Always Ageless w Valerie v June 9 2025 Guest Michael Pankow

Episode Transcript

Speaker 1 (00:20):
Welcome to Always Age Less, this show where we celebrate
living well, aging wisely, and making confident choices at every
stage of life. I'm your host, Valerie van Desover, and
today we're diving into a topic that's often misunderstood and
goes perfectly with National Homeownership Month, which is the month
of June. We'll also talk about one of the best

(00:44):
ways to finance homes, and that's through a reverse mortgage. Now,
before you change the dials, stay with me because this
is not a sales pitch. Remember we are a resource here,
so we're going to talk about some of the pros,
the cons the reasons why some people do them, talk
about some examples of families who we've been able to
help through this show. So, whether you are an older adult,

(01:07):
you are the adult child trying to help your parents
or trying to figure out what's the best options for them,
or you just don't know and maybe you just like
to hear it but you don't want to actually commit
to anything. Well, join us as someone who doesn't know
the industry history has helped to shape it. Michael Pancow
is a reverse mortgage specialist with over twenty years in

(01:30):
the mortgage business. He's also the CEO of Veterans Mortgage
of America. He's a proud US Army veteran and a
passionate advocate for both seniors and veterans and everyone who
loves them. So this conversation is going to shed some
light on reverse mortgages, what they really are, how they
can help. But we're also going to talk today about

(01:51):
veterans and again home Ownership Month and options that are
available to vets, how they can benefit from all the
things that maybe they don't even know about. So we
welcome you, Michael Pancok. I might just interject that Michael
was on our show before and he's going to tell
you a story about someone he helped, and it was
such a popular show that how could we do home

(02:13):
Ownership Month without having Michael back with us.

Speaker 2 (02:16):
So welcome, Thank you very much. Feller. Excited to be
here for sure. For sure, tell.

Speaker 1 (02:22):
Us again a little bit about your background. How did
you get started, where did you come from, and what
took you in I'm assuming you were in the military
in your younger years, So tell us your story.

Speaker 2 (02:35):
Absolutely, And you know what, if I can start with
this real quick, you know today is June sixth, and
just to memoralize and to celebrate veterans. June sixth, nineteen
forty fours the day that we hit the beaches in Normandy,
and so just want to say thank you to all
the veterans past and present for their service or dedication
to our country and for the sacrifices they made. So
I just want to point that out since today is

(02:57):
June sixth, twenty twenty or twenty twenty five, and I
just want to say thank you all veterans. But how
do I what was the question?

Speaker 1 (03:04):
Day? Was how D Day was? How long ago?

Speaker 2 (03:06):
Well that was nineteen forty four, so.

Speaker 1 (03:08):
That was eighty fifty one years ago.

Speaker 2 (03:12):
No, nineteen forty four, so we're twenty twenty five, so
for about eighty years now.

Speaker 1 (03:16):
Yeah, yep, long time ago, eighty years ago. Some of
our I'd be curious if any of our viewers or
listeners are our veterans who were here during D Day,
which they some of them could be there, if there
were some one hundred year olds right right right, or
if they if their parents or grandparents are still alive

(03:37):
and served at D Day. What a fascinating time that
was in watching some of the movies, you know, the
pain and the horror that these guys were just young
guys right hitting the beaches of Normandy because they were
there to serve their country and they were trained and
raised that that's what they were supposed to do.

Speaker 2 (03:55):
That's right, that's right, and also service.

Speaker 1 (03:58):
Absolutely, thank you for bringing that up today. That's a
poignant and definitely that we should.

Speaker 2 (04:04):
You're welcome, You're welcome. So yeah, my backgrounds, so I
have been, like you said, Beller, I've been in the
mortgage industry now for you know, over twenty years. One
of the co founders and a veteran myself, like you said,
a veteran's Mortgage of America. And we're we're powered by
Techxana Bank. We have the ability to do loans in
all fifty states. And I've been focused in the senior
area for quite a while now, and you know, my

(04:27):
certifications demonstrate that that's something that I'm very focused on,
in addition to the organizations that I'm attached to. So
you know, the Certified Senior Advisor, which is the CSA.
You and I talked a little bit about that yesterday.

Speaker 1 (04:41):
It is not easy to obtain. Let me tell you
that I'm studying for that test right now. And someone said,
if you're not a PhD or an attorney, this is
kind of the same thing.

Speaker 2 (04:52):
Yeah, you know, it's a proctate exam. When you go
through the course of the books they give you, it's
about ten pounds worth of books and they're chuck full
of information. But the certific my Senior Advisor, really gives
you a very holistic three hundred and sixty degree perspective
on all things that impact seniors, right, and so it's
a fantastic course, and it carries a lot of weight
when you walk into the room, and it gives us
the ability to talk about a lot of different things.

(05:13):
The other certification that I have, which is I think
also important to what we're going to talk about, which
is the CAPS or CAPS that certified Agent of Place.
And what's great about that is that when we talk
to seniors about making modifications to their home. You know,
ninety percent of all seniors went to age in place.
It's where comfort is, it's where family is, it's what
they know and so but how do you do that though?

(05:33):
Because things change. You bought the house thirty five years
ago when you were young in spray. And now you
might be in your seventies or eighties and things aren't
the same Like my parents, right, things have changed for them.
They're and their my mom's seventy eight, dads eighty eight,
and we had to make some modifications of the house.
So the CAP certification allows me to walk in and
provide that guidance and to provide that that level of expertise,

(05:54):
if you will, on what modifications to make, which we'll
probably talk a little bit later, to allow you to
age in place a little bit more securely and safely.
And then the last thing is I'm on the board
of directors for the National Agent and Place Council, the
Education Chair, and that's a great organization growing right growing,
and very proud to be a part of that. And

(06:14):
then lastly, I'll just mentioned the Senior Home Coach with
Katherine Ambrose, right, you and I are both part of that.
That's a daily thing that you and I participate in,
and just what a great group of individuals who every
day are focused on talking about senior initiatives, talking about
how to work with seniors and support seniors. So I'm
very tied into the senior space. In addition to running
a mortgage company and raising a family.

