Mortgage Decisions in Midlife: What You Need to Know Before You Buy Again

How do mortgage decisions change as you move into your 40s, 50s, and beyond?

In this episode of Real Estate Connections, host Mary Foerster sits down with Solomon Skolnick, a senior loan originator and author known as “Professor Home Loan,” to break down what today’s buyers need to understand about financing in a changing market.

With more than 20 years of experience, Solomon shares insights specifically for those navigating major life transitions such as empty nesting, downsizing, relocation, or caring for aging parents.

This conversation goes beyond rates and approvals. It focuses on what lenders actually consider, what they don’t, and how to make smarter financial decisions in today’s environment.

In This Episode You’ll Learn

• Why downsizing often becomes “right-sizing” in today’s market
 • How rising costs and limited inventory are impacting housing decisions
 • What lenders look at when approving a mortgage and what they don’t
 • Why taxes, insurance, and maintenance costs matter more than you think
 • What not to change financially during the loan approval process
 • How asset-based lending works for buyers with strong savings
 • Options like reverse mortgages for purchase in later stages of life
 • How the sandwich generation is navigating housing for both parents and children
 • Why real estate decisions are emotional but financing decisions must be logical

Solomon Skolnick is a Senior Loan Originator, 5-Star Mortgage Consultant, and author of Home Loans Made Simple. With over 20 years of experience, he is known for his client-centered approach to sustainable homeownership and his ability to simplify complex financial concepts.

Often referred to as “Professor Home Loan,” Solomon helps clients understand not just how to secure a mortgage, but how to make decisions that align with their long-term financial goals.

Connect with Solomon Solskolnick

Get a free digital copy of Sol's book about home financing. https://solskolnick2.book.live/mortgage-lenders-buyers-book

Website
 https://unitedmortgage.com/loan-officer/solomon-skolnick/

Facebook
 https://www.facebook.com/solomonskolnick
https://www.facebook.com/sol.skolnick

This episode is intended for informational purposes only and does not constitute financial or investment advice.

