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Mortgage Talk with Mark Hairston - Is It A Good Time To Buy? · The Bridge Austin

• 0:01
  Speaker 1: Welcome to Mortgage Talk with Mark Hairston, the program that
• 0:05
  Speaker 1: not only talks about mortgages, taxes, and interest rates, but
• 0:09
  Speaker 1: Mark and his guests talk real estate trends and your home.
• 0:12
  Speaker 1: He also answers your mortgage questions to help you make
• 0:15
  Speaker 1: the right financing or refinancing decisions. Now, here's Mark Hairston.
• 0:20
  Speaker 2: Happy day, everybody, and welcome back to Mortgage Talk with Mark.
• 0:25
  Speaker 2: And today, we're going to talk about a couple things
• 0:27
  Speaker 2: around the mortgage space that... some news, some stats, some
• 0:31
  Speaker 2: more information, questions, some case studies, etc. But before we
• 0:35
  Speaker 2: did that, I want to kind of recognize the fact
• 0:37
  Speaker 2: that today is Friday, November, not November, September the 11th.
• 0:40
  Speaker 2: So 25 years ago, of course, was that tragedy in
• 0:43
  Speaker 2: New York City. And I was remembering that and just
• 0:46
  Speaker 2: wanted to honor those folks who died in the buildings,
• 0:50
  Speaker 2: in the planes, the first responders, several thousand people perished
• 0:54
  Speaker 2: that day. We just want to remember that, you know,
• 0:57
  Speaker 2: it was such a tragic thing. But But 25 years
• 1:00
  Speaker 2: is hard to believe. But I just want to kind
• 1:02
  Speaker 2: of throw that out there. So let's get to work
• 1:06
  Speaker 2: here a little bit about the mortgage space. Some information
• 1:11
  Speaker 2: about housing right now. Let me get to some notes
• 1:15
  Speaker 2: I took on my phone. Give me just a second here.
• 1:17
  Speaker 2: The fact of the matter is, listings are up. As
• 1:20
  Speaker 2: of September 22nd, listings are up to almost 17,000 listings
• 1:21
  Speaker 2: in the area. in the MLS in the Austin area,
• 1:28
  Speaker 2: which is, I'm not sure that's a record, but if
• 1:30
  Speaker 2: it's not, it's got to be close to a record.
• 1:32
  Speaker 2: So again, people ask me, hey, Mark, is it a
• 1:34
  Speaker 2: good time to buy? And that's always a loaded question
• 1:37
  Speaker 2: because it's hard to say. We don't know because the
• 1:40
  Speaker 2: market's off about 25% from the highs of 2022 over
• 1:43
  Speaker 2: a four-year period. We've had a gradual decline of prices.
• 1:47
  Speaker 2: And so usually the old adage is to buy low.
• 1:50
  Speaker 2: And I think we're either at the bottom or we're very,
• 1:53
  Speaker 2: very close to the bottom. Having said that, I will
• 1:56
  Speaker 2: say it's a really good time to negotiate. Most contracts
• 1:59
  Speaker 2: I'm seeing these days have a lot of seller concessions,
• 2:02
  Speaker 2: but be their closing costs paid or buy-down rates, things
• 2:06
  Speaker 2: like that, especially with the builders. So I don't usually
• 2:08
  Speaker 2: compete with new home builder lenders, but if you're looking
• 2:11
  Speaker 2: for some really good deals, I would maybe look at that.
• 2:14
  Speaker 2: But always call me. If you have any questions, always
• 2:16
  Speaker 2: call me at 512-789-6967. And I'd be happy to help
• 2:23
  Speaker 2: you any way I can on that. Let's see, the
• 2:26
  Speaker 2: other good news, and this is not brand new news,
• 2:28
  Speaker 2: but I want to remind you that the state legislature
• 2:31
  Speaker 2: has raised the homestead exemption from $ 100, 000 to $ 140, 000. And
• 2:38
  Speaker 2: there's a bonus for seniors like myself. I just filed
• 2:41
  Speaker 2: a homestead exemption on a new property we purchased a
• 2:44
  Speaker 2: while back. And I get an additional.
• 2:47
  Speaker 3: $ 60, 000.
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  Speaker 2: So if you're a senior in a homesteaded property, you
• 2:51
  Speaker 2: have a $ 200, 000 deduction from the assessed value for taxes.
• 2:57
  Speaker 2: So that's really good news. And that one is fairly new.
• 3:02
  Speaker 2: And then finally, this is, again, not brand new news,
• 3:04
  Speaker 2: but I want to remind you that normally we've been
• 3:06
  Speaker 2: talking about reverse mortgages. And the traditional reverse mortgage, there's
• 3:10
  Speaker 2: a lot of different options these days. We're going to
• 3:12
  Speaker 2: talk about some of the case studies around some clients
• 3:14
  Speaker 2: I've helped recently. But the traditional loan is called the
• 3:18
  Speaker 2: HECM loan, which is a home equity conversion mortgage guaranteed
• 3:21
  Speaker 2: and insured by FHA. And that loan's been around since,
• 3:25
  Speaker 2: I think, 86, 87, somewhere in there when Reagan was
• 3:28
  Speaker 2: still president. Now, that has a cap. And the cap
• 3:31
  Speaker 2: today is $ 1, 249, 000, which means that's the most.
• 3:32
  Speaker 3: That FHA will insure.
