Reverse Mortgage & Beyond | Myths, Basics & Buying a Home with Cheryl Scheidell

Reverse Mortgage & Beyond with Cheryl Scheidell and Interviewed by Diana Benson - EXP Realty)


In this episode, Diana Benson from EXP Realty interviews Cheryl Scheidell on Reverse Mortgage & Beyond to break down the truth behind Reverse Mortgages.

We cover:

• Reverse Mortgage basics

• The myths & misconceptions

• How seniors can purchase a home using a Reverse Mortgage

• Who qualifies and how the process works


This conversation is perfect for seniors, adult children helping parents with financial planning, and real estate professionals wanting to better guide 55+ clients.

Catch Cheryl every week on her radio show:
Is A Reverse Mortgage Right for You?
📻 Sundays at 3:30 PM on AM960.

Host Contact Information

Cheryl Scheidell
Reverse Mortgage Specialist
📞 480-817-4324
📧 cheryls@barrettfinancial.com
▶️ YouTube: @reversemortgageandbeyond
🌐 ReverseMortgageAndBeyond.com

If you’d like to discuss your mortgage needs or learn how a reverse mortgage can support aging-in-place strategies—such as home modifications or caregiving support—I’m always happy to help.

👉 If you enjoyed this episode, please SUBSCRIBE, RATE, and REVIEW Reverse Mortgage & Beyond so more people can discover these meaningful conversations.

Connect with Diana Benson
480-226-1925
diana@yourAZrealestateconnection.com

#ReverseMortgage, #RetirementPlanning, #AgingInPlace, #SeniorLiving, #HomeEquity, #RealEstateEducation, #Lending, #Downsizing, #FinancialWellness, #SeniorHomeowners

Cheryl Scheidell | NMLS #886425 | Barrett Financial Group, LLC. | NMLS #181106 | 2701 East Insight Way, Suite 150,
 Chandler, AZ 85286 | AZ 0904774 | NV 5091] OR | TX view complaint policy at barrettfinancial.com/texas-complaint.

Information discussed is for educational purposes only and is not intended as legal, tax, financial, or cybersecurity advice and does not constitute a loan offer or credit decision.. Reverse mortgage programs are subject to eligibility, underwriting, and approval. Loan programs, rates, and guidelines are subject to change. Always consult with qualified professionals regarding your specific situation.

 | Equal Housing Opportunity | Equal Housing Lender | This is not a commitment to lend. All loans are subject to
 credit approval. | nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/181106 

Transcript

SPEAKER_01 0:00

Welcome to Reverse Mortgage MBM, the podcast where we take you inside the world of reverse mortgages. I'm Cheryl Schidel, and I have been in the mortgage industry since 2002 and have specialized in reverse mortgages for the past 10 years. We'll cover topics like reverse mortgage basics, purchasing a home, and the myths about reverse. You'll also hear from some trusted referral partners. Let's get started.

SPEAKER_00 0:28

Hi, I'm Diana. I help people in the 55 Plus community, and today we're talking to Cheryl Schidell, who's gonna tell us a little bit about a misunderstood mortgage product, the reverse mortgage and reverse purchase. Welcome, Cheryl. Thank you.

SPEAKER_01 0:42

Thank you so much.

SPEAKER_00 0:43

Why don't we start out just you introducing yourself, telling us a little bit about yourself, your background, how long you've been in the business.

SPEAKER_01 0:49

Okay, great. Thank you. Well, thank you for having me. Uh I'm Cheryl Schiedell and with uh Barrett Financial, and I've actually been in the mortgage industry since 2002. So I've been here for a while.

SPEAKER_00 1:02

You've seen a lot. Yes, yes, yes.

SPEAKER_01 1:04

I am a Phoenician. I'm from here. Oh wow. And so, yeah, yep. And uh about nine years ago, I had about three reverse mortgages fall into my lap. I didn't even know what a reverