Want to understand flexible mortgages? Our video this week offers great advice about how they can help you, especially if you’re a first-time home buyer. Check it out even if you’ve bought a house or two; you still might learn something!
Hello. Hello. Hello. Hello peeps. Right in my ear. Yikes. Her good ear. Yep. I am deaf in one ear. So, he’s got my good ear. So, I’m hearing it. That’s why I always sit on the side through every cell of my ear. My whole life is on my wife’s life. Anyway, sometimes my cells don’t want to hear it, but it’s it is what it is. Okay. (00:27) So, we’re here today and we’re happy to be here. Uh Randall and I are your friendly husband and wife pickle team, realtor team here in Prescuit and we love to come to you weekly with crazy little videos and thoughts and things that pop in our head as we’re driving along and we say let’s share that with our folks out there listening. This is a good one. (00:48) This is a good tip. Yep. This is a good one. This is a good tip. So this is about something they’re calling a I call it a flex mortgage. Mhm. Uh, you got to be careful with lending because there are all kinds of regulations. I don’t know if I’m allowed to call it a flex mortgage. (01:07) I know it’s okay to call it a lifestyle home loan because at least somebody who seems to be certified will do that. But I wanted to I wanted to mention this to uh to you guys because most people who are in our sort of sort of either retired or getting ready retired, you should know about this stuff. This will change your life and uh for the better. (01:32) And this is what I call a flex mortgage. So, a flex mortgage is a mortgage where if you don’t want to pay the note for a month, you can just skip it. That’s a flex mortgage. Pretty cool. Yeah. If you want uh let’s say you’ve you for whatever reason, let’s say there’s been a disease and all of a sudden real estate real estate prices are through the roof. (01:55) Now, you have more equity than you ever thought you want and you’re thinking, “If only I could tap into that equity.” You could do that with a flex mortgage. Okay. Uh or a a lifestyle home home loan, whatever they want to call them. The the short answer is this is what they used to call a reverse mortgage. Now stay with us. (02:15) Stay calm because I know as as soon as I say reverse mortgage, people are like, “Oh no, oh no, oh no, I can’t bear it. I can’t can’t bear it. Can’t think about it.” It is a It is a new and improved product. New improved product. It’s not like the old time. Not like the old time. The very first thing you need to understand about the new flex, whatever you want to call it, we call it flex mortgage. (02:39) Okay? Uh the the very first thing you need to understand is that there is no repossession if you run out. All right? So, let me let me back up for those of you who don’t know what a reverse mortgage is. So if you if if you have a mortgage, so you if you are paying your notes, you’re paying a bit of interest and you’re paying a bit of equity early on. (03:04) You’re paying mostly mostly interest. As time goes on, you’re paying equity and you’re paying some interest until finally you’re done. Uh at the end, you’re paying almost all equity until it’s gone. That is a traditional mortgage. With a reverse mortgage, if you don’t pay the let’s say you don’t pay the note on a particular a particular month, well, what they’ll do is they’ll take the money that they thought you were going to pay and they will uh the the equity doesn’t change. (03:36) The equity component doesn’t change because you didn’t pay the equity component, but the interest component they didn’t pay. They’ll take out of your equity. So your equity will start going down. It the longer you do that, the the more your equity will go down. So that’s a reverse mortgage. It used to be that when you ran out of equity, they would kick you out of your home. (03:59) The first thing to know is that doesn’t happen anymore. Not at all. No. The reverse mortgages are now done through FHA and the new rules are they can’t kick you out of your home if you go through all of your equity. all of your equity. Can they kick me out of my home? No, they can’t. Okay. So, you know, I I wasn’t born yesterday, so I raised my hand and I said, “Okay, what about the spouse?” Oh, no. (04:28) The spouse gets to stay there. So, if you pass away, your spouse can still stay in the not kicked out. I said, “Yeah, but you don’t know this spouse. You don’t know this spouse. this guy, he’s uh he’s about 85 and uh he his wife passed away a few years ago and um you know he was sad for a while and then he lost his mind and he remarried. (04:55) So he’s 85, she’s 25. And we’re not talking about what’s that what’s that football coach? Oh, I don’t No, that you know who I’m talking about is Belch or I don’t know sports. I’m totally teased on that, but this is we’re not this is not his story. This is completely hypothetical. So, I got a guy, he’s now 85. (05:17) He lost his mind the last few years after his wife died. He married a girl who’s 25 years old. Yep. Okay. So now, and they have one of these mortgages and he dies. How long can she stay in the home? Yep. The answer is until she dies or she wants to get out of the house, right? If she wants to sell the house, you