Speaker 1 (06:33):
And by the way, we will be proud to say
that Katherine Ambrose, who is America's Senior Home Coach, will
be a guest on our show this month. Also as
this is National home Ownership Month, but it's also National
Safety Month, and the focus of National Safety Month this
year happens to be home safety. So it's perfect for

(06:56):
all the things that Michael, you and I work in
and care about with taking care of seniors. I just
have to say that, you know, we talk about people
getting older and having to make changes to their home,
and let me say, some of us may get older,
but that doesn't mean we act or live like we're older.
So we want to be sure that anyone who's older

(07:17):
and listens or watches this understands that we don't classify
you as old or elderly just because your numbers of
your age have progressed a little bit. So this show
is also about making sure that your life is front
fun and easy, but also you can make some changes
in your home then allow you to live there for
a long time, and we're going to talk about that also.

Speaker 2 (07:39):
Yes, absolutely one hundred percent.

Speaker 1 (07:41):
So how did you get to where you are now?
You graduated from high school and you went in the service.
Is that what happened?

Speaker 2 (07:46):
Yeah, pretty much about a year delay and went into
the military one overseas immediately and you know, course back
then there was no Facebook, no cell phone, so last
contact with everybody, and then came back three years later.
Was in the National Guard for was six years? Yeah, no,
nine years. And because I served a total of twelve
and then I was supposed to go to flight school,

(08:08):
couldn't go to flight school, and then I went to
OCS instead and graduate OCS, went to the Arabic Language School,
and then I went tell.

Speaker 1 (08:15):
Our viewers and listeners what is OCS?

Speaker 2 (08:17):
Oh? Sorry? Officer candidate school, went to Offster Candidate School
and got my commission and then was branched to the
military police. I was a combat military police, so we
did all kinds of missions and where I served in
the California National Guards for a total of nine years.

Speaker 1 (08:34):
Wow. So what does a military person do it? What
do you do as a policeman in that capacity?

Speaker 2 (08:40):
Well, what's what's unique about the military police is that
military police get deployed to everything everything from riots in
la they get deployed to national you know, natural disasters,
they get deployed to combat, they get deployed to garrison
duty with their actual cots like you see drive me
down the street. So military police get deployed to a

(09:03):
lot of different things because they're trained in a lot
of different areas.

Speaker 1 (09:08):
So it's not just military things. That's not like just
something that it could be like a civilian job, so
to spe.

Speaker 2 (09:17):
Yeah, some of these guys do it full time. But yeah, again,
the military police get deployed to a lot of different things,
not just for the military verses.

Speaker 1 (09:23):
Did you ever think about becoming a policeman?

Speaker 2 (09:26):
I did. I'm actually actually from Sacramento State University. I'm
a criminal justice major. But what was funny is that
I was a restaurant manager all during college. After I
came out of the military and I started working for
Anheuser Busch on their brand team, fell in love with
sales and marketing. I went to the Olympics in nineteen
ninety six, actually felt the concussion from the bomb when

(09:48):
it went off when it unfortunately killed one Galu. And
then from there I went to CBS Radio. They picked
me up because of my brand experience, and I was
a sales manager with CBS Radio and Sacramento, so I
have some radio back ground, and then from there I
went into the mortgage industry in two thousand and one
and have been in the mortgage industry ever since.

Speaker 1 (10:09):
Well, I have to say that I also have a
passion for the mortgage industry. I also was doing that
for many, many many years, probably about the same years
as yours. I sell my NMLS certification. So okay, I
admire you for that and appreciate all that you go through.
So you then, but how did you get into the
mortgage industry and how did you get to Did you

(10:30):
go there specifically intending to work with veterans?

Speaker 2 (10:35):
Oh? So, when I was at CBS Rito, I went
on a sales call and I met a couple of
guys with They were at a company or a nonprofit
actually called National Home, and National Home provided down payment
assistance and one of the guys ended up buying a
house down the street from me. And long story short,
they kept saying, Hey, we want to talk to you,
and we want to talk to you. So finally they

(10:55):
talked to me and they convinced me to leave radio
and start this thing. Cold Turkey didn't know anything about
the mortgage industry. And it wasn't doing mortgages. It was
providing gift funds tied to FAHA loans tied to down payments,
and I didn't know anything about it.

Speaker 1 (11:10):
That's quite a twist. Yeah, it was.

Speaker 2 (11:13):
Quite a twist. Yeah, quite a twist. So started that
with three guys. By the time we wrapped it up
about three and a half years later, we had twelve guys.
And the only reason why we closed it down was
because FAHA changed their mind about how gift funds were
processed and how gift funds flowed through the system, and
so we had to shut it down because it was
no longer viable. So the day we shut that down,
I closed my first mortgage loan. I said, huh, that

(11:34):
wasn't so bad. That was a good payday. And I
helped somebody and so got into the mortgage industry, and
next thing, you know, and the next year I was
a top producer. In the year after that, I was
a top producer, and then I got into leadership.

Speaker 1 (11:45):
After that, of course, of course, and at what point
in time, So did you specialize in VA loans or
how did you get into the senior loans and vet loans.

Speaker 2 (11:57):
No, but my very first company that I worked at
in the mortgage industry, the owner of the company was
focused on seniors and focused on reverse mortgages, and so
I dabbled in reverse mortgages for a long time and
not going to say I did a lot of them.
I'm not going to say I did. However, when I
had the opportunity at Fairway Independent Mortgage, they were very

(12:19):
focused on reverse mortgages, is when I really had the
opportunity to cut my teeth and to get involved. And
I had seventy five originators loan officers that worked for
us at that time, and I had twenty eight of
those that were certified to do reverse mortgages. So that
was my real push going back to twenty nineteen, was
really starting to push on helping seniors through reverse mortgages.

(12:41):
And then later in a subsequent role, I was the
lead for the company with a small independent mortgage banker
running the reverse mortgage division, where I certified all the
loan officers, created the training, did all of that work,
and so that was a real joy and you know,
just to take it back, you know why I enjoy
working with and why I think there's such a huge

(13:01):
benefit to serving seniors. As I watched my grandmother, and
I might have mentioned this on the last one we talked.
Last time. Let's talk a us.

Speaker 1 (13:07):
Tell us about your story with your.

Speaker 2 (13:10):
Grand Yeah, you know my grandmother. You know my grandfather
who was a veteran. He has served in World War Two.
He was a marine and he was just like John
Wayne to me, he really was. He was painting the house,
like many many guys. He was painting the house. He
was in his limit sixties, took a fall, wasn't in
the best of health, broke his hip, ended up in
the VA hospital and never made it out. That summer

(13:32):
between my junior and senior year, though I had my
driver's license, my mom and dad couldn't take my grandmother.
So I spent the summer of my between junior and
senior year driving my grandmother to the VA hospital down
in San Diego. So where did you save.