• 3:33
  Speaker 2: So even if your property is worth $ 2 or $ 3 million,
• 3:44
  Speaker 2: and you want to get a reverse mortgage using that product,
• 3:47
  Speaker 2: the most they will insure is $ 1, 249, 000, which still is
• 3:51
  Speaker 2: a lot better than it used to be. So it's
• 3:52
  Speaker 2: still plenty of money. So let's kind of talk about
• 3:55
  Speaker 2: some case studies. Actually, some questions. I get a lot
• 3:58
  Speaker 2: of questions from either real estate agents or prospects or
• 4:03
  Speaker 2: sometimes even online. People will ask questions online or sometimes
• 4:07
  Speaker 2: from this show.
• 4:08
  Speaker 3: And one of the questions....
• 4:10
  Speaker 2: Is around if you currently, if you're a senior and
• 4:12
  Speaker 2: you have a mortgage, and I think about two-thirds of seniors,
• 4:17
  Speaker 2: maybe not that much, but about a half percent, about
• 4:19
  Speaker 2: 50% of seniors still have a current mortgage.
• 4:22
  Speaker 3: Like myself, I have a mortgage. I just talked about it.
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  Speaker 2: So if we have a mortgage, can you get a
• 4:27
  Speaker 2: reverse mortgage? And the fact of the matter is you can.
• 4:30
  Speaker 2: And I'll give you an example. I had a client
• 4:32
  Speaker 2: call me by referral from a real estate agent I know.
• 4:35
  Speaker 2: And this gentleman is 72 or 73 years old. He
• 4:38
  Speaker 2: lives in a duplex in South Austin. And he called me.
• 4:41
  Speaker 2: He said, Mark, I've got a mortgage, but I want
• 4:44
  Speaker 2: to pull out some additional money. Now, the problem is
• 4:47
  Speaker 2: in Texas, it's a strange rule in Texas. You cannot
• 4:50
  Speaker 2: do a HELOC, which is a home equity line of credit,
• 4:53
  Speaker 2: or a cash-out traditional Texas cash-out loan on a duplex,
• 4:56
  Speaker 2: even if you live there. Oddly enough, you can if
• 4:59
  Speaker 2: it's an investment property, but you can't if you live there.
• 5:03
  Speaker 3: It's a homestead.
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  Speaker 2: So that was a problem because he wanted to get
• 5:05
  Speaker 2: some money out. He had plenty of equity. He only
• 5:07
  Speaker 2: owed about $ 100, 000, but he had about $ 500, 000 in equity.
• 5:10
  Speaker 2: He said that my bank wouldn't do it. So my
• 5:12
  Speaker 2: agent told me to call you. So I said, look,
• 5:15
  Speaker 2: what I'm going to do is show you some options
• 5:17
  Speaker 2: on a reverse mortgage. He'd never heard of it, which
• 5:19
  Speaker 2: is a little surprising because it's been around a long time.
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  Speaker 2: Most people have at least heard the term reverse mortgage
• 5:24
  Speaker 2: or HECM. And I explained it to him. I showed
• 5:27
  Speaker 2: him some, I illustrated two different types of loans. One
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  Speaker 2: was this HECM, which I said, what we can do
• 5:34
  Speaker 2: is we can free up some cash flow. He needed
• 5:37
  Speaker 2: some cash and some cash flow. Things have gotten expensive.
• 5:40
  Speaker 2: He thought he was in a pretty good position to retire.
• 5:43
  Speaker 2: He has rent from the other side of the property, obviously,
• 5:46
  Speaker 2: which is always going to be rented in that area.
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  Speaker 2: And he's got some social security, a small pension, and
• 5:52
  Speaker 2: a little bit of money in the markets. But he
• 5:55
  Speaker 2: wanted to free up some cash because he didn't want
• 5:57
  Speaker 2: to move. He could have sold the property, obviously, and
• 6:00
  Speaker 2: netted $ 400, 000 or $ 500, 000. But that was not his goal.
• 6:03
  Speaker 2: The goal was to stay there. as long as he
• 6:05
  Speaker 2: possibly can. So I said, well, we can't do it
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  Speaker 2: with a HELOC or a Texas cash out, but I
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  Speaker 2: do have an option for you, which is this reverse.
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  Speaker 2: And he loved the idea of, first of all, eliminating
• 6:16
  Speaker 2: his current mortgage payment. Although he had a 3% mortgage,
• 6:20
  Speaker 2: he was very proud of that. And he didn't want
• 6:22
  Speaker 2: to talk about removing that initially. He wanted to talk about,
• 6:26
  Speaker 2: but he also wanted some cash. I said, well, what
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  Speaker 2: we can do, and this is a fairly new strategy,
• 6:31
  Speaker 2: we can do a second lien reverse mortgage, where he
• 6:35
  Speaker 2: could borrow $ 50, 000 or $ 75, 000 or $ 100, 000 as an example,
• 6:39
  Speaker 2: and he wouldn't have to pay that money back. Now,
• 6:41
  Speaker 2: he'd have to pay his first mortgage back because that's
• 6:43
  Speaker 2: the way that's when structured. But it'd free up some
• 6:45
  Speaker 2: cash for him to do other things. He said, I
• 6:47
  Speaker 2: really want to travel. I want to put a little
• 6:49
  Speaker 2: more money in the market. And so we talked about
• 6:53
  Speaker 2: that initially. That was a pretty good idea. But then
• 6:55
  Speaker 2: I showed him the HECM loan. I said, look, we
• 6:57
  Speaker 2: can eliminate Your current mortgage, you won't have a mortgage. Now,
• 7:01
  Speaker 2: the interest will accrue, of course, as we talked about that,
• 7:04
  Speaker 2: at 6.5%, not 3 that he's currently at. But that
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  Speaker 2: frees up $ 1, 300 a month for him, which is significant.