Transcript

Speaker: 0:00

And welcome to Real Estate Connections podcast. And today we have Sol Skolnick with us, a lender from New York area and just a really a font of information. He calls himself the professor mortgage lender. And you'll know why as we talk to him right now. Sol has had more than 20 years experience as a mortgage lender and he is just a font of information. I've asked him to kind of tailor his comments to an audience around age 45 to 65. So today what we want to do is cover is what are the transitions, what are the transitions that end up in mortgage transactions for this population? Empty nesters, relocation, whatever. And then secondarily, what about those same mortgage considerations, loan considerations, when you're taking a look at the responsibility of caring for a dependent relative, typically an aging parent, but not always. Welcome to Real Estate Connections podcast, where relationships open doors. I'm Mary Foerster and housing is a universal need. We are often thinking about our existing housing, our future housing, that possibly of family members. This is where you're going to hear the issues and the people who are working the issues every day. Please hit subscribe and like if you find this podcast helpful to you. Thank you. So welcome, welcome, welcome. And Sol is the author of a really wonderful book that is available and will be in the show notes, Home Loans Made Simple. And I enjoyed reading every bit of it. So welcome today, Sol. How are you today? Great. Thank you, Mary. I'm doing very well and I'm really looking forward to our conversation. Terrific, terrific. Well, we both agreed that Sunshine makes us smile and neither of us has it right now. So we're going to work at that and I know we can do it. Absolutely. So we're seeing a lot of people who have been homeowners, property owners, in their homes, maybe typically raised a family there. And now maybe empty nesters. Now, Ford is thinking longer term about retirement. And when the one gift that COVID gave us was remote work, you know, and so we have a lot of us have more flexibility now in doing our work remotely. So what are the trends that you're seeing in this population group, Sol? Well, typically when people decide that the home that they raise their family in, if that's what they've done, is more than they need, they look to downsides, buy something smaller, it might be within the same area or it might be very far away in terms of retirement. But if you're looking in general in the same area, the issue is it becomes very expensive at the moment. Prices have risen, prices have maintaining the home of risen. And so you see a lot more sidesizing as we like to call it at this point, rather than downsizing where people are basically spending not much less than they had spent before to acquire something. What they're trying then to acquire is something that's more physically manageable for them, whether that's smaller square footage, or whether that's in a development where somebody else will take care of a lot of the maintenance, that's really going to be personal choice. So that's a big difference. And I was mentioned to you in our earlier conversations, we sold our home where we'd live for 37 years. When we went to buy that home, there were six homes on that same street in that area for sale because people were empty nesting. When we put ours on the market, it was the only one because the inventory has decreased because of that. That's a big part of it. Yes, not enough homes have been built, the amount of inventory needed, but the inability of people to downsize when they normally would have at certain points in their life has certainly changed the method. I'll be it, your home was 200 years old, that when you bought that home, there were six houses available on that street. Isn't that fascinating? Yes. And again, because of aging, because families had grown to a certain point and we know where we needed the space. Exactly. Exactly. So, and are you seeing trends where people are moving out of their home and moving to a less expensive location possibly? Is that a trend at all? It's a mix. I mean, if somebody needs to continue working, they tend not to move far away from where they were before. So, if they're looking at something that's smaller, they're looking at something that somebody is taking care of for them. If they're in retirement or pre-retirement mode, they might be looking to different kinds of communities, different areas to lower their overall costs. So, I've always wanted to live next to the beach kind of person. To me, that sounds very expensive. That sounds like a... Yeah. Well, again, people who I've been accustomed to moving to certain areas in Florida or certain areas in the Carolinas are finding that that's not as inexpensive as it might once have been. Clearly we know that the interest rates are higher now than they were three years ago, but that sort of quick two and a half year period where it was from two and a half to four percent really is a true anomaly. It's not reflective of where the market's been for the last 50 years. The average for a 30 year fixed note over the last 50 years has just been just under 8 percent, 7.99 percent. Fascinating. Fascinating. And again, and we forget that quickly and it's easy too when you go outside and say, "Oh, 3 percent," and done. So that's a transition. The rates have settled down prior to the recent war in Iran. So the rates have settled down for a while. They're a little bit nervous at the moment as everything is with the economy, not knowing what's about to happen. The other thing is very important when people are going to purchase, even if they've done it before, when a bank gives you an approval or a pre-approval in terms of what you can afford, they're only looking at the principal interest, taxes, and insurance, what's called in the business pity. So the principal and interest, if you have a fixed loan, are going to stay the same forever. We know that taxes are not going to go down. They're going to go up. We know that insurance is not going to go down. So those are two things you need to remind yourself quickly that when you've been approved at a certain level, that's been put in there, but two of those things are going to likely stop, and you need to prepare for that. The other thing that it doesn't include, and people, again, don't realize, the bank does not include anything for utilities, for maintenance of the home, for a new this, for fixing the boiler when it breaks. Those are all things that you need to be prepared for that the bank is not asking you about, quite frankly. So yes, when we're pre-approving you at a certain level, you need to add on the expenses that you know you've been encountering all