Speaker 1 (13:45):
All the time? Where did you live at the time?

Speaker 2 (13:49):
I was in San Diego. I was in San Diego. Oh,
So we were in San Marcos and North County. My
grandmother lived there as well, and so I was driving
all the way down to La Joya, which is where
the VA Hospital is, and right there next to the
UCSD campus. By the way, my son who's twenty, he
just got accepted to UCSD and he's going to be
going there in the fall.

Speaker 1 (14:05):
Oh great, well, hopefully we'll see you more often in
this part of the world.

Speaker 2 (14:10):
Absolutely. Yeah, I love it down there. But you know,
I watched my grandmother the pain that she went through,
and I watched how that impacted her, and financially she
was doing okay, but it really just pulled me in.
And so now when I see seniors, I always think
of my grandmother, inevitably always right, And now I'm seeing
my mom and dad. They're both on walkers. They've both

(14:31):
taken falls in the last two years, which has been
debilitating to them. But thank god they've got a reverse mortgage, right,
because they've got that to lean on. Even though the
house was fretty and clear, they've got that reverse Morgelina
on which they've used and we'll talk about, you know,
making renovations and making asing a place kinds of improvements.
They've done that. So I've lived it and I've helped
my mom and dad do it, and it's just it's

(14:52):
really gratifying. When I can help a senior achieve whatever
it is they're trying to achieve financially.

Speaker 1 (14:58):
Yes, and I'm sure that is. And I know from
your heart and from the discussions that we have on
our morning calls that you you certainly do and a
lot of people take inspiration from you. So it's National
home Ownership Month. Should seniors buy houses? Do you ever
hear them say, oh, I'm too old, I'll just rent.

Speaker 2 (15:19):
Yeah, you know what, I don't think it's ever too
late if you can afford it and if you can
make it work. I don't ever think it's too late
because there's so many benefits to owning a home, as
you know, Yes.

Speaker 1 (15:28):
That's true. Do you ever have situations where someone might
sell a home and then they just decide to rent instead.

Speaker 2 (15:37):
Yeah. I think a lot of seniors consider that as
an option. And when i'm when they ask me for
my opinion on that is, you know, I say, Hey,
that's that's that's great, that's that's something you may possibly do.
But if you can buy a home, there's a lot
more benefits to it. There's a lot more security. Right
when you're renting, you don't have the peace of mind
because the rent can always change, They can always evict

(15:57):
you just because they want to sell the property. So
you don't have a lot of peace of mind or
security when you rent. So when I can without being forceful,
is I try to point out some of the difference
between renting and the opportunities with owning.

Speaker 1 (16:11):
Do you think that older people, and I'll say, I'll
include myself, and that you know, older people like us,
maybe like you, I don't know, I would suppose you're younger,
that they think that, especially if they've lived in their
own home for a long time, that maybe they need
to pay cash at that point. I mean, I've heard
people say, oh, no, will ever give me a mortgage,

(16:32):
like I'm seventy five or eighty. Well, first of all,
I can't discriminate on age, right, if you're ninety five,
you could still get a thirty year mortgage because it
can't discriminate. So that's one thing, correct, right, yep.

Speaker 2 (16:43):
As long as they qualify for work, absolutely.

Speaker 1 (16:45):
Sure, sure. But beyond that, it just seems like people
would think, oh, you know, qualifying such a hassle. I
can't qualify. I'm not working anymore, and they think they
either have to pay cash or they have to rent.
Do you find that where people feel there's are there
only two options?

Speaker 2 (17:02):
Yeah, it's almost like the pre program too. While I've
lived in this house for thirty years, I'm going to
sell it, I'm going to downsize. I'm gonna pay cash
for the next one, so I don't have a mortgage payment.
And they are absolutely options to that, as you and
I both know, and you know of course, is the
reverse mortgage for purchase. That's something that I offer. And
the reverse mortgage for purchase gives you that same opportunity
to not spend dollar for dollar all that cash that

(17:24):
you just pulled out of the home you just paid
off for the last thirty years, while at the same
time having all the benefits of home ownership, which is
why people want the cash deal because they feel like
it gives them the best security option. Right, No one
can ever take the house for me because I have
it free and clear. Well, same thing with the reverse
mortgage for purchase. No one can ever take the house

(17:45):
for me as long as you meet certain conditions just
to cover the tax and insurance.

Speaker 1 (17:49):
I have a friend, a close friend who's no longer
with us and actually is my inspiration for this show.
Jay Kappan had a show for a long time called
The Educated Retirement and he was a reverse mortgage specialist.
In his last twenty five years, Jay would make the
comment Michael that everyone should have a reverse mortgage. Do

(18:12):
you agree with that? And why do you think he
would say that?

Speaker 2 (18:17):
Well, because he believes so strongly in the product, as
I do. I find really hard for somebody who's over
the age of sixty two, as long as they qualify
and the equity makes sense for them not to have
a reverse mortgage. For me, a reverse mortgage puts a
moat right like a castle, a moat around a castle,
puts a moat around the senior, puts a moat around
their home, and puts a moat around their airs because

(18:38):
of the consumer protections that are in place with a
reverse mortgage. So I find it very hard when I
recommend not getting a reverse mortgage is when you know
that you're not going to be in the home for
more than a year or two, because there's some expense
to getting a reverse mortgage, So if you're only going
to be in there for a year or two, then
it's probably not the best option for you. But outside
of that I find it really hard to suggest not

(18:59):
getting a reverse mortgage because of all the features and
benefits and consumer protections quite honestly involved with the River sportgage.

Speaker 1 (19:06):
So let's take today to talk about some scenarios. Maybe
we've got someone driving listening to us, or sitting at
home our viewers or listeners who maybe they don't really
know about all of them, maybe don't really understand. They'll say,
I don't understand mortgages. Maybe they've never even had to
have one. What if let's take some time, let's talk
about different scenarios. So, for example, I think it's really

(19:31):
sad when someone loses their spouse and they feel they
can't make their house payment, or they know they can't
because of their own income situation, and so the first
thing they think of, or their friends think of, or
the local realtor thinks of, is you have to sell
your house. So the realtor thinks, and I am one,

(19:53):
and you are one probably too. So the realtor thinks, oh, well,
these papall have to sell their house. So I'm going
to get a I'm gonna get a listing. But I
think it's so sad when people are in that situation
and they feel like they have to move, they have
to sell. What do you think about that?