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  Speaker 2: I mean, that pays his taxes and insurance and utilities
• 7:15
  Speaker 2: and a lot of different things. Or he said, you know,
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  Speaker 2: in three months, that's $ 5, 000 I will not have spent
• 7:22
  Speaker 2: on my mortgage payment. I could use that to travel
• 7:24
  Speaker 2: or take a long vacation or something like that. So,
• 7:28
  Speaker 2: and I said, in addition to that, in addition to
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  Speaker 2: eliminating the mortgage, we're going to put you on another,
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  Speaker 2: because of your equity position and age, $ 100, 000 for a
• 7:38
  Speaker 2: line of credit. And he thought that was wonderful. He
• 7:41
  Speaker 2: didn't really need all that money, but I said, if
• 7:43
  Speaker 2: you don't need it today, you may need it next
• 7:45
  Speaker 2: year in five years or 10 years. And by then
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  Speaker 2: that line of credit will have grown to several hundred
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  Speaker 2: thousand dollars. So he really liked that.
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  Speaker 3: That's what we did.
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  Speaker 2: So, um, And the other question, he said, can I
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  Speaker 2: use the money to pay off debt? And the answer is,
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  Speaker 2: of course you can. Now, they don't allow you to
• 8:00
  Speaker 2: bring your debt to closing to pay it off, but
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  Speaker 2: they don't tell you what you can or cannot do
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  Speaker 2: with the money. So he did have some credit card debts,
• 8:08
  Speaker 2: some unsecured debt, of course, high rates that he wanted
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  Speaker 2: to eliminate. And the reverse mortgage was the best option
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  Speaker 2: for that as well.
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  Speaker 3: So that's what we did.
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  Speaker 2: He was very pleased. And he even referred me a
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  Speaker 2: couple of his friends, his girlfriends, as a matter of fact,
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  Speaker 2: owns a home in Oak Hill, paid for. So we're
• 8:22
  Speaker 2: talking to her about a reverse mortgage. The other one is,
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  Speaker 2: can the bank take my house if I have a reverse?
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  Speaker 2: In other words, will the bank take title of the property?
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  Speaker 2: That was a fear for a friend of mine's grandmother.
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  Speaker 2: She let me speak with her grandmother. We haven't actually
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  Speaker 2: done anything yet, but I think we will because she's
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  Speaker 2: in a position, she's 89 years old, and she's in
• 8:45
  Speaker 2: a place where she's got a home paid for her,
• 8:47
  Speaker 2: worth about $ 300, 000, maybe a little bit more. We haven't
• 8:50
  Speaker 2: appraised it yet, but that's kind of what we're guessing.
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  Speaker 2: Been there a long time, wants to age in place,
• 8:55
  Speaker 2: doesn't want to go to a retirement home, but she
• 8:57
  Speaker 2: does need some skilled nursing. She needs somebody to come
• 8:59
  Speaker 2: in every day or every other day to, you know,
• 9:01
  Speaker 2: help her with the basics, maybe bathing or cooking meals
• 9:04
  Speaker 2: or something like that. She gets around pretty good, but
• 9:07
  Speaker 2: she can't, she's not driving any longer. But anyway, the
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  Speaker 2: point is she thought because of some, um, bad publicity
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  Speaker 2: over the years that the bank, whoever does the loan
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  Speaker 2: on a reverse will take title. I said, no, ma'am,
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  Speaker 2: you'll always own the home. And here's the reason why,
• 9:22
  Speaker 2: because she has some property up, I think in Bertram
• 9:27
  Speaker 2: or Burnett, worth about a million dollars that she's selling.
• 9:30
  Speaker 2: It's like a small farm and it's on the market
• 9:33
  Speaker 2: for sale. But she doesn't have the money to take
• 9:36
  Speaker 2: care of the skilled nursing today. She's got about six
• 9:38
  Speaker 2: months of reserves left to make it. I said, we
• 9:41
  Speaker 2: can free up a line of credit that you can
• 9:43
  Speaker 2: use until that ranch sells and you're able to pay
• 9:48
  Speaker 2: this thing off and go back to no mortgage. This
• 9:51
  Speaker 2: will give you some breathing room for at least six
• 9:53
  Speaker 2: months or a year, however long it takes. And she
• 9:56
  Speaker 2: liked that idea. Again, we haven't signed it up, but
• 9:58
  Speaker 2: I think think she will probably pull the trigger on
• 10:02
  Speaker 2: that because she's going to be out of money here
• 10:03
  Speaker 2: pretty quick. And the family really doesn't. They can help,
• 10:06
  Speaker 2: of course, and they will if needed. But they have
• 10:09
  Speaker 2: their own lives and their own responsibilities around money. And
• 10:13
  Speaker 2: so we'll see what happens there. I'll let you know.
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  Speaker 2: But that's a very common misconception. We've talked about that before.