of this time, and we'll continue to, hopefully at a small rate, but still there. I loved your warning in your book, because I've had personal experience with it. Don't go out and open a credit card as you're being considered. So here's the deal. I had wonderful clients when I was in Northern Virginia, and this man's from overseas. Most of my clients were from overseas, a physician, and he showed up at closing our inspection house inspection in a brand new Mercedes high-end model. I looked at it, I thought, "Oh my goodness." He said, "Mary, I just redid my lease." And oh, I had to call the lender and beg, just beg, "Please, please, please, you know, take into consideration the net." That's what the case was, but that was a real time example of a lot of work went into buying a house, and it can be so precarious, so precarious. Yeah. There are really several things to not change from the time that you put in the application and the time that you close, because even if he could afford that automobile, he was approved based on a particular debt-to-income ratio. Once it changes, the underwriter has to rewrite that file. They may be able to approve it again without issue. However, they've got to stop the process and rewrite it. And so each time you do something like that, whether it's a credit card, whether it's purchasing, whether it's a lease, anything that increases your debt-to-income changes the underwriter's acceptance of your loan. It was quite a lesson. It was quite a difficult lesson. So trends now, you have just sold your home. Did you move into another single-family home? No, we didn't. The first thing I said to my wife was, we're not buying anything right now because we don't need to. We're at a stage in life where we need to understand what we really need and where the market's going. If we're going to build equity, building equity through home acquisition is not the quickest way to do it. So, yes, when you're 30 years old or 25 or 42 and a half, and that's part of the plan going forward, that's legitimate and reasonable. If you're a plus 65, even if you're not planning to retire any time in your life, the point is building equity through the home is not going to be the best way to do it. So for us, we're looking at renting. We're in a condominium area where there are other homes, where there are other things being taken care of for us. And then we can see because when I always say, where do you think you'd like to live? I said, well, we've been in the same place for 37 years. I have no idea. Right. That's right. Yeah. So that people need to ask themselves that question. And then again, if you want to buy something, that's fine. And you have to understand that economics makes sense of it for you. Yes. And so there's so many wonderful related professionals to a mortgage lender. And that is your CPA, of course, whoever's preparing your taxes and advising in your personal financial plan. They're really very important in that type of transaction. You do have equity after 37 years, and you will have tax considerations of it depending on what you do with it. So those professionals are critical to a lot of your decision making, I would say. And hopefully your realtor will work with you on that. Their documentation should say also, check with to make sure that you understand the consequences of all that. So what happens, you know, what are some of the considerations you want to in our earlier conversation, we talked about ways that an older person could take use, use a different financial instrument to qualify for a loan that may not require selling of that particular asset. Is that what you were saying? Well, I was assuming that they were selling the asset but wanted to buy something else. Yes. Different ways to do it. So if you sell your existing home and you want to not have mortgage payments going forward, but don't want to pay cash or want to keep liquid to some degree, there are reverse mortgages for purchase. It's not just a refinance mechanism. You can buy a home with a reverse mortgage, which means you can put a large down payment of capital, but then you have no mortgage and then that house will be sold once it's no longer your primary and that money will take care of the home for you. So that's one way of looking to do it. If you had been earning money and been able to establish a lot of savings, a lot of stocks, bonds, whatever, there's what's called an asset liquidation loan. You don't actually liquefy it, but your ability to do that will allow us to lend money to you based on what you have rather than what you earn. That's the collateral. That becomes the collateral for the loan, I see. In most of the programs, if you have 60 months or five years worth of pity in those funds, we can lend you the money to buy the house without any income. Wow. If you have other income, social security, or you have a different kind of job, that can also help to offset that. But you can do that based on assets that you have that are accessible. Get homes, build it, which is why I said something before about the real estate. Homes don't count. So even if you have six other homes, they're not liquid, you have to sell them. But stocks, bonds, mutual funds, any of the things that can be turned into cash in a normal course of events through your financial planner say, "Okay, press a button. I need $711,000 on Friday." And they say, "Sure, I'll put it in Wellbarrow and bring it up to you." Well, excellent, excellent. So what are you seeing? And what is your experience now that you're seeing with, I would say, sandwich generation people? Have you run into that quite a bit? Or what are some examples of people in those middle years now having, taking a look at how important it is to maybe step in, maybe become a partner with an aging parent or relative? What are you seeing there? Well, so there are conversations, and again, you need your other legal professionals, but there are conversations. If the parent's intention over time is to allow the children, middle children, to own the house, you may want to create ownership sooner rather than later so that the responsibility can be shifted to the middle of the sandwich, if that's possible for them to do. Because what happens, tends to happen, is people get later in life. If they don't own it outright, they may have trouble keeping up with the mortgage, with the additional costs. And having the middle generation help take care of them rather than give them a gift or lend them the money, sometimes switching ownership will help. Again, you have to be in a position to do so, but it can be helpful. We also find that, again, that same middle generation, more and more often are now helping their children more at certain things that they had been