3 Ways to Use Your Mortgage as an Asset ft. Matt Shanlian

Our first guest joins to help reframe the mortgage not as simple debt, but as a flexible tool for cash flow, retirement planning, and estate simplicity. We break down closed-end seconds that preserve low first-lien rates, and clear the fog around reverse mortgages and what really moves rates.

• treating the home as its own category on the balance sheet
• common equity mistakes and emotional purchasing
• preserving low-rate first mortgages with a closed-end second
• cash flow as the key budget metric
• reverse mortgage uses for payment relief and tax-free lines
• estate planning benefits and why heirs want simplicity
• how Fed moves relate and don’t relate to mortgage rates
• realistic outlook for rate ranges this year

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Disclosure: Information contained in this podcast is for entertainment and informational purposes only, and should not be considered as financial advice. Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC registered investment adviser.  Registration as an investment adviser does not imply a certain level of skill or training. Keystone Financial Group and PCA are separate, non- affiliated entities. PCA does not provide tax or legal advice. 

Transcript

Welcome And First-Ever Guest Intro

Announcer 0:00

The financial huddle does not provide tax, legal, financial, or other professional advice. Listeners are encouraged to consult with their own advisors in these areas. Alright, everybody, huddle up. Play Huddle Z. This is the Financial Huddle. Ready?

Ryan Fleming 0:14

Hello, Huddle Nation. Welcome back to another episode of the Financial Huddle Podcast. Wherever you are, wherever you may be, we hope you're doing well. Everybody's healthy. Maybe you had a great Valentine's Day. And as always, very honored to be with my uh my partners here, uh Brian Minier, Ed Beemiller. Guys, thanks so much for joining us. Good to be here.

Ed Beemiller 0:35

Always a pleasure.

Ryan Fleming 0:36

Well, fellas, always. Yes, sir. Guys, I'm gonna get right into this. This is an epic uh this is an epic episode today. It marks the very first time ever we've had a guest, and it's a big deal.

Ed Beemiller 0:49

A round of applause. A round of applause.

Ryan Fleming 0:51

So, Huddle Nation, let me be the first to introduce you to uh one of our very, very good friends. Um, he's been a partner of our firm pretty much since the beginning. Um, Mr. Matt Shanlian, and we've invited Matt to come in here today for a plethora of reasons. One, he's a pretty awesome guy. Two, he knows quite a lot about the uh mortgage industry, and three, he is a fellow Cleveland Browns fan.

Brian Minier 1:21

Sorry about that.

Ryan Fleming 1:22

You know, Misery loves company. That's right. Now, the only knock that we have on Matt is that he is a Michigan fan for some reason, but we love him anyways. We do. Okay.

Ed Beemiller 1:33

So we can get past it. We can make an exemption, that's right. Exceptions are loud.

Ryan Fleming 1:38

Matt, welcome to Huddle Nation.

Matt’s Background And Advisor Partnership

Ryan Fleming 1:40

Welcome to our show. Thank you so much for uh giving us some of your time. Why don't you tell the audience just a little bit about yourself, how you got into the industry, and what the heck do you do, man?

Matt Shanlian 1:51

Hey, I appreciate you guys. Uh and hey, we Browns, we got a we got a Pro Bowl quarterback. We can proless it's a good thing. If you think about it on paper, we got the best defensive player and the and a Pro Bowl quarterback, but somehow we're still 3 and 14 every year. Yeah. Uh anyway, uh but uh like Ryan said, uh, my name is Matt Shanlian, and and uh I I've been lucky enough to work alongside these guys for a lot of years and my history, how I got into the industry, but really into the mortgage industry. Work for a family company. My father started an organization over 25 years ago, and we've worked expressly with financial advisors like uh like my pals here, and just really built uh our organization around the financial services industry to find ways to just help advisors because we've found over the years that most people, when they think about retirement, they think about Ed and Ryan and Brian. But when they think about their house, they they they go to the bank. And sometimes you can get two different stories, two different ideas, conflicting um, you know, thought processes on what kind of mortgage to get and how does that affect your financial, your your retirement and what you're saving. And so we kind of built our organization all those years ago just to service these advisors and to make sure that what we're doing on our end is always complementary to the advisor. We're always doing something that helps their financial plan build wealth, save for retirement, not doing something that may take money away from that goal. And so we've been at it for a long time, um, been through a bunch of different seasons, some some good seasons, some crashes, some uh some spikes, you know, with the pandemic. And so it's really a great thing to be a part of an industry like this and also be partners with you guys for so many years when we've seen, I mean, you bid me with at 2% rates and eight percent rates.