• 10:20
  Speaker 2: But I want to kind of repeat things sometimes because
• 10:23
  Speaker 2: people learn, I think, by repetition. But nobody's going to
• 10:27
  Speaker 2: take title. You can do anything you want with your property.
• 10:29
  Speaker 3: You still own it.
• 10:29
  Speaker 2: It's just a mortgage. It's just a different structured loan
• 10:31
  Speaker 2: for seniors. That's really all it is. It's like a
• 10:34
  Speaker 2: line of credit that you don't have to pay back.
• 10:37
  Speaker 2: It's an option to pay back.
• 10:38
  Speaker 3: Eventually, you will.
• 10:39
  Speaker 2: And the rule around that, of course, is once you
• 10:42
  Speaker 2: leave the property, either pass away or Or if you
• 10:45
  Speaker 2: were to move and buy another property, you would have
• 10:47
  Speaker 2: to pay this one off within a year. Or if
• 10:51
  Speaker 2: you had to go to a retirement home, anytime you
• 10:54
  Speaker 2: leave the property permanently, you're going to have to pay
• 10:57
  Speaker 2: it off within a year. That's the rule. You can't
• 10:59
  Speaker 2: rent it out. So that's the, if you will, downside
• 11:02
  Speaker 2: to this kind of loan. Now, another question is, can
• 11:08
  Speaker 2: I use a reverse mortgage to buy another property? The
• 11:12
  Speaker 2: answer is yes and no. I've got a client of
• 11:15
  Speaker 2: mine who's got a lot of equity. He's got a
• 11:18
  Speaker 2: lot of money, matter of fact. But he said, look, Mark,
• 11:21
  Speaker 2: I've got $ 2 million sitting here, and I'm not going anywhere.
• 11:25
  Speaker 2: He lives in Westlake. He's got a great home. He's
• 11:27
  Speaker 2: been there for a long time. He's retired, but he's
• 11:29
  Speaker 2: young retired. He's 69 probably. And he says, hey, what
• 11:35
  Speaker 2: can I do? I said, well, you can get a
• 11:37
  Speaker 2: HELOC if you wanted to. He said, well, I'm pretty
• 11:41
  Speaker 2: much debt-free, and I really don't want any payments on anything.
• 11:43
  Speaker 2: I said, well, I have another solution. And I showed
• 11:47
  Speaker 2: him this reverse option. I said, look, we can get $ 500, 000
• 11:50
  Speaker 2: or approximately $ 500, 000 out.
• 11:52
  Speaker 3: Of your home.
• 11:53
  Speaker 2: And he wanted to leverage the money because it's just
• 11:56
  Speaker 2: sitting there. It's what we call debt equity. He realized that.
• 11:59
  Speaker 3: He's a smart guy.
• 11:59
  Speaker 2: And he went out and bought a duplex for about $ 500, 000,
• 12:06
  Speaker 2: a little bit less.
• 12:06
  Speaker 3: So he had a little cash left over.
• 12:09
  Speaker 2: But that's throwing off about almost $ 4, 000 a month in rents. So,
• 12:14
  Speaker 2: of course, you've got tax and insurance to pay, but
• 12:16
  Speaker 2: let's say he's netting $ 2, 500 or $ 2, 800 a month, and
• 12:20
  Speaker 2: he doesn't have to pay back the reverse. So he's
• 12:23
  Speaker 2: replacing some of his equity with a new asset that's
• 12:26
  Speaker 2: going to be appreciating over the next several years that
• 12:29
  Speaker 2: he can also leave to his kids. People are all,
• 12:32
  Speaker 2: a lot of times, all freaked out because I say, well,
• 12:35
  Speaker 2: what if I won't have enough equity to give them
• 12:38
  Speaker 2: my kids? I said, well, that could be true. I mean,
• 12:40
  Speaker 2: it very well could be true down the road. But
• 12:44
  Speaker 2: if you use it wisely, you're going to have maybe
• 12:46
  Speaker 2: more assets over here, either in the stock market or
• 12:49
  Speaker 2: real estate or life insurance premiums. I had one client
• 12:52
  Speaker 2: take a bunch of money out and buy a big
• 12:54
  Speaker 2: whole life policy, single premium life insurance policy for like
• 12:58
  Speaker 2: $ 2 million. I said, there's your kid's inheritance. He said, yeah,
• 13:01
  Speaker 2: you're right. Now I can go have fun. I said,
• 13:04
  Speaker 2: Knock yourself out. So those are different strategies you can
• 13:08
  Speaker 2: do with reverse mortgages. But the fact of the matter
• 13:09
  Speaker 2: is nobody's going to take your home. You can use
• 13:12
  Speaker 2: the money to invest in other places. But you can't
• 13:18
  Speaker 2: use the money from reverse to buy another home and
• 13:21
  Speaker 2: go live in it. Now, what you can do if
• 13:23
  Speaker 2: you were to sell a property is you can use
• 13:26
  Speaker 2: a reverse mortgage to buy another property and not have
• 13:29
  Speaker 2: a mortgage payment. And we're starting to see more and
• 13:32
  Speaker 2: more people kind of lean toward that because they're realizing, look,
• 13:36
  Speaker 2: I'm 70 years old and I don't have enough cash
• 13:39
  Speaker 2: really to buy the property that I want to buy.