in the past. One of the things they're doing is allowing them to move back home after they thought they were gone. There's clearly a higher number of late 20, early 30, even late 30 children living with their parents who had never expected to do that. So that's part of it. It's not unusual now for children to get gifts when putting down a down payment. Five years ago, the gifts were $5,000, $75,000, $10,000. Nothing. The gift sum is now $50,000, $75,000, $100,000. So to offset the increase in the costs that are involved in owning the home. So yes, the parent, the person in the sandwich has two ways to look. Making sure that their parents are taken care of and what can they do to do that without making their own lives much more difficult. And what can they do to set up their children for future success, knowing that that's less likely for them than it was for the person in the middle 30 years ago. I know I've been reading a lot about being really cautious about putting your adult children in a deed, and so that does really require a CPA to get involved because of the tax basis. And so it's really critical in those cases. But it seems like each situation is different. And I've run into a lot of people lately, Sol, typically women, you know, in their middle years now responsible for going into another state, helping a parent sell a property, moving them home, et cetera. We had a conversation about how you pay for assisted living, and you said that's not a mortgage is what you said. Correct. Right. How does that work? How does that work? I want to buy in, I'm going to sell my home in Florida, I'm going to move into assisted living in Texas. What is the financial mechanism that makes that happen? Well, I mean, if you sell the home, you have to take that money and then just aim it towards the expense of moving into that place. There is no instrument, if you will, that allows that to happen. Other than having your children help you put that money somewhere that you can use it while it continues to grow hopefully, but take care of those expenses. There's no direct way to do it. Yes, because it makes sense, as I think about it, that in an assisted living environment, you need all the cash upfront, right, in order to qualify? Well, you need a certain amount, but you also need to be able to pull money on an ongoing basis. Exactly. So if you sold a home making sure that you're working with somebody professional to make sure that not only is it safe, but it has the ability to grow as well. Okay, so, Sol, you just moved out of your house of 37 years. And now you're a professional, you're what we call a real estate professional. And so anything you would have done differently? Did you run into anything that you were so surprised about? Well, we knew how to prepare the house. I mean, I've gone through this enough with clients and with real estate agents to prepare the house. We spent a lot of time doing that. That was both difficult and expensive. One of the things that I was less prepared for was what the inspector that the purchaser would hire would have to say about different things in the home. So if you're living with something and it operates, you're comfortable with it. If you think you're going to buy it and you're thinking about, well, it operates in a certain way for five, 10, 15, or 20 years, your perspective becomes a little bit different. So there were some things there that were different than I would have thought before. The other thing is to really make sure you have to talk to the real estate agent that you're working with to make sure that they're talking to the real estate agents who are bringing in new people to understand the community that they're moving into, even more so than the house. Very good example. Westchester County is where we live. We lived in one of the two villages in the county where there are no school buses. The law in New York State is that if you live two miles away or more from the school, there has to be a bus. Well, the town we lived in, Pleasantville, is not big enough. So if you're two miles away from the school, you're no longer in the village. So we had people coming up wanting to look at the house, and they'd ask me, "Well, where did your children pick up the school bus?" I said, "In some other town." It didn't exist. You need to make sure that the agents, and again, you would think that the agents would know that, and certainly the listing agents in a given village or town are absolutely new. When people are being brought up into the suburbs, especially for the next stage, you need to make sure that those agents know what the village and town are like, what the schools are like. They can't tell you the schools are good, bad, or indifferent, but they can certainly point you to the reports that will give you that information. Yes, exactly. Oh, and I can imagine in that area, you have people coming out of the city now wanting to be living a more suburban life than they have been. Yeah, very good. Yeah, I think schools, most of it is about schools, quite frankly. They want to make sure the schools will get their children wherever they think their children need to be. Yes, that's what we typically want for our children, right? So, I have lately been hearing from different real estate professionals who recently sold their homes how heart-wrenching it was to see those home inspection reports. So I appreciate your perspective of if it's working for you, it's working, right? And obviously that's a pretty subjective thing at times, but that was pretty painful to the forester family. I would say we had that experience as well. And I have to say, I used to be very cavalier to my clients and I would say, look, during an intake, this is a business transaction. My job is to get you the highest price and the buyer's agent is to get them, the buyer's, the best deal, right? So that's where the tension may lie. And home inspection, I would say, is one of those territories that was really out there. I no longer say that to people that this is a business deal because there is emotion tied to it. There's no question about it. There's emotions. And again, I come up against this all the time when I'm dealing with people looking to buy homes and I'm saying, the house is going to be an emotional purchase, but let's talk about the financing. That's called math. It's not emotional. There are things you need to know. You need to know if you're going to be subject to a prepayment penalty if you want to pay ahead. You need to know that if the rates go down in general, does your lender have some process where you can get a lower rate without refinancing? Also, if at some point you have additional money and you want to lower your principal insurance, does the lender