Speaker 2 (20:13):
That is sad? And I think that everybody's scenario is different,
and I think that they they unfortunately it's a it's
a it's an education thing, right. If they knew what
they knew, they would make they may make different decisions.
So it's about us being able to share with seniors
and people in that position that you know there might
be an option for you, and you know when you
look at you know, how do I stay in the house.

(20:35):
Maybe it's a he lock a home equity line of
credit that allows you to stay it a little bit longer.
I don't usually recommend that. Hopefully it's a reverse mortgage
where we can pull some money out of the house
and it's which is tax free, and that will allow
you to stay in the house because again it puts
it puts you in a position by where no one
can ever take that property from you, just like if
you owned it free and clear, as long as you

(20:56):
pay your tax insurance in your HOA and it and
it's your primary way. So with a reverse mortgage refinance,
and if there's a line of credit involved, you can
pull from that line of credit and never have to
make a payment on it, and any unused balance continues
to grow. So if you have cash flow concerns, that
can make a difference. I just closed alone three weeks ago,

(21:17):
where she did pretty good on a monthly basis, but
she was still digging into her reserves at about fifteen
hundred dollars a month. Well, she only had fifty five
thousand dollars left and she was a healthy seventy eight
year old, so she was going to run out of money, right,
So that's longevity risk. So if you are a senior

(21:38):
that's dipping into your reserves or your pension or your
social security, your death been it from your spouse, if
you're a widow, it's all not adding up to cover
your bases. And you do own your home and you
don't have to own your home free and clear, might
make sense for you to reach out and we can
run some quick numbers without having to do an application.
We don't have to pull your credit. I can just

(22:00):
quickly run some numbers right on my phone and share
with you if we're in the ballpark, based on your age,
the value property, how much you owe, if you do
owe anything, if we can help you out, and that's
typically it's a very quick phone call. It's a very
painless phone call.

Speaker 1 (22:15):
But yeah, so okay, so let's go through this really
simple all right, Let's pretend that our viewers and our
listeners are really curious or not so curious, hopefully the
very curious, but they really just don't understand what we
just talked about. So let's say that I have a
I go on a listing appointment. I was referred to

(22:35):
a lady and true scenario. Her husband had passed away.
She had not been working, so she couldn't afford to
make the house payments. Even if she did go to work,
it would be a you know, a retailer clerical position
where she wouldn't have a lot of money, and if
she refinanced on a typical mortgage, would not probably be
able to make the payments. She could have a renter,

(22:59):
other things. It would be pretty complicated, and she didn't
want to lose her house. So let's say that she's
about sixty five, all right, which isn't terribly old anymore.
But let's say she's sixty five or seventy two, really
doesn't matter. She got now they had taken out a
loan against their house to fix up their house. But

(23:21):
if we got a good appraisal on their house, it
would be praise for about nine hundred thousand, and she
owed about six hundred So should this person And she
didn't want to leave her house, does not want to
leave her house, So what kind of a mortgage could
she get? I think on a reverse mortgage? Aren't there

(23:41):
a couple different kinds of scenarios, a couple of different
loans that this person might be able to qualify for.

Speaker 2 (23:49):
Well, based on her age and the value the property
being nine hundred thousand and she has an existing mortgage
of six hundred thousand, she wouldn't She may quality fine,
but she'd have to bring money to the table in
that scenario because her loan balance is just too high
compared to the value of the property.

Speaker 1 (24:06):
Okay, So what would her loan balance need to be
for that to make sense sure? If her loan balance
was four hundred thousand, would it work?

Speaker 2 (24:15):
You know? Well at fort No, not at four hundred thousand.
If her loan balance was two hundred and fifty thousand,
she would get back a line of credit of seventy
five thousand dollars. If her loan balance, I'm going to
take it up to three fifty yepe, she'd have to
come in with money. So let's put at three hundred thousand.
So if her loan balance was three hundred thousand, she'd

(24:37):
get a small line of credit of twenty five thousand,
and a lot of times even just breaking even where
you don't get a large line of credit, but you
just stop the pain. So in this case, this is
a cash flow, monthly cash flow issue for her, right
and if she was able to stop the monthly cash
flow where she's putting out maybe a fifteen or sixteen
hundred dollars payment, that's a huge increase in cash flow.

(24:57):
If you can save that money, it's tax free, it's
money or not spent. Right. So in this particular scenario,
at that age, the original six hundred thousand, she'd have
to come in with quite a bit of money. Now
as you get older.

Speaker 1 (25:09):
Them, Okay, so what if she was seventy five.

Speaker 2 (25:12):
At six hundred thousand, Yeah, it's probably that's not going
to make enough of a difference. At seventy five, Yeah,
she'd still have to come in with a pretty good number.
Even if she was let's say eighty eight. Eighty eight
should still have to come in. Six hundred thousand is
a pretty high blown to value at that point, right.

Speaker 1 (25:31):
Well, let's assume that she owed three hundred thousand.

Speaker 2 (25:34):
Okay, and that's at seventy eight years of age. Sure, okay, yeah,
three hundred thousand at seventy eight years of age. She's
going to get back seventy four thousand dollars.

Speaker 1 (25:47):
Okay, So that's.

Speaker 2 (25:49):
Paying off the current mortgage. Plus she gets the line
of credit of seventy.

Speaker 1 (25:52):
Four thousand, and what could what would a person use
that for?