Ed Beemiller 3:47

Um we like the two percent better, man.

Matt Shanlian 3:50

Yeah, me too. Yeah, so yeah. Bring those back. So uh does my wife. She loved she loved those paychecks when uh rates were well Matt.

Ryan Fleming 3:59

Yeah, sorry to interrupt you, Matt. So the the nature of our show, like we told you, is to really promote financial literacy. And like I said, we we're just really thrilled to have you because home equity

Is A Home Asset Or Liability

Ryan Fleming 4:10

management is truly it's a misunderstood tool, to be quite honest with you. And so what we did is we want to we just want to talk about some different aspects of home uh home equity management and just what our listeners can really be thinking about when it comes to just their mortgage and the best way to manage that that asset, or maybe it's a liability. I guess we'll get into that.

Brian Minier 4:31

And Matt, one of the things that we really appreciate about you is not just that you do mortgages, but you really help and work alongside advisors. I know that's your niche, but it is very helpful to our clients when we can we can talk about how that works alongside with their financial plan. And so, and so one of the things that that we always talk about with our clients as it pertains to their home is is it an asset or is it a liability? And so love to hear your thoughts on, you know, what is it? Is it an asset? Is it a liability? What's your thoughts?

Matt Shanlian 5:04

Yeah, so I mean, according to your credit report, it's a liability. Uh it's a debt that shows up on your liability uh side of your balance sheet. We always we use the term balance sheet a lot, we use the asset to liability side in our conversation. So uh, but it's a it's a pretty unique liability, obviously, you know, uh different than a car, and most things that you're paying, you know, those things depreciate over time. The house obviously generally appreciates every year. There's been about three years in the last 50 that the houses haven't appreciated at least uh a marginal amount. And so it is a liability while you're paying it down, um, but it is also a store of value as you are paying it down. Um and it has so many things that it touches in your financial picture. And the big thing that you know we always talk about is houses, you know, you can you can look at it as like, well, just a place to sleep. You know, yeah, I hear that a lot. But it's also a place of memories. It's also the place where you your son learns to maybe swing a baseball bat, or your daughter does her first cartwheel. And so it isn't like an IRA that's just there to grow. Um, there's a lot of emotions that get tied up into it. And so that's why we see so many mistakes around the house. Um, whether it's getting in the wrong type of mortgage or maybe over buying or over-renovating, because you know, having that bigger, you know, dining room is gonna be great for Thanksgiving, but maybe it doesn't grant a lot of value and it costs a lot of money, or and so we see a lot of people with their house making some illogical choices. And so it is a liability, but we want to be strategic and how we budget. So it's not just there to exist, but how do we make sure we use that equity to maximize opportunities for retirement, for you know, lifestyle, for you know, you got a kid playing travel ball, and you know, that bill all summer long is expensive. Like we don't want to also have a big mortgage if that's the goal of the family. And so um we look at it to try to answer your question as easy as possible or as simple as possible. It is either it's really a class on itself. Um, and so it needs to be managed differently than a credit card bill or a car loan or an asset like an IRA or 401k, a cash file and life insurance annuity. And so I kind of use the mortgage as almost its own separate class.

Ed Beemiller 7:26

Yeah, yeah, and it's uh I think you do a great job, Matt, working in conjunction with us and the advisors because when we're looking at the real estate often, it's the most underutilized asset on their balance sheet, you know, because everyone's goal is to pay my mortgage off, you know, at that time. So it is an

Using Equity Wisely And Common Mistakes

Ed Beemiller 7:45

important tool and uh it definitely needs you know to be considered as part of a holistic plan.