• 13:41
  Speaker 2: I could buy a lesser property, not tax-free, but mortgage-free,
• 13:46
  Speaker 2: or I could step it up maybe another $ 200, 000 or $ 300, 000
• 13:49
  Speaker 2: with one of these reverse mortgages and still not have
• 13:51
  Speaker 2: a mortgage payment. Because what I'm realizing, experiencing it at
• 13:56
  Speaker 2: my ripe old age of 67. I'll be 67 October 23rd.
• 14:00
  Speaker 2: So put that in your calendar, put that in your pipe.
• 14:04
  Speaker 2: And so we're, you know, starting to see things get,
• 14:07
  Speaker 2: you know, everything is more expensive than it was 10
• 14:09
  Speaker 2: years ago. Of course, that's the way it works. So anyway,
• 14:13
  Speaker 2: that's a couple of options there. Another one is, can I,
• 14:17
  Speaker 2: what if I outlive the money from a reverse mortgage?
• 14:20
  Speaker 2: And this is, this can be a problem. And I
• 14:23
  Speaker 2: want to share a story with you guys on a client.
• 14:26
  Speaker 2: I just closed this week. As a matter of fact,
• 14:29
  Speaker 2: she was referred to us by some investors. We know,
• 14:31
  Speaker 2: you know, we know some people who like to buy
• 14:34
  Speaker 2: properties and fix them up and flip them and make
• 14:36
  Speaker 2: a profit. And we have a network of those friends and,
• 14:41
  Speaker 2: and they usually find people who are distressed either in
• 14:45
  Speaker 2: foreclosure proceedings or behind on their mortgage or whatever. And
• 14:50
  Speaker 2: they try to negotiate a deal with them and take
• 14:53
  Speaker 2: over the properties. Well, This one referral came from an
• 14:57
  Speaker 2: investor friend, and she felt sorry for this person. And
• 15:01
  Speaker 2: she said, look, I'm not trying to buy your home.
• 15:04
  Speaker 2: I want you to refer you to Mark and his wife, Shara,
• 15:08
  Speaker 2: because the lady needed money. She had lost her job.
• 15:11
  Speaker 2: She was still working at 70. She was almost 80
• 15:13
  Speaker 2: years old. She was still working.
• 15:15
  Speaker 3: And so she was.
• 15:15
  Speaker 2: Behind on her mortgage. As a matter of fact, friends
• 15:17
  Speaker 2: from church were helping her out to the tune of
• 15:19
  Speaker 2: around $ 20, 000 by the time we got to her. So
• 15:23
  Speaker 2: she still had a mortgage on her property. And so,
• 15:26
  Speaker 2: but she didn't have much income. And so what happened,
• 15:30
  Speaker 2: we were to close on that deal. And because her
• 15:33
  Speaker 2: credit wasn't very good because she was behind on her mortgage. Well,
• 15:36
  Speaker 2: she wasn't behind at the time because the friends had
• 15:39
  Speaker 2: stepped up to help her. But her credit wasn't very good.
• 15:43
  Speaker 2: And she loved her cats. She had like six cats.
• 15:46
  Speaker 2: I guess that's where all her money was, was the cats.
• 15:49
  Speaker 2: But so we were able to roll in what's called
• 15:53
  Speaker 2: a LESA, L-E-S-A, which is a life expectancy set-aside, where
• 15:59
  Speaker 2: the lender will calculate approximately what your tax insurance is
• 16:04
  Speaker 2: going to be for the next 15 years or 20
• 16:06
  Speaker 2: years or whatever it is, however much we can get you.
• 16:10
  Speaker 2: And then they will pay those every year for you.
• 16:12
  Speaker 2: So she doesn't have a mortgage payment, obviously, and she
• 16:15
  Speaker 2: won't be paying her taxes or insurance as long as
• 16:17
  Speaker 2: she lives in that property. So she liked that idea.
• 16:20
  Speaker 2: And we were able to free up a little more
• 16:22
  Speaker 2: cash for her because of her equity. But the appraisal
• 16:25
  Speaker 2: came in a little lower than we had hoped.
• 16:27
  Speaker 3: So we weren't able to give her as much as
• 16:29
  Speaker 3: she wanted.
• 16:29
  Speaker 2: But at least it freed her up to give her
• 16:32
  Speaker 2: some peace of mind that she can stay in her property.
• 16:35
  Speaker 2: And she actually is going to be looking for probably
• 16:37
  Speaker 2: a part-time job. Now, the problem is, and I told her,
• 16:42
  Speaker 2: I said, look, if you outlived your 95 years old,
• 16:46
  Speaker 2: if you lived longer than 95 years, She doesn't think
• 16:50
  Speaker 2: she will, but that's only 16 more years. Then the lease,
• 16:56
  Speaker 2: it's out of money because that's all we could get
• 16:59
  Speaker 2: her as far as the loan went. So she would
• 17:02
  Speaker 2: then be responsible for taxes and insurance at that point
• 17:05
  Speaker 2: if she lived to 95. Now, who knows what's going
• 17:07
  Speaker 2: to happen in the next 16 years, but I did
• 17:09
  Speaker 2: warn her about that. She was very clear. She's a
• 17:11
  Speaker 2: very sharp woman. So the fact of the matter is
• 17:16
  Speaker 2: we couldn't do it forever, but we could do it
• 17:18
  Speaker 2: for a long time. And she was happy enough with that.