Speaker 2 (25:56):
You know, what's great about that is that it can
use that money for anything they want to. There's no
restrictions on it, so they can use it for anything
they want to. The only restriction they have is it
in year one they get access to about sixty percent
of that So in year one she would have access
to about thirty nine thousand dollars and then she could
do whatever she wanted with the money year two. But

(26:17):
a lot of people don't use any of the money.
They just let it grow because the reverse mortgage line
of credit continues to grow, unlike a he lock a
home equity line of credit, and it also is not
attached to the value, which I think is important for
us to talk about today because if you watch the
news at all, and it doesn't matter which news channels
you watch, this is a very vanilla topic. Is that

(26:39):
home values the market is shifting and in certain in
a lot of areas of the country, it's turning into
a buyer's market. Well, when the buyer's market starts to occur,
is that we see home values start to stagnate, meaning
they don't go up. And so what that means is
that we possibly could shift to a market where home
values are started to decline. And if that happens, my

(27:04):
fear is that for seniors that have a home equity
line of credit like my borrower did that I closed
four weeks ago down in Los Angeles, is that that
home equity line of credit for anybody, whether you're a
senior or not, if the bank senses or sees statistics
that say values are decreasing, that means that that helock
could potentially, don't want to scare anybody be frozen I

(27:27):
meaning you have no more access to that money, or
they'll decrease the limit on the helock itself. So if
you're a senior or anyone that's living and using that
home equity line of credit to subsidize your income, as
the senior was that I just talked about, that's a
scary place to be. So with a reverse mortgage, however,
the line of credit can never be frozen, and it

(27:48):
can never be taken from you, and you never have
to make a payment on it. So it's a really
great hedge against declining market values. It's a great hedge
against inflation because they can never take it from you.

Speaker 1 (28:00):
So if in a scenario, let's say a scenario where
a person has gets one hundred thousand dollars a line
of credit for one hundred thousand dollars, then once.

Speaker 2 (28:09):
You use all of your line of credit, then the
line of credit is done and it moves over to
the debt side because you have to pay it back
if you sell the property, if you refinance out of it,
when you pass right, that becomes a part of the
debt that moves on with the property. But yeah, once
the line of credit is used and done, then you
don't have any more access to it. But the good

(28:30):
news is you still get to live in the property
and as long as you pay your taxes and your insurance,
and you reach a way if you have one, then
you can still live in the property as if you
owned it free and clear, without having to make a payment.

Speaker 1 (28:43):
So let's clarify that. So what you're saying is you
may have used up the line of credit, but you
still are you still don't have to pay it back,
and you still get to live in the home and
you don't have any house payments.

Speaker 2 (28:57):
That's correct if you have to have your taxes and your.

Speaker 1 (28:59):
Insurance, right, But if you had taken out the line
of credit, you'd be making payments on the line of credit.
You'd be making payments on the mortgage, right. Because we
want to be sure that our listeners and our viewers
understand this. But if you have a reverse mortgage, what

(29:20):
part of it do you not have to make payments on?

Speaker 2 (29:23):
None of it ever, So until you sell the property,
until you sell the property, or you want to pay
off that loan with another loan, meaning you refinance out
of it, or you a maturity event occurs and you
are no longer in the property, right, it's no longer
your owner occupied home. That's when you'd have to pay

(29:44):
back the reverse mortgage or your errors would have to
pay it back.

Speaker 1 (29:47):
So if you have to start out with the three
hundred thousand our loan, and I took out the seventy
five thousand dollar loan, do I only have to not
make payments on the seventy five thousand or don't have
to make payments on the three hundred thousand part either.

Speaker 2 (30:00):
So you say, so, you're saying if you paid off
the three hundred thousand that you had originally, and then
you've got a seventy five thousand dollars line of credit
which you used at some.

Speaker 1 (30:08):
Point, so you've made We're talking about a scenario where
they could take out seventy five thousand dollars, right, Yes,
but by doing that, are they wrapping it all into
one loan by refinancing the first and adding the seventy
five thousand at the same time.

Speaker 2 (30:23):
Yeah, So in that scenario, she had a three hundred
thousand dollars existing mortgage balance. The reverse mortgage pays off
that three hundred thousand and gave her a seventy five
thousand dollars line of credit. She doesn't have to pay
anything on the three hundred thousand that was included in
the reverse, and when she uses theoretically that entire seventy

(30:44):
five thousand dollars line of credit, she doesn't have to
pay anything on that as as well. It just means
it's done and there's no more access to it.

Speaker 1 (30:52):
So that's how So that's again, so that's how you
get away. You to get away with it. So that's
how it works out that you don't have to make
a payment on the first whereas if you take out
a home equity line of credit, you go to the
bank and the bank says, I'm going to loan you
seventy five thousand dollars against your equity. Okay, but then

(31:14):
you still have your first for three hundred thousand that
you're making payments on, and you now have your second
that you're making payments on. Right, So you've gained seventy
five thousand dollars in cash, which you maybe you needed
that to pay off debts or whatever, but you're still
now have two loans.

Speaker 2 (31:30):
That's and that's exactly, yes, Gully, that's exactly what we
just fixed down in LA for my borrower who was
actually using her helock to help make the payment on
the helock, so she was she had a first mortgage.
She had the helockky Peter back. That's right, that's right,
and that's a that's a that's a downward spiral, which

(31:52):
she recognized, and so that's why she got the reverse mortgage.

Speaker 1 (31:55):
All right, So let's talk about that because this sounds
it sounds really good. So you can take if you
need additional cash, can you could? You also does does
a reverse morge ever work like a second where you
keep your first in place?

Speaker 2 (32:13):
Yeah? So there are products that are proprietary products, not
the FAHA product, but there are products that are for
what we call proprietary and there is what's called a
home safe second, and they will leave your Typically people
do that when they want to keep their low interest
rate first mortgage, meaning they got a rate for three percent,
They go, no, I want to keep that as long

(32:34):
as the equity and the formula works. There's a home
safe second that operates just like a reverse mortgage. Mean,
they never have to make a payment on it until
they move out of the property or sell the property
or refinance all of it. Right. That allows them to
pull cash out tax free and use those funds for
whatever they'd like. But that's a proprietary product. But that

(32:55):
product does exist.

Speaker 1 (32:57):
So when you use the word product, it's a.

Speaker 2 (32:59):
Loan, it's a loan type.

Speaker 1 (33:01):
That's correct, right, Okay, so make sure everybody who's not
a mortgage was like it still understands. Yeah, all right,
So if someone really needed so someone okay, right, and
you said this, so someone would do that. If I
have a three percent first on my house, I don't
want to do anything with that. I don't need to,
and it's a very low first, so I could just

(33:23):
take a portion of So can you ever take if
you have a three percent first and you only have
a small loan amount, can you what? How do they
determine what kind of a second you could take out
if you wanted to keep your first in place.