have a program where they can let you have a lower monthly payment going forward with the same rate and the same term, but based on the fact that you actually now owe less than you did 24 hours ago? So those are often things that people don't ask because they're asking what's the rate. If they even know to ask what the rate costs, you're surprised because the rate that's posted on any given day, whether it's in the Wall Street Journal or on some bank's advertisement, has 52 little caveats underneath it. And you need to know how does that affect you? What is your credit score? What is your debt to income ratio? What's the loan to value? Those are the three things that go into the pricing of the loan. And one of the words that people don't know but need to, even if they're never going to buy again, is called PAR, P-A-R. What is the loan with zero cost? In other words, I'm not giving the bank any money. They're not giving anything back. Once you know what the rate is at PAR, you can begin to negotiate or settle in your own mind how you want it to go forward. If you want to get money back, you can take a higher rate. If you want to get a lower rate on a willing to pay towards that, that's a process too. So that's another piece that you need to know very early on, whoever your lender is, I need to know what is for PAR rate. What will it cost me to get other things? What will it cost me to get money back? And then these other pieces of the loan to know how it's going to work because that's an instrument that you're going to be tied to, in most cases, for a minimum of 15 years. And again, usually in theory, 30. The other thing I remind people when they do that is before the pandemic, the average loan was held for probably five to seven years, whether you got rid of it because the rates went down or you needed cash out or you were selling. It moved up a little bit. Obviously, it stopped for a moment at the pandemic. Yeah, some moments. People were going over, but immediately after, it's now seven to 12 years. And that's going to come down a little bit. But please understand that a 30-year note isn't you're not going to live with that for 30 years. What's your plan? And whether it's a first home or whether it's your sixth home and you're an older person getting ready for the next stage, you have to make that math make sense to you before you go forward because you're going to live with it. One other area, so is the area of accessory dwelling units. Have you seen that in New York at all? I know New Jersey is considering legislation right now. Yeah. Well, in the parts of New York, we're in it really is town by town, village by van. So they make their own rules about that. Some places are more generous about it and some places are more restrictive. And most of that is about history. I mean, there are cities of half a million or a million people in Westchester County where accessory dwellings were something that has been traditionally available. Well, if you get into some of the smaller villages and towns where there are basically one family after one family after one family, that's been less prominent, but beginning to change. So those villages and towns are saying, OK, what makes sense for us? What's going to make sense for the people living? So what? But the rules are straightforward once you're there. So ask the question and they'll let you know. Yes. So there are 20 states now that allow accessory dwelling units and each state is to a certain level of permissiveness in the state of Massachusetts just connected about a year and a half ago and rules out last summer. And but once again, just like you mentioned, the towns are now because we're not run by counties so much as the rest of the country, but the towns get to kind of weigh in. And so the progress toward getting additional home inventory, which is what this is all about and being able to use your property and be able to rent your home or parts of your home once they meet the requirements, all that to get some more income, to get some inventory is it's very spotty. I mean, it's very, very spotty right now. And it's I know in California, which has had to use for quite a while, there are the pros and the cons, but they've desperately needed that housing. And so we'll see what happens to villages and 200 year old houses and two acres of lawn to mow. I don't wish that on anybody, but that's what we have right now. And so it's a it's a it's a changing world for us. Good. Any any final thoughts, any any kind of counsel you have to people who particularly in the middle are thinking, OK, I'm ready for a transition. I think people in the middle need to understand that the how people get financing and the how and why about buying changes a lot. And so that even if you bought before, you need to understand how does it work now and you get within different states, within different counties, depending where you are. The rules are different from time to time. The costs are different. The taxation is different. The way banks operate can be different than you're accustomed to. So get as much information about how it works in the now. Again, even if you've had a house three times, the now of today is not the now of even three years ago, 10 years ago. When I get first time home buyers sitting down and the first thing they say is my parents told me to get a GFE, which used to be called the good faith estimate. Yeah. Oh, that's right. We used to have to. Well, and I said, well, that's great, except it hasn't existed for 10 years. So again, you need to be current. It doesn't matter whether it's first time or sixth time. Laws and rules change all the time because we know municipalities and governments like to adjust life for us. And certainly when it comes to housing and taxes and purchasing and stuff to do with banks, that's the case. That's true. Thank you. Thank you so much. So now you can see why Sol is called the professor, right? But do consult the show notes because we will put the link for his book, Home Loans Made Simple, or his contact information will be there and you can contact him directly. And Sol, it looks like we didn't have any sunshine from, you know, the actual star, but we certainly had enough sunshine in our conversation. I'm so grateful to you. Thank you, Mary. It's been a pleasure. I appreciate it. Great. Thanks. Thank you so much for joining us today. And I hope you found this conversation useful to you and your real estate goals. You'll find the contact information for our guests and any links they recommend you have in the show notes. And should we be able to help you identify some strong real estate professionals in your area, drop us a note at info at realestakeconnectionspodcast.com. Thanks again and bye for now. Bye.