• 17:20
  Speaker 2: She said, well, I probably won't be around 16 years.
• 17:22
  Speaker 3: Anyway, that's the risk.
• 17:26
  Speaker 2: And that is one of the problems that people say, well,
• 17:30
  Speaker 2: these reverse mortgages are going to, you know, they have
• 17:32
  Speaker 2: a high rate of foreclosure. The fact of the matter
• 17:34
  Speaker 2: is they don't foreclose on you. The lender's not going
• 17:37
  Speaker 2: to foreclose you. What's going to be the problem is
• 17:40
  Speaker 2: the county could foreclose on you if you're not paying
• 17:42
  Speaker 2: the taxes or the insurance could force you to pay
• 17:45
  Speaker 2: insurance or force you out. So those are the reasons
• 17:48
  Speaker 2: people get foreclosed on a reverse mortgage, not because they
• 17:50
  Speaker 2: have a reverse mortgage. The bank's not going to do
• 17:52
  Speaker 2: it because you don't owe them anything until you leave
• 17:55
  Speaker 2: the property. So anyway, I like to clear that one up.
• 18:00
  Speaker 3: Let's see.
• 18:01
  Speaker 2: Another one is, what happens if I have to move
• 18:04
  Speaker 2: into a nursing home? Now, that's planning ahead. Now, I
• 18:11
  Speaker 2: have some clients that didn't plan ahead. It was a
• 18:13
  Speaker 2: client of mine, a younger man, called me, said, man, my...
• 18:17
  Speaker 2: My in-laws are in trouble. They're struggling because he has
• 18:24
  Speaker 2: to go into memory care. The husband, he's still living.
• 18:27
  Speaker 2: So he still has some income from Social Security and
• 18:29
  Speaker 2: a little bit of pension money. But otherwise, they can't
• 18:34
  Speaker 2: afford the nursing home. That's the problem. They don't have
• 18:37
  Speaker 2: long-term care insurance. And I'm footing the bill right now,
• 18:40
  Speaker 2: and I don't want to do that for very much longer.
• 18:41
  Speaker 3: It's like $ 6, 000 a month.
• 18:43
  Speaker 2: So you can, as long as a spouse, in his case,
• 18:47
  Speaker 2: if he was a single man or a widow or
• 18:49
  Speaker 2: a widower and they had to move to a nursing home, again,
• 18:53
  Speaker 2: you're going to have to sell the property because, you know,
• 18:56
  Speaker 2: or deed it to your kids and they can maybe
• 18:58
  Speaker 2: refinance it. But the loan has to be paid off.
• 19:01
  Speaker 2: In his case, they don't have to pay it off
• 19:03
  Speaker 2: because the mother, the wife, I should say, is still
• 19:05
  Speaker 2: living in that home and she's in pretty good health.
• 19:08
  Speaker 2: So we're freeing up some cash to cash flow out
• 19:11
  Speaker 2: some of the equity in order to pay for the
• 19:13
  Speaker 2: husband's care, they don't think he'll probably make it another
• 19:15
  Speaker 2: couple years.
• 19:15
  Speaker 3: And there's plenty enough.
• 19:16
  Speaker 2: Money in that loan to keep him in his care home.
• 19:23
  Speaker 2: So that's another way that people use this type of loan.
• 19:31
  Speaker 2: And what if my home needs repairs? That's another question
• 19:34
  Speaker 2: that comes up. And that's a good question because we
• 19:36
  Speaker 2: can't do this loan unless your house is in fairly
• 19:39
  Speaker 2: good condition. As a matter of fact, the lady with
• 19:41
  Speaker 2: the cats, we had to, I didn't say we, not me.
• 19:46
  Speaker 2: She went to the city of Zinroun Rock. has some–
• 19:51
  Speaker 2: and I don't know exactly how this works because it
• 19:52
  Speaker 2: wasn't really a loan.
• 19:53
  Speaker 3: It was more of a grant.
• 19:55
  Speaker 2: But they gave– she needed some work on her home.
• 19:57
  Speaker 2: The roof was in bad shape. Some of the plumbing
• 19:59
  Speaker 2: was in bad shape. So at that point, we couldn't
• 20:01
  Speaker 2: get her a mortgage because it wasn't habitable, if you will.
• 20:05
  Speaker 2: So there's guidelines on condition of property too. They're not
• 20:07
  Speaker 2: going to loan on a property that needs a lot
• 20:09
  Speaker 2: of work. And so the city of Austin, city of
• 20:13
  Speaker 2: Round Rock or Williamson County or somebody had a $ 20, 000
• 20:16
  Speaker 2: grant that she was qualified for because of her income status.
• 20:19
  Speaker 2: And she was able to fix the property up. We
• 20:21
  Speaker 2: got it appraised and we closed the loan. So otherwise
• 20:25
  Speaker 2: you can do that yourself. I had one borrower who
• 20:27
  Speaker 2: lived in a nice home, but an older home and
• 20:30
  Speaker 2: built in the probably late seventies. And he was able
• 20:34
  Speaker 2: to access about a hundred. He said, I want to
• 20:35
  Speaker 2: stay in my home, but I don't want to go
• 20:36
  Speaker 2: out and get a home improvement loan or a mortgage
• 20:39
  Speaker 2: or whatever. I said, well, we can do a reverse mortgage.
• 20:42
  Speaker 2: You can access $ 100, 000, actually more, but that's all he needed.