Speaker 2 (33:36):
Well, there's only one loan product that addresses that, and
that's the proprietary product that allows you to do that.
So the FAHA loan product, which is the Heckham the
Home Equity conversion mortgage, doesn't allow you to have a
first It does not subordinate, it doesn't go in a
second lean position like the proprietary products will. And a
second lean means you have two loans, right, So yeah,

(33:57):
the FAHA reverse mortgage we all know is you pay
off the first and then if you have enough equity
in your age and everything makes sense, then you get
that line of credit credit out of it. Proprietary says,
oh wait a minute. There are special times when somebody
who can pay for their first mortgage, they don't want
to pay it off because they've got a low interest

(34:20):
rate first mortgage, but they want to get access to
cash for lifestyle needs or a plan right to go
do whatever it is they want to do.

Speaker 1 (34:28):
Give us some examples of things, Michael, that people can
use their home equity for. I heard a situation about
a year ago where someone took a reverse mortgage on
their own home and then they took some of that
money and bought a house for their child. Is that
something they can do?

Speaker 2 (34:47):
Yes, absolutely, so that would be called gifting with warm hands,
and yes, you can do hands.

Speaker 1 (34:52):
We can do that right, warm.

Speaker 2 (34:54):
Hands, And you know that's that's the beauty of the
reverse mortgage product is that you can do anything you
want with the money. There's no one asking you what
are you going to be using that money? For? Valerie.
It's when you when you call the servicer, you say,
I need a distribution of ten thousand dollars if you
that's what.

Speaker 1 (35:10):
You call the servicer means you let's go again. That's
you call the company who you make your house payments
to correct and you tell them, I want to have
an X amount of dollars out of my house, out
of my home loan.

Speaker 2 (35:24):
Out of my line of credit. Correct, right, yeah, yeah?
And how that works is every month a serve because
you don't make a payment with he reverse. You can,
but there's no obligation, there's no requirement of it. The
servicer provides you with every month a statement that gives
you your balance, and it gives you, if you have
a line of credit, what that line of credit access is.

(35:45):
And you call that servicer and within five business days
they have to give you the money legally. And they
don't say what are you going to use the money for? Valerie?
They don't say, hey, we don't think that's a smart idea.
You call them and say I need the money, this
is how much I need, and they send it to
as long as you have that available in your line
of credit.

Speaker 1 (36:05):
It's also my understanding that reverse mortgages are different types.
I think you can, is it correct? So let's talk
about those some people can take out a lump sum
and how does that work? Michael yep.

Speaker 2 (36:19):
So there are really two types of reverse mortgages on
the FHA traditional home equity conversion mortgage, right, and that
is you've got a variable rate reverse mortgage. Nine percent
of all reverse mortgages do the variable rate because the

(36:43):
access to the line of credit, there's many ways you
can access it, and people like that flexibility. Then you've
got the fixed product, which is a closed in loan.
So closed in loan in our terms, is it's a
one time distribution. Okay, like home equity line of credit
that we're all familiar with, just like the line of

(37:05):
credit with a reverse mortgage is what we call an
opened end loan, which means you can use that line
of credit as you need it. Okay. So with the
two products that we see and that we that we
present in every proposal is both the variable rate reverse
mortgage and the fixed rate, which is that one time distribution.

(37:28):
The fixed rate reverse mortgage. People like to think, oh,
it's fixed, that's great, I know what the interest rate's
going to be.

Speaker 1 (37:34):
However, that sounds pretty good, right.

Speaker 2 (37:37):
It does. But when you look at well, there's a
difference of fifty thousand dollars in my line at credit
because they don't give you as much on the line
of credit with the with the fixed as they do
in the variable That's why ninety nine percent of most
reverse mortgage borrowers go with the variable rate, because there's
a line of credit that far exceeds what they'll get
on the fixed reverse mortgage. In addition to the ways

(38:00):
you can access the money and control the funds in
that line of credit with the variable right loan.

Speaker 1 (38:08):
Hey, I had a client call me who was referred
to me by someone else, and she had said to
her her Michael, who the guy she wanted to do
a reverse with several years ago, give me something that
will give me some income every month.

Speaker 2 (38:24):
Yep.

Speaker 1 (38:25):
But then at some point in time she she had
run out of money and she needed to increase the
amount of money she could get and she was unable
to do that. What would what would cause that to happen?

Speaker 2 (38:39):
Well?

Speaker 1 (38:39):
And in what case would you take a loan out
where I would come to you and say I want
and it's is it kind of like an annuity then, Michael,
Where I come to you and say I need some
cash flow? Help me. What would you tell me? What
would you tell this person?

Speaker 2 (38:53):
Yes, so what I would share with that individual are you.
Let's say, for example, is if there's in that variable
rate reverse mortgage, what we're talking about is the ten
year payment TN you are e. That is like the annuity.
They take whatever your line of credit is, and they
take your age and they subtract. Let's say you're eighty

(39:17):
for easy math, okay, and they take right. No, no,
I know. So you take that twenty years, multiply that
times twelve months, and you divide that number of months
into the line of credit. Okay. That tells them how
much roughly they can give you per month. But here's
the best news about that. And again, another consumer protection
that's in place with a reverse mortgage is that that

(39:41):
tenure payment, it's again te N you are e will
continue forever. So if you live to one hundred and twenty,
that tenure payment will continue on whether or not the
money you have the money in your line of credit
or not. That's one of the consumer protections with a
reverse mortgage. So if you said, Michael, you know, we
ran the numbers. There's two hundred and fifty thousand dollars

(40:03):
in equity. The ten year payment is going to give
me twelve hundred dollars per month, Okay, random number, twelve
hundred dollars per month in the form of additional tax
free income. And it's not considered income but tax free money. Yes,
that twelve hundred dollars will continue for the rest of
your life, forever and ever and ever. It will never

(40:24):
go away, despite the fact that you've maybe used up
all of your line of credit. The other way that
we can do something similar to.

Speaker 1 (40:31):
That, that sounds pretty incredible.

Speaker 2 (40:33):
It's it is. That's why if people just knew how
the reverse mortgage really truly worked, we'd have more people
than just two percent of all seniors that could qualify
actually using the River's mortgage. It's actually very sad because
twelve hundred dollars a month to most people is a
game changer on a fixed income. It's a game changer, right,

(40:54):
It's game changer. The other option we have is the
term payment te erm. The is a fixed amount for
a fixed amount of time. So we can say, you
know what, Michael, it's I've got three hundred thousand dollars
in my line of credit. I really want to live
big for the next twelve months. Okay, well, we've got

(41:14):
plenty of money in there. Let's go ahead and give
you five thousand dollars a month tax free, which is
sixty thousand dollars over the next twelve months. So you
can go take a great cruise, so you can maybe
buy a new car. You can give to that to
some of your kids or the grandkids if you have
any right. You can do whatever you want with money.
But you're getting five thousand dollars a month for the

(41:34):
next twelve months based on the term, which is a
specific amount for a specific amount of time. That's again
why ninety nine percent of all seniors, after they understand
the differences between the fixed product and the variable product,
go to the variable product because it gives you all
those options with your line of credit.

