Episode•October 3, 2023•26 min

Learn The TRUTH About Reverse Mortgages with Todd Christensen | Ep. 268

Get the facts about reverse mortgages in this informative episode with Todd Christensen. Learn why reverse mortgages are restricted to those 62 years old and over, how reverse mortgage proceeds can be used, and discover creative ways to use a reverse mortgage. Plus, get tips on other options that may be available for homeowners interested in tapping into their home equity without a monthly mortgage payment. Don't miss this informative episode about reverse mortgages! About Our Guest Author, Accredited Financial Counselor®, and HUD-certified housing counselor Todd R. Christensen, MIM, is an Education Manager at Money Fit by DRS, Inc., a nationwide nonprofit credit counseling agency. Todd develops educational programs and produces materials that teach personal financial skills and responsibilities to all ages. In addition to over a thousand counseling sessions, Todd has facilitated more than 2,000 workshops since 2004 on effective personal financial management. His experiences serve as the basis for his first book, Everyday Money for Everyday People (2014), sharing the discussions, tips, stories, and ideas used by the tens of thousands of participating individuals and couples. Connect with Todd Website: https://moneyfit.org Email: [email protected] Facebook: Money Fit by DRS Twitter: @MoneyFitbyDRS Connect with Tiffany Visit our website: https://moneytalkwitht.com Facebook: Money Talk With Tiff Twitter: @moneytalkwitht Instagram: @moneytalkwitht LinkedIn: Tiffany Grant Additional Resources & Links Episode 188 - Spending Personalities with Todd Christensen This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

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Key Takeaways

1
Reverse mortgages allow homeowners 62+ to tap home equity without monthly payments
Lender pays off existing mortgage and provides cash via lump sum, term, or lifetime payments
Loan is repaid when borrower passes away, moves out, or sells the home
Interest accrues over time so the mortgage balance increases rather than decreases
2
Spouse protections require being on the title or as co-borrower
If spouse is on title, they can remain in the home even if borrower passes away
Payments may stop but residency rights are protected
New spouses after the reverse mortgage do not receive the same protections
3
Reverse mortgages have strict ongoing requirements to avoid default
Must live in the home at least 6 months and 1 day per year
Must pay property taxes, HOA fees, and maintain the property
Failure to meet these obligations can result in foreclosure
4
Reverse mortgages can be used for creative purposes beyond basic cash flow
Can purchase a second home or multi-unit property (duplex, triplex, fourplex)
Live in one unit and collect rental income from others without mortgage payments
Proceeds can be used for any purpose including debt consolidation
5
Reverse mortgages are not inherited debt and can be refinanced or paid off early
Heirs are not personally responsible for the loan beyond the home's value
Can refinance into a conventional loan if equity allows
Can sell the home at any time and keep remaining equity

Intro

Tiffany Grant welcomes back returning guest Todd Christensen to demystify reverse mortgages, a financial tool often misunderstood due to infomercial marketing.
Todd R. Christensen, MIM, is an Accredited Financial Counselor and HUD-certified housing counselor at Money Fit by DRS, Inc. He has facilitated over 2,000 workshops since 2004 and authored Everyday Money for Everyday People.

Money Fit by DRS Todd Christensen Email

– What Are Reverse Mortgages?

Todd explains that a reverse mortgage allows people 62+ to access home equity without monthly payments. The lender pays off any existing mortgage and provides cash through various payout options.

It's a way of not only getting rid of your mortgage, but also getting some cash income, cash flow through your senior years.
– Todd Christensen

– Why Age 62 Requirement?

The age requirement exists because calculations factor in life expectancy. Younger borrowers would receive minimal monthly payments. The youngest borrower must be at least 62.

– Spouse Protection Rules

If a spouse is on the title (even if not a borrower), they can remain in the home after the borrower passes away. However, they won't continue receiving payments. New spouses after the reverse mortgage lack these protections.

– Creative Uses and Alternatives

Reverse mortgages can purchase investment properties like fourplexes where you live in one unit and rent others. Required counseling covers alternatives including home equity lines of credit and property tax deferral programs.

You could even use a reverse mortgage to purchase a second home... collect rent for the rest of your life and never have a mortgage payment.
– Todd Christensen

– Who Should Avoid Reverse Mortgages

Cannot maintain the home or pay property taxes/HOA fees
Plan to move within a few years due to upfront fees
Are snowbirds spending less than 6 months annually in the home
Expect to leave significant equity to heirs

– Exit Strategies and Refinancing

Borrowers can sell the home and keep remaining equity at any time. Refinancing into a conventional loan is possible if home value exceeds the reverse mortgage balance. The loan can be paid off early without penalty.

Books Mentioned

Everyday Money for Everyday People by Todd R. Christensen

Resources

Money Fit by DRS
Episode 188 - Spending Personalities with Todd Christensen
HUD HECM Lender List

Topics

reverse mortgageshome equityretirement planningfinancial counselingHUD programsestate planningsenior financesmortgage alternativesproperty taxesfinancial education