Ryan Fleming 7:52

Yeah, and and in that, you know, talking about trying to pay it off, you know, you have one side of the house, like Dave Ramsey says, pay that thing off as fast as you can. And you have other people that would say, no, maybe at times it's a great way to strategically leverage some home equity to free up cash flow or to invest or to start a business. And so, you know, not that long ago, uh Ed made a comment about rates being like at two, two or three percent 30-year fixed mortgages, and those were incredible opportunities. Well, now we're in a little bit of a different environment. And so, Matt, this poses uh an issue for people that actually would like to consider tapping some home equity or paying down some higher interest rate credit card debt, or maybe taking uh a home equity line of credit to invest in real estate or whatever it may be. But with rates being so much higher nowadays, has there been any kind of new um new things that's uh arised in the mortgage industry that allows people to tap that home equity but not

Low Rates Vs High Rates: Today’s Dilemma

Ryan Fleming 8:55

lose that maybe 3.9% or 2.8% fixed rate that they had several years back? Um I I've had a lot of clients say, I wish I could do that, but I don't want to give up that rate. And so is there something out there that clients can now understand here in 2026 that can help them in that way?

Matt Shanlian 9:14

Yeah, absolutely. And it's uh it's one of those things that you know what we've partnered with for you all and your clients your your uh for years is um a lot of stuff that with just debt consolidation types of uh of of mortgage um transactions, meaning you know, uh people you know, life happens, but you know, debt gets accumulated whether it's on purpose or a lack of paying attention or or you know, sometimes it can just be an unforeseen event. And so a lot of times you as advisors, we have a big heart because you're you're you know, uh it's always nice to invest this big swell of money that just laying there. But

The 30-Year Fixed Closed-End Second

Matt Shanlian 9:50

I know a lot of times in your job you're you're helping kind of people get out of a situation before you get into the next situation. And so we've partnered with the debt consolidation stuff for years, and you know, when rates go from all-time lows to really what their highest point was in over 20 years, it becomes really hard to tap into equity um the old-fashioned way, which would be what we call like a cash-out refinance, which is very simple terms. You take your mortgage that you owe more money on and you you throw away that interest rate, you maybe add some debt and some dollars to it so you can pay off debt, and then you get the new market rate. So if you were at two and a half and I'm at seven and a half, you would throw away that two and a half and go to seven and a half, but you would get the cash to consolidate um some debt. The problem is that move in rate really ate up all the cash flow, the good news out of it.

Ryan Fleming 10:37

Right.

Matt Shanlian 10:38

Um and so the good thing about uh hard times in my industry is it causes our industry to be more creative and find solutions that are that are true to the market. And so one of the products we use is it you know, it's its name is called a closed-in second, we call it a cash out second. And really what it is, it's a 30-year fixed second mortgage and it allows you to do kind of the best of both worlds where we hold on to that really low interest rate, that 2.5, 3%, but we can take the equity out at market rates. Right now it's in the 6% range in the mid to high sixes. You're able to get that interest rate fix it for 30 years, but only on the portion of equity that you're pulling out. And so if we're paying off, you know, credit card debt that's in the mid-20s to maybe high twenties uh percent range uh and pulling it and stretching it out over 30 years uh into a product that's like in the 6.5 to 6.7 range, we we now get that cash flow improvement, which is really, you know, we've heard terms cash flow is king and all that stuff over years. That's really important. I think a lot of times in my industry people get um confused by like interest rates and and and all these numbers that don't really matter, APRs. What matters is what comes in and out of your bank account every month. What are you saving? What are you spending? What's left? Is there any? And you know, we want to make sure that we have the maximum opportunity for that money that's left over, whether it is lifestyle, um, and that's what your family wants, or whether it is for saving for retirement. And so that product is is really great. And I and I'm hopeful that my industry

Cash Flow First: Why It Matters

Matt Shanlian 12:10

really takes hold of it. We we're doing probably a dozen or so a month all over the country with our financial planning partners. Um I I suspect it'll be more because rates I don't think are, you know, we can talk about that later, but we're not gonna be back to where we were, maybe ever, but not for a while, if that. And so this is a really great product that bridges the gap, that gives us the ability to get that equity, but not lose out on that really great decision we made in the pandemic with that low rate, and give you the best of both worlds, consolidate that debt and start saving again or start creating that cash flow that you're missing.