Speaker 1 (41:53):
But the fix that does not.

Speaker 2 (41:55):
No, the fix is a one time you know what,
you got sixty thousand dollars comeing to you. You're sixty
thousand dollars and that's it. But again, you don't have
to make a payment on any of it, no matter
what loan program you get into with a reverse mortgage.

Speaker 1 (42:05):
All right, let's take some time. We've got about ten
minutes left. Let's talk about buying a home a reverse mortgage.

Speaker 2 (42:14):
Yeah, I think that this is.

Speaker 1 (42:16):
One of the most misunderstood options available and so many
people could be homeowners, which is what we're talking about
in the month of June especially. Let's talk about we
have a situation where we're working together on and I
know you just finished while you're working another one in Hawaii.
I think, so, why would I want to buy? I

(42:38):
have to move. I've sold my home. I have to move.
I can't qualify for Didley. I'm on Social Security. I
don't have enough income to qualify. I don't have any debts,
have some money that I just earned out of the
sale of my home, but I can't qualify. My husband's gone,
no money, no income to speak up? What can I do?

(43:01):
How are you telling me, Valerie and Michael, I can
buy a house. How does that happen and not qualify?
Can't do that on a conventional loan? Why would anybody
give this to me?

Speaker 2 (43:15):
Right, Let's talk about the qualification real first. So with
a reverse mortgage, they're not you don't have to have
a job, you don't have to you can you don't
have to have a FIGHTO score, so to speak. They
do run your credit, but it's not for that reason.
Is it's a financial assessment. And what the financial assessment
says is it based on your current income, which is
usually so security, your a pension, based on the debts

(43:37):
on your credit report, maybe a car loan or small
credit card payments, based on your living expenses, based on
the size of the property, right and then based on
the tax and insurance. And if you have an h AA,
that's the financial assessment piece. If your income and your
imputed assets computed assets are sav these accounts, iras, stocks, bonds,
whatever you have in the background, those are imputed assets

(43:59):
which they can use is to help you qualify. So
with a reverse mortgage.

Speaker 1 (44:03):
Sure I have no assets, but I have cash that
I just got from the sale.

Speaker 2 (44:06):
Of my house exactly. So in that case we're gonna say, okay,
let's say you're and I can run the number for
us here, and I think I'll just go with the
one you went with yesterday. Roughly she was she sold
the house, and she sold it for eight hundred thousand.
She walked away with I think right around seven hundred thousand,
right close to that, yes, close to that. Okay, So

(44:29):
she's going to be that individual is going to be
buying a house in another market for right around I
think you said three fifty is that correct? Okay? Okay,
And let's say the age is seventy five years of age.
I don't remember for sure, but at seventy seventy five
years of age, based on a purchase price of three

(44:51):
hundred and fifty thousand, that individual would have to come
in with two hundred and seventeen thousand dollars as the
down payment rather than spending three hundred and fifty thousand
dollars of their cash. They saved and that example, they
saved one hundred and thirty six thousand.

Speaker 1 (45:10):
Dollars in cash.

Speaker 2 (45:14):
Yeah, well, I'm sorry, I'm sorry. The three hundred fifty
thousand dollars purchase require a down paying with two hundred
and seventeen thousand, so they would have saved one hundred
and thirty six thousand dollars that they didn't have to
put down. And if they bought the property paying cash,
that's a lot of money.

Speaker 1 (45:30):
So if I find the house for three hundred thousand dollars,
assuming my age works in the down and stuff forth,
so I find now it's for three hundred thousand, so
I could pay cash for it, right, I could, because
cause I've got the money. I just sold my house.
I just came away with seven hundred thousand dollars, so
I could pay cash for this house right right, right,
And I wouldn't have any payments except taxes and insurance,
which I would have to pay anyway. So why would

(45:53):
a person want to buy this house and put a
reverse mortgage on it right away? That doesn't Why would
any more I want to do that?

Speaker 2 (46:01):
Because you achieved the same thing as if you paid cash.
You have ownership, you have title to the property. The
bank doesn't own the property. And in this example, you
saved one hundred and thirty six thousand dollars that you
can use for aging in place, medical emergencies, providing for care,
taking a trip. But you saved one hundred and thirty
six thousand dollars while achieving the exact same thing is

(46:23):
as if you paid cash.

Speaker 1 (46:25):
And how did I And for the benefit of our
blisteners and viewers, how did I save anything? Because I
have a three hundred thousand dollar house and I don't
you're telling me I don't have I have something for
three hundred thousand, I only have to pay two hundred
thousand for it.

Speaker 2 (46:38):
Yeah, well, we used the example of three point fifty,
but I'll well, let's just say yeah, yeah, yeah, So
at three hundred thousand, again you're coming with one hundred
and eighty six thousand. You didn't have to spend three
hundred thousand dollars. Every money you spent, you spent. You
saved one hundred and twenty four thousand dollars. But you
still achieved home ownership, and you still you're on title

(46:59):
and you never have to make a payment on that property.

Speaker 1 (47:01):
I bought a house for let's just say for three
hundred thousand, and let's just say I only had to
pay two hundred thousand dollars in cash for it, right,
and just assuming those numbers work, right, that's how you
buy it, you with the re using the reverse mortgage.

Speaker 2 (47:15):
Yes, right, yeah.

Speaker 1 (47:17):
So when we say to people you save money, what
they're saving is they're saving their cash because they didn't
have to pay that much for the house.

Speaker 2 (47:23):
That's right, right, that's right.

Speaker 1 (47:26):
And what happens then is that the government or the
FAHA or whoever it is that loans that makes the loan,
they make the loan for two hundred thousand, let's say,
and they and they don't you don't have to pay
what happens to the other hundred thousand, You just don't
have to pay it.

