, uh, begin with the end in mind and if the end isn't good, all's well, um, uh, that, that ends well, but if it doesn't end well, that's a problem.

Yeah, absolutely. Susie, thanks for raising that question. Now let's go to Minnesota. Hi, Don. Go ahead. Don, are you with us?

Am I on? Yes, sir. Go ahead. Okay. Just, uh, uh, give you a scenario. Uh, I haven't, I've been listening and I haven't really seen from A to Z, uh, the whole process of doing this, but, uh, if you have a, let's say a hundred thousand dollar home equity, uh, what percentage of that, uh, will, would they approve for the reverse mortgage? That was my first question. Then also, are there interest rates involved with whatever you get?

Sure. Um, there are, um, uh, the amount that you receive is 30 to 50% of the value of your home, depending on your age. So that would be, uh, you know, anywhere from 30 to $50,000 and every hundred thousand dollars that your house is worth.

Um, the older you are, the more money you get because of course you have less time to use it and enjoy it. Whatever amount is used, there's an interest rate that is charged, but never a payment. It simply goes up. So let's say that you have, uh, $10,000 out that you use to, uh, fix your roof. Uh, next, uh, the rate is about six and a half percent right now, similar to any other 30 year mortgage is regulated by the government. Um, so you can't be overcharged on it. Um, and that does go down when the rates get better. And so at the end of the year, you would owe 10,650, not 10,000, but you would not be required to make a payment that would just simply roll onto the next year. You can make a payment if you wished, but you'd never have to. Uh, so that's how the mechanics work with the reverse mortgage. Is that helpful, Don? Okay. If you have 40 acres, uh, is the reverse mortgage only on the improved part of the 40 acres, your house and garage is the land included in the valuation? Well, that's a great question.

You'll decide that. Um, I, I did a lot of, uh, reverse mortgages in Wisconsin, where I came from right next to you there in Minnesota. And so I did a lot of farms in Northern Wisconsin. And generally what we did is just took out the house and five acres because enough value was not given to the land.

It's not a good idea to have any, a whole lot of land because you don't get full value and you may want to sell the land separate from the house someday as well. Uh, and it gives you more flexibility, but you can do it either way. That's up to you depending upon your situation. Thanks for your call, Don. We appreciate it.

To Cleveland, Ohio. Hi Amy. Go right ahead. Hi Rob. I was originally going to call and ask, um, how I could finance. I was going to buy, um, my least car in June and I've been saving and I have some money to pay for it, but not quite enough. But when I heard this program, I thought I might be a candidate for this reverse mortgage. And could you tell me if I am, I have a home that my late husband and I built 25 years ago. I own it free and clear.

I just paid the taxes on it and I'm just wondering, is this something that I could tap into getting a reverse mortgage and how do I know about it? Sure. Yeah.

Yeah. So, um, remember when Rob was asking about the ways to get money out, your situation would be perfectly tailored for a line of credit. So let's say that, uh, you know, you had a hundred thousand dollar line of credit. You don't pay interest on that. Uh, that's not something that you're required to, uh, uh, to re take out or anything else. If you only need $10,000 to pay off the lease on the car, that money is sitting in your living room, so to speak. So we just make that available.

You can use it when you want, you can pull it out, you can put it back in. If you have money later, you can make payments whenever you want, or you can leave it sit until after you're gone. Um, it's just, we simply create liquidity for a certain amount and you would be perfectly suited for a line of credit that you would use when you wanted without any requirement to make a payment because you don't need a monthly check. You just want a lump sum to be able to take care of that total.

So that would make sense to take out of the line of credit. Yeah, very good. Amy, call us back anytime we can talk about that car, but thanks for reaching out today. Harlan, we're getting short on time.

I'd love for you to tie a bow on this. What would you want to leave our listeners with today? Yes, I think the biggest thing is, is, is, uh, one of the things that's talked a lot about in the Bible is the spirit of fear. And, uh, the spirit of fear comes when we are either uninformed about things or we don't trust in God. And the thing about a, uh, that I found over the 20 years of doing this and even in my own situation is, um, once you go through a planning process and you consult a professional and you consult the Lord, uh, that fear goes away. And many people are simply afraid of a reverse mortgage because they've heard some bad things. And I just encourage people that if you want to increase your tax, uh, or increase your cashflow and decrease your taxes and increase your giving and have a better, uh, even help your children, um, help others around you and give with a warm hand instead of a cold hand, this is something that is worth checking out. It's not for everyone, but it's not something that you should just automatically say, Nope, I'm not interested at all.

Um, because you don't know what you don't know. And once you understand, does it fit in with my retirement plan? Does it fit in with my giving plan? Does it fit in with my legacy to my children?

And when all of that is put together, when you're working with a professional and you make a plan, the fear goes away because you understand it and you know the direction you're going. Yeah, that's a good word and a great place to leave this today. Well, Harlan, grateful for your time today. Uh, hope we can have you back sometime real soon. Well, I look forward to it and we, we are in the business of, uh, we always say that we're here to love and value people, as I mentioned earlier. And, uh, it's a privilege to be able to, uh, share these things because there's more people that we can love and value. And thank you for the opportunity, Rob.

Absolutely. My friend, God bless you. That was Harlan Akula. He is the author of Home Equity and Reverse Mortgages, the Cinderella of the Baby Boomer Retirement.

You can find it wherever you buy books. Uh, folks, let me just conclude where I started today. You know, we do everything on this program through the lens of scripture. And you hear me talking often about getting out of debt and staying there. And I will continue to do that because there are clear warnings in scripture around the use of debt. And yet in the context of a well thought out plan with wise counsel seeking biblical wisdom, we need to understand all of the planning tools at our disposal. And I believe this is one of those misunderstood planning tools that can be very effective if used properly. And the key here is when we talk about the use of debt, we say, let's make sure we're not denying God an opportunity to work. Let's make sure we're not presuming upon the future. Let's make sure there's no better alternative and that we have spousal unity and we have a guaranteed way to repay. And the nice thing about a reverse mortgage as one possible planning tool is there is a guaranteed way to repay because you're never, according to the government guarantee, going to owe more than the house is worth.

And as long as you have spousal unity and it makes sense in the context of your overall plan and situation, this can be a tool you're overlooking. And so we wanted to shine a light on it today and do it with godly counsel. And that's Harlan Akkola. If you'd like to learn more, go to movement.com slash faith. And thanks for joining us on this broadcast today. Let me say thanks to my team today, Anthony, Amy, Dan, and Jim couldn't do it without them. I'm Rob West.

This has been faith and finance live on Moody radio. Thanks for being along with us. Hope you'll come back and join us tomorrow. We'll do it all over again. We'll see you then. Bye bye.