• 20:46
  Speaker 2: He said that's going to make it nice. He fixed
• 20:48
  Speaker 2: it all up, and he's not having to make a
• 20:50
  Speaker 2: mortgage payment on that loan because it's a reverse mortgage.
• 20:54
  Speaker 2: So he's very happy about that. As a matter of fact,
• 20:57
  Speaker 2: I had a friend of mine call me, and this
• 20:59
  Speaker 2: has changed the subject a little bit, but how people
• 21:02
  Speaker 2: can buy homes with a reverse mortgage. We talked about
• 21:04
  Speaker 2: this a second ago, but a friend of mine, an
• 21:07
  Speaker 2: old friend of mine, I hadn't talked to him in
• 21:08
  Speaker 2: probably five or six years.
• 21:09
  Speaker 3: She called me. Her name is Sandy.
• 21:11
  Speaker 2: She said, Mark, I was listening to your radio show,
• 21:13
  Speaker 2: and the fact of the matter is I bought a
• 21:15
  Speaker 2: home using reverse mortgage back in 2018 or 2019, somewhere
• 21:20
  Speaker 2: in there. She said, I retired from the state. I
• 21:22
  Speaker 2: knew it through real estate. She did sell a little
• 21:24
  Speaker 2: real estate back in the day. And she said, you know,
• 21:27
  Speaker 2: I've got money in the markets, but I wanted to
• 21:29
  Speaker 2: buy a home, and I didn't want to pay cash
• 21:31
  Speaker 2: for it. And so I used reverse. It's the best
• 21:33
  Speaker 2: decision I ever made. I should have her on the show,
• 21:35
  Speaker 2: as a matter of fact.
• 21:37
  Speaker 3: I may call her.
• 21:38
  Speaker 2: And I've had a lot of, I say a lot,
• 21:40
  Speaker 2: two or three other friends over the years who happen
• 21:42
  Speaker 2: to be realtors. Realtors, they understand this product, really appreciate it.
• 21:46
  Speaker 2: And both of them had bought homes, one in Bastrop
• 21:48
  Speaker 2: and one in Kyle, using reverse mortgage because they understand
• 21:51
  Speaker 2: the mechanics of it and how it works. It's not
• 21:53
  Speaker 2: a scary thing once you learn about it. So, and
• 21:57
  Speaker 2: with that said, I've got a few minutes here. With
• 21:58
  Speaker 2: that said, I'm really excited. I'm wrapping up the final
• 22:02
  Speaker 2: edits of my book coming out. And I hope to
• 22:05
  Speaker 2: have that on the shelves, on at least Amazon shelves,
• 22:08
  Speaker 2: I should say, in the next, I don't know, three
• 22:11
  Speaker 2: or four weeks, something like that. And the book is,
• 22:14
  Speaker 2: I finally said on the name, thanks to the help
• 22:16
  Speaker 2: of some of the people here on the audience, it's
• 22:19
  Speaker 2: called The Gold Mine in Your Backyard. Because people don't
• 22:22
  Speaker 2: realize that a lot of their net worth, and they
• 22:26
  Speaker 2: may realize it, but they don't realize what they can
• 22:28
  Speaker 2: do with it. So, it's really 69 or 70 sort
• 22:32
  Speaker 2: of questions, scenarios, some of the things we talk about
• 22:34
  Speaker 2: on the show, um, examples of people who use this
• 22:37
  Speaker 2: and other questions that we cover in the book. That's
• 22:39
  Speaker 2: where I get a lot of this material. These are
• 22:41
  Speaker 2: things that people ask me over the time, or I've
• 22:43
  Speaker 2: done my own research. I had my own questions around it,
• 22:45
  Speaker 2: you know, cause I've heard about this product for years
• 22:48
  Speaker 2: being the mortgage space, but I didn't know much about
• 22:50
  Speaker 2: it until a few years ago. And I started really
• 22:52
  Speaker 2: doing a lot of deep research on it. And I
• 22:53
  Speaker 2: think it's a great option for a lot of people,
• 22:55
  Speaker 2: not for everybody, but for a lot of people. Um,
• 23:00
  Speaker 2: Can a lender change the terms? And there's two things
• 23:03
  Speaker 2: I want to talk about is fees real quick. We've
• 23:05
  Speaker 2: got a couple minutes. Now, here's another question. Can these
• 23:10
  Speaker 2: fees be negotiated? Because I tell people all the time
• 23:13
  Speaker 2: when they're going out to get a mortgage, even if
• 23:16
  Speaker 2: you don't choose me, I will help you negotiate different costs.
• 23:19
  Speaker 2: I know where the hidden costs are on mortgages. I mean,
• 23:23
  Speaker 2: what they call junk fees. Now, some fees are not
• 23:26
  Speaker 2: junk fees. Some fees have to be paid. The attorney
• 23:29
  Speaker 2: is going to be paid for sure. The recording people
• 23:31
  Speaker 2: at the county survey, if possible, appraisal. Those are fees
• 23:35
  Speaker 2: you normally can't negotiate with the lender. Now, you can
• 23:38
  Speaker 2: negotiate with the seller to pay them, but not the lender.
• 23:41
  Speaker 2: But there are fees you can negotiate with the lender.