Ryan Fleming 12:41

Yeah, you made a comment earlier about the house being an emotional thing, and I and I agree with that. And and you know, as planners, you know, we want our client's house to be paid off too, right? There's just a couple different ways you can go about it. But we also want to make sure that our clients understand the power of liquidity, use, and control of their dollars. And so this closed-in second mortgage that you talked about can really provide a lot of relief and stress relief on a month-to-month basis for maybe millions of people and even some of our clients. And you're right, uh, cash is king. Cash flow is what matters the most on a month-to-month basis. So that's important to understand that those opportunities are still out there. But I there's another kind of controversial thing about mortgages, I think you wanted

Reverse Mortgages Demystified

Ryan Fleming 13:25

to ask.

Ed Beemiller 13:25

Yeah, and and this is something um this is a topic that has come up more and more in the last three, five years, uh, especially with our senior marketplace that maybe are transitioning from the home where the the kids grew up in and they're they're relocating or moving. And once again, with the underlying goal, just kind of mindset for a lot of that marketplace is about cash flow. Here's my retirement objective. I need to minimize the outflows. And so one of the things that the goals for a lot of these people when we talk to them is we got to pay our mortgage off by this date because that's when we're retiring. And the reality of it, what that creates is kind of what we mentioned earlier is the mortgage is paid off, so the cash flows, you know, you've assisted the cash flow, the outflows have been decreased, but you now are have often what's a very large asset, which is un underutilized. And then people are trying to figure out all right, how do I get my income objective met using the other assets that I have? And so the topic of reverse mortgages, and this is something that you know kind of has hit close to me, and and Matt, you guys are the ones that helped my parents, you know, and this is going back six, seven years ago when they moved from Cleveland down to Columbus, sold the house that we grew up in, um, realized you know the proceeds, but the proceeds weren't quite enough. So we were actually able to do, when I say we, Matt and his team were able to do a reverse mortgage purchase that got my parents into their new home and actually provided some additional capital that we put into uh another income-producing product for them to help build their income for their retirement needs. So, you know, in that case, Matt, I I think it's one of the most misunderstood strategies or products. Can you give us a little overview and kind of your thoughts and how you look at reverse mortgages?

Matt Shanlian 15:25

You know, it uh reverse mortgages have kind of been like this strange journey for a lot of people in our industry. Um, we've been huge proponents of them for this whole time. We've been selling them um as a product since I've been in the industry over 20 years. And I mean, to say that we're a proponent of it, my grandparents, who have both passed on, had a reverse mortgage. My parents, my father, who's on the other side of that wall, uh he's 69 years old, he has a reverse mortgage on his house. And so uh we don't just sell it because it makes money, we sell it because we believe it. And my disclaimer every time with the reverse mortgage is it's not for everybody. Yeah, okay, this is not a fix-all, this is not everybody needs a reverse mortgage. There are extenuating circumstances, but I truly do believe that reverse mortgages have a place in more financial plans than current. Um and really what it is is um the traditional um reverse mortgage kind of scenario is uh you're living in a house, maybe it's paid off, or what we're seeing a lot now is uh people of retirement age, you know, like my my father and my mother, they bought a house, a really nice house, uh about 12 years ago. So in their mid-50s. Um that didn't happen generations before. My grandparents bought a house when they were 30 and died in it 50 years later. Like they didn't move up and down. And so people buy really beautiful homes in their 50s. And so then when they want to retire in their early 60s, they still owe $150,000, $200,000. When they're trying to build that budget down of like, okay, I'm I'm going from accumulation to spend down, I gotta get my monthly budget as low as possible. Um they look at the mortgage. And so a lot of times what we do with reverses is we can liquidate a uh a mortgage payment. So um be able to pay off an outstanding debt on a house so that $1,900 a month or