Speaker 2 (47:46):
Yeah, that so they would start in that example with
the loan amount of one hundred thousand, and they do
not have to pay a payment on that loan ever,
as long as they live in the property, right and
as long as they don't decide to do a finance
somewhere down the road and pay it off. If they
sell the property, then they would have to pay off
that loan. Correct, But that's it. That's the only time

(48:08):
they have to pay it off, all right.

Speaker 1 (48:10):
So a person could rent and they wouldn't They could
save all their money.

Speaker 2 (48:16):
They could, but there's no security in renting. And you know,
the big challenge with renting as well, is it making
modifications to a home that you're renting is problematic. So
if you need to add something to the home to
allow you to live there, get in the landlord and
say yes, that's best of luck. Right, we don't know
if they're going to allow you to add grab bars,

(48:37):
change the shower to a zero threshold shower, add a
ramp to the front of the home or wherever it
is you're living, change the lighting. Right, there's going to
be problems with that. So if you can do a purchase,
that's always going to be better for the senior because
you're planting roots again and you have control of the
property and peace of mind.

Speaker 1 (48:56):
All right, So this sounds pretty good. So I want
to go buy a house. I'm a single lady. I
have Social Security of maybe one thousand dollars a month
in social Security income, maybe fourteen hundred a month, maybe
nineteen hundred a month. But I certainly can't qualify for
a house. But I really can't qualify to rent either, right,
So I could if I have some money, I could

(49:19):
buy a house on a reverse mortgage. I would never
have to make a mortgage payment. I would only have
to pay taxes, insurance, and if there are homeowners associations
and of course utilities and other things which I would
have to pay just for my life anyway, that's right.
So rather than renting where you know the rent could

(49:40):
go up and you don't know what the landlord's going
to do, and the landlord you might have great rent
and the rent and maybe they never raise your rent,
but maybe one day they sell the building and you've
had the benefit of really low rent for ten months.
Now you're stuck out here. Someone puts you out on
the street and you can't find a rental anymore because

(50:01):
the rents have gone up, and you've just been spoiled
by having a loan rental price, right, that's right. So
you can buy a house and you're never going to
have to make a payment on the mortgage, that's right.
And when you pass away, the government does not own
your house and they do not come back and ask
you to pay off that money.

Speaker 2 (50:20):
Well, they do ask you, Well, you do have to
pay off the money. So it's a loan, right, So
you do have to pay off the loan, right, But
that's it. You have to pay off whatever is owed
on the reverse mortgage, but you don't have to pay
any more than that. So, but there is a protection
in place that if let's say we have a black
swan event and the market just drops and your loan
balance on your reverse mortgage is higher than the value

(50:44):
of your property, like, oh, who's going to cover that difference? Right? Well,
when you get a reverse mortgage, there's a two percent
mortgage insurance premium that you pay, and that's with a
purchase you're actually going that's going to be part of
your down payment. With a refinance that comes out of
the equity, so you don't actually write a check for that.
But that two percent makes a reverse mortgage a non

(51:07):
recourse loan. Makes it a non recourse loan, which means
that you never owe more than the value of the property.
So if your loan amount, let's say you're an early
adopter and you love Tom Selleck and he's been pitching
reverse mortgages for a lot leally that big smile. I've
been pitching reverse mortgages for a long time, right, and
you got one twenty five years ago, which some people

(51:27):
could have. Well, your loan balance, because again with a
reverse mortgage, the loan balance goes up, so it's deferred
interest because you're not making a payment, right, So that's
how that make makes their money. They're not making the
money when you pay the payment on a forward mortgage.
There's interest charges every month. Well, they add that to
your reverse mortgage, right, so the reverse mortgage balance actually

(51:49):
goes up, which we show people when we provide the
disclosures and the proposal.

Speaker 1 (51:54):
But so the reverse mortgage balance goes up. But also,
let's just be honest, in most places in the United States,
if not all places in the United States, so do
property values.

Speaker 2 (52:07):
Yes, yes, that's one of the proposals.

Speaker 1 (52:09):
Well, I have a friend who has a reverse mortgage
and he's lived off of his reverse haven't made a
house payment in years, and he said, I think I'm
going to sell my house and move to Palm Springs.
I said, really, I said, can you do that. You've
had a reverse mortgage for so long. He said, sure.
My house has gone up in value so much that
even though I'm living off of the reverse mortgage, I
haven't made house payments, my house keeps going up in value.

(52:30):
So I'm still okay. So this is certainly not a
promise that that's going to happen, but that certainly is
an alternative. As we get to the end of our show,
this has been really really valuable information. I'm sure people
have learned a lot. What's your best advice to people?
All the things you've known, the scenarios you've seen, the
people you've walked into their homes and been at their

(52:51):
dining room table with them and seen their situations. What's
the best advice you have for someone.

Speaker 2 (52:58):
Is make sure you get the right advice and the
education from the right individual. What I see so many
times is, well, my son says, my daughter says, my
neighbor says, these are unlicensed, never been to any educational course,
have never presented any of what we're talking about today,
whether it's on the real estate side. And you've seen
this too, well, my neighbor says that. And it's like

(53:20):
it's my head spins when people say my neighbor my son.
If their son or their neighbor and their daughter and
whomever they're talking to doesn't have the same level of
expertise that we do, why do you go with that advice?
Understand the miss from the facts. The facts can usually
change the direction for most people because they go, I

(53:42):
had no idea, So please get good information from the
right individual. That's the best advice I can give.

Speaker 1 (53:48):
You, absolutely, And you may find yourself in a situation
where you can own a lovely home, yes, and stay
there forever on a very very very little budget and
with almost qualifying Michael Pancott, thank you so much. Tell
us Where can people find you?

Speaker 2 (54:05):
Yeah, you know what, would love to talk to anybody,
have any questions. My number, my cell phone number is
nine one six two nine six seven seven six by.
That's nine one six two nine six seven seven six by.
That's the best way to get a hold of me,
or you can email me.

Speaker 1 (54:22):
And we want to tell our listeners and our viewers
Michael was on our show a few weeks ago and
someone listened to us. They called him right away. He
helped them, is currently helping them with reverse mortgage, so
I know he can do the same for you too.
Thank you very much for being our guest. Thank you
to our listeners and our viewers for being with us
again today and always ageless. We look forward to seeing
you next Monday at three o'clock. Thank you everyone, Happy

(54:46):
d Day, and thank you Michael for your service.

Speaker 2 (54:49):
Thank you Belli, You're very welcome. Thanks for having me on.

Speaker 1 (54:51):
You're welcome.