know, well, okay, that’s a different thing. (05:42) She’s not going to get as much for the equity when she But if she wants to just stay in the house for as long as she may live, and chances are she’s going to outlive him, uh, I mean, she’s going to die at an age more than him. That might be 90 years. Yep. They are on the hook. That’s the way the FHA works. That’s right. (06:01) So, the first thing you need to know is they can’t kick you out of your home. So, yeah. So, if you run through all of your equity, say you have a house uh 800,000 and you have $700,000 worth of equity, 800, you know, or 600,000 and you keep on drawing on that, keep drawing on it and doing this new flex loan. Yeah. (06:19) And you run out of equity. Yep. You’re there. You’re there. You’re not kicked out. They cannot kick you out of your They cannot grab your house from you. Uh if you marry a young person, that’s right. They can’t kick her out or him out as the case where may be. They can’t kick the spouse out until the spouse either dies or wants to sell the house. Yeah. (06:42) It’s kind of kind of a cool product. Uh some people uh are afraid to go through their nest egg. They like to have that nest egg and they’re like, well, you know, so this could be another another avenue of not touching that nest egg and just using the equity in your home. Let me play out a typical scenario with a typical mortgage. (07:03) So, you have a couple, they buy a home with a standard mortgage, they’re in their 60s. Uh, you know, they have planned for their retirement and everything, but life happens. And so, now they’re in their 80s and uh they they have not really maintained the home well. They don’t have money to uh do the maintenance on the home. uh they struggle to make the mortgage payment every month, right? And we see this a lot because if they if they don’t, they know they’re evicted, right? Uh so they’re scrimping and they’re saving until finally it let their late (07:40) 80s let’s say uh they finally pass at which point the home goes to their children and their children immediately sell the home at you know 60 70 cents on the dollar at a big loss because of all the deferred maintenance because of all the deferred maintenance and everything else. Nobody wants to live there. (08:01) Nobody wants mom’s, you know, china cabinets and all that other kind of stuff. So, they immediately want to sell. It’s it’s sold at a discount anyway and then they take the proceeds and they divvy it up. Yep. Well, with a reverse mortgage, what would happen is the same sort of thing. They would they would, you know, inherit the home or at least the equity. (08:24) Uh they would sell the home and it would net out. They would not have scrimped and saved. They would have used some of the equity to maintain the home. Yep. So it would it would command a better price when they sell it. It would be in better shape and they wouldn’t have stressed. And in the end, their children may end up with maybe a few extra a few less dollars, but maybe not because they’ve maintained the home the way that it should. (08:54) It it kind of plays out a lot better in the fourth quarter than it does otherwise, right? And if you take away the risk of getting kicked out of the home because you run out of equity because of something unforld, um it doesn’t matter. You get to stay in the home. Yes. So, we it’s kind of an interesting product. We’ve shared it with sever several of our older clients who some of them, like I said, want to preserve their nest egg and they’re like, you know what, I don’t want to touch that. (09:23) I want to leave that for my children. I’ll just use the house equity and then they can kind of enjoy life and not be so stressed. So, it’s kind of a win-win. So, if this is something you’re interested in, um, give us a call. We can refer you. We don’t refer you. Obviously, we’re not lenders. No, you know, we don’t do it. (09:41) We can certainly hook you up. We do not do lending. We can hook you up with someone who can help you. Uh, another thing to consider too is if you kind of have that same that the flexibility that we’re talking about, you may want to buy a nicer home. You know, you don’t need to buy so smart or or so frugally. (10:03) You might want to buy a home that’s worth a little more and have you enjoy your your twilight years a little more, right? and and splurge a bit more knowing that you don’t have to maintain that that mortgage if you don’t if you don’t if you can’t or you decide you don’t want to. Yeah. So, that is our tip of the day for the new lifestyle home loans or as we like to call it a flex loan. Flex loan. (10:27) You should know things are changing for the better and better products are coming out there that can help people who are a little bit older and maybe want to enjoy life a little more and not feel that that heaviness of a monthly mortgage now that they’re retired. So, something to think about. Yeah, absolutely. (10:46) So, if you have any questions about that, um we could certainly, you know, be happy to share our referrals and you could see if it might work for you. Yeah, absolutely. All right, my friends, that is all for today. Hey, we hope you found this helpful and we hope to hear from you soon and uh make sure you come visit us. Love to see you. Bye bye.