Estate Planning And Heirs’ Real Needs

Matt Shanlian 17:10

$2,400 a month that goes out for mortgage payment is no longer. Um thereby basically adding $30,000 a year of cash flow um to a budget. Um or in the case of my father with a reverse mortgage, um he doesn't know anything on his house. And so he opened it up because he wanted a line of credit. Because he has his assets other places. And and um the great thing about a reverse mortgage is the proceeds in those lines of credit are tax free and you don't have to repay them. And so he's kind of setting that up as a protection or a shield around his other assets because let's say something happen- I mean, it's for people over the age of 62. So obviously at that age, you know, there are medical emergencies and things that happen more unforeseen than younger uh people, nothing against the older people listening. And so things come up unforeseen. Uh what uh would you rather take something out of an account that is taxable or that would lower um an income stream later? Or would you rather take it out of a tax-free account that you don't have to repay? Whether that's a you know, uh a dental surgery that costs ten thousand dollars or something, uh needing a new car because something happened. Um he's kind of set that up and and hasn't had to tap into it yet, but he's set it up as that kind of protection over the rest of his assets because honest, quite honestly, like uh when him and my mother pass, I don't want that house. But if he used that house to protect the rest of the assets that I would get in the trust that is set up that is uh avoiding the taxation and all like that's a greater use, and so like we don't we want to have uh you know a more educated view, and we try to do that with our clients and advisors of how we can use the house in that let in that way of not just you know liquidating a payment always, but if you have a home that's paid off and it's a nice valued home, how can that be a protection for the next generation? Because I don't want a three-bedroom ranch, I got too many kids

What Really Moves Mortgage Rates

Matt Shanlian 19:05

and animals, and I just that's gonna be too small of a place for me. Um and I live in the middle of nowhere in the woods and he lives in town. And but if that if that uh loan or that home protects all of the things he saved, and so that my sister and I, when they do pass, that there's an inheritance that's more robust, and I don't have to sell anything. I just get to go to the attorney's office and split the assets. I don't have to put a for sale sign up and mow a lawn to get the money back of an inheritance. So it's just a much cleaner thing um to go through in that. And I I don't want to be too morbid, but it's a great illustration of how a reverse mortgage can be used to protect the other assets that you get.

Ed Beemiller 19:48

As part of estate planning. And that's so true.

Brian Minier 19:51

We I I tell clients all the time that your kids don't want your house. Yeah, it's a it is a headache, and so you're absolutely right. And Matt, that is a great example of how you come alongside of a financial planner and help. I I did want to talk to you a little bit about interest rates. You mentioned that before. And two things, two questions. One, where do you see interest rates going? And two, some people feel that the interest rates are tied to what the Fed is doing. So we know back late last year the Fed lowered interest rates. Are the two tied together?

Matt Shanlian 20:26

Yeah. Uh we'll tack the Fed question first. Um, yes, and no, not always. So the Fed, you know, when they change the rate, they're not saying, hey, mortgage rates are now three or three and a half or three and a quarter. What they're changing, they're they're they're changing is the overnight lending rate, which does affect mortgages. Um so when the Fed cuts, it's generally good news over long term. It's not an immediate, like you know, there's an announcement on a Tuesday at 2 p.m., Fed cut the rates to 20 to 5 base points. It's not immediately my rate sheets are are improved. A lot of times, actually, for the first couple days they go the other direction because what people need to understand is mortgage rates, mortgage-backed securities are a market commodity. So they're traded. So people will take news and and it'll it'll go up, it'll go down. But it we are in an environment