• 23:44
  Speaker 2: As a matter of fact, The lady, one of the
• 23:47
  Speaker 2: clients I've been talking about, we negotiated our fee down,
• 23:50
  Speaker 2: our origination cost or fee, because we wanted to help
• 23:54
  Speaker 2: her get a little more money. We do this for
• 23:57
  Speaker 2: a living, obviously, but we also do it because I
• 24:00
  Speaker 2: think it's important to help people. So my wife and I,
• 24:03
  Speaker 2: I should say, we waived about, I think it was
• 24:05
  Speaker 2: around $ 4, 000 or $ 3, 500 from a closing fee. And those
• 24:10
  Speaker 2: are fees that you can negotiate with a reverse mortgage
• 24:13
  Speaker 2: lender or any lender, some of the origination cost of
• 24:17
  Speaker 2: these loans. Now, if you get a HECM, they're going
• 24:20
  Speaker 2: to be more expensive. They're, I think, a better product,
• 24:22
  Speaker 2: but they do cost a lot because of the insurance
• 24:25
  Speaker 2: premium that some of the proprietary loans won't have, which
• 24:27
  Speaker 2: is 2% of the value of the property. So in
• 24:30
  Speaker 2: her case, the 2% came to around $ 7, 000. She couldn't
• 24:34
  Speaker 2: waive that if she wanted to get the loan. Now,
• 24:36
  Speaker 2: some of the proprietary products that we've talked about don't
• 24:39
  Speaker 2: have origination fees or they don't have any insurance premiums
• 24:42
  Speaker 2: because they're not a government-backed loan.
• 24:45
  Speaker 3: They're not insured.
• 24:46
  Speaker 2: So that's something to consider as well, the cost of
• 24:50
  Speaker 2: these loans. But again, if you're talking to your bank
• 24:54
  Speaker 2: who may do a reverse mortgage, probably not. Most banks
• 24:57
  Speaker 2: aren't in that business.
• 25:00
  Speaker 3: But they could be.
• 25:00
  Speaker 2: I'm not saying they're not or anybody that you're talking to.
• 25:03
  Speaker 2: and you want a second opinion, let me know, because
• 25:06
  Speaker 2: they're not all the same. They're going to be close
• 25:08
  Speaker 2: to the same because there's only a few markets out
• 25:11
  Speaker 2: there that actually do these well. When I say markets,
• 25:15
  Speaker 2: there's a few lenders around the country who do them
• 25:17
  Speaker 2: very well.
• 25:18
  Speaker 3: But you have to go through a broker.
• 25:20
  Speaker 2: Like myself or another lender in order to access the
• 25:23
  Speaker 2: reverse mortgage. You can't go to the federal government. They're
• 25:25
  Speaker 2: not going to lend the money to you. What happens
• 25:29
  Speaker 2: during a market housing crash? That's another one that kind
• 25:32
  Speaker 2: of comes around. The fact of the matter is we're
• 25:34
  Speaker 2: not really crashing.
• 25:35
  Speaker 3: We have had a severe correction.
• 25:37
  Speaker 2: But I'm telling people I'm looking at one to two,
• 25:40
  Speaker 2: maybe 3% when I start looking at assumptions of value
• 25:43
  Speaker 2: down the road. A common one in Austin, Texas is 4%,
• 25:47
  Speaker 2: 4% appreciation.
• 25:49
  Speaker 3: And we may see those days again, but I think
• 25:50
  Speaker 3: it's going to be a few years.
• 25:51
  Speaker 2: So when I'm analyzing these properties for these loans, I'm
• 25:55
  Speaker 2: saying I want to use a 2% appreciation. I don't
• 25:57
  Speaker 2: want to be too aggressive in that and say something
• 26:00
  Speaker 2: that's probably not going.
• 26:01
  Speaker 3: To be true down the road. Now, I could be wrong.
• 26:04
  Speaker 2: We've seen inflation and we've seen appreciation in 10%, 15%
• 26:09
  Speaker 2: some years. But I want to be very conservative. I'm
• 26:12
  Speaker 2: thinking 2% to 3%, max 3%. But again, in a
• 26:14
  Speaker 2: market crash, you'll never You'll never be responsible if your
• 26:23
  Speaker 2: loan amount is higher than the value of your property.
• 26:25
  Speaker 2: They'll never come back. It's a non-recourse loan. So if
• 26:27
  Speaker 2: you owe a million dollars and your property is worth
• 26:29
  Speaker 2: half a million dollars, the $ 500, 000 is waived.
• 26:32
  Speaker 3: Nobody will be responsible for that. So I hope that helps.
• 26:35
  Speaker 2: If you've got any questions, call me, please, at 512-789-6967
• 26:38
  Speaker 2: or mark at markhairston.com, H-A-I-R-S-T-O-N, mark at markhairston.com. Until next time,
• 26:48
  Speaker 2: have a great weekend and hook them horns.
• 26:51
  Speaker 1: This has been Mortgage Talk with Mark Hairston. Mark is
• 26:54
  Speaker 1: a mortgage advocate with Texas Mortgage Source LLC, offering personalized
• 26:59
  Speaker 1: mortgage solutions, fast customized quotes, great rates and service with integrity.
• 27:05
  Speaker 1: Contact Mark at MarkHairston.com. MarkHairston.com. You can call or text
• 27:11
  Speaker 1: Mark at 512-789-6967.
• 27:11
  Speaker 3: That's 512-789-6967. And come back next week for more Mortgage Talk.