The Path Ahead For Rate Levels

Matt Shanlian 21:15

of continued rate cuts. Now there's gonna be a little pause probably here for the next few months. Um and so that is generally pressure for rates to come down. But it's not a one-for-one. If if they drop the rates 50 basis points, I don't drop 50 basis points. Sometimes when they drop the rates zero, no, none, my rates actually will get better, you know, a small amount. So, but the the environment we are heading into, and and we don't want to get too nerdy about this stuff for your guys, as people that'll probably pass out to talk about more securities any longer. But you know, we do have a new Fed chair coming in, um, you know, and it's it's an appointee of the president. So, what I will say is I don't know how this person will react to the current environment. Um Mr. Powell was very um uh uh steadfast in his approach, um whether you liked it or he didn't. Um I think he did a lot of good things. I think there's some things that I would have done differently, but that's me, and I'm not an economist. Um but I I do think that uh knowing who is in our political offices, they do generally like rates to be lower. But I don't expect them to be four percent. Um if they do get to that level, what I will tell you is that's generally meaning we're having a recession. So there's a lot more bad news around low rates that uh happens around the whole economy. And so when people say I wish rates were lower, know that if rates go down a whole point in a short period of time, that usually means the stock market went down 12, 14 percent. That usually means unemployment went up. So maybe your neighbor lost their job. And so there's some humanity around rates that I think we get lost. We want to just cheer, you know, cut the rates, cut the rates. Well, we do it too quick, it's either that's

Final Takeaways And Call To Connect

Matt Shanlian 23:00

either gonna create inflation, or if we're doing it really fast, it's because our economy's in trouble. Impacts with both sides at lower rates for lending to be easier to you know you know encourage growth. So long answer to say. I think rates are getting they're slowly moving in a positive direction. Um you know, in our height, we were almost at 8%. I think right now we're in like the mid-sixes for like purchases. Um this is on a 30-year fix, Matt. Yeah, this is on a 30 year old. But like FHA VA loans, we're in the high fives. I mean, that feels like to me, I mean, that makes us I mean they for a few years it was it was pretty dark in our industry. Um I I think we're gonna continue to get down there. I could see like your conventional rates getting into the low sixes or fives by the sometime this year.

Ryan Fleming 23:42

Yeah.

Matt Shanlian 23:43

Maybe getting low fives with government loans. That's honestly a pretty good rate window.

Ryan Fleming 23:48

Yeah.

Matt Shanlian 23:49

It's really whenever we think of it like a pendulum, I'll tell you with rates. The further it goes low, the more momentum it's gonna swing the other way to go high. And so if we can stay in that four and a half, five and a half percent range, that's a good amount of money. Like that's a good burn on the money for a bank to lend out. Um, that makes the money pretty cheap to borrow. Um, and there's healthy margins all over the industry. And so I don't pray for a 2% range again because I know that's gonna just make things go back up. I'd love for us to settle in 5-4 range, and we all be happy people. And I think people there'd be a lot of affordability too in that range.

Ryan Fleming 24:25

Yep. Matt, I mean, huddlers, it's clear. Uh Matt is an expert uh in mortgages. Matt knows more than we do. Yeah, he's the man. Matt, I can't thank you enough for just you know taking the time again, educating our huddlers out there. And and huddlers, whether it be a closed-in second mortgage, a reverse mortgage, um, learning a little more about rates, and and maybe if your rate can be better improved, whatever it may be, anything mortgage-wise.

Brian Minier 24:51

You can just get a new house.

Ryan Fleming 24:52

Or if you just want to buy a buy a new house, we we'll get you in touch with Matt. Um, you know, let us know, shoot us an email, we'll get you Matt's information. They are, uh, in my humble opinion, um, some of the best in the entire country when it comes to the mortgage industry. Mortgage experts through and through, uh, a trusted partner. We value you so much, brother. Thank you so much for all you do for us, our clients, and uh just everybody throughout the country, to be quite honest with you. Incredible topic. Mortgages are very prevalent. It's a very misunderstood tool out there. And Huddlers, uh, we promised that we would bring financial literacy, and we are super glad that we could provide our first guest ever to talk about this topic. More to come. Yep. More to come. Tune in next time, Huddlers. Take care of yourselves. Whether you're listening or watching, more to come. Thank you so much.

Brian Minier 25:38

Hit that subscribe button, follow us, and like us.

Ed Beemiller 25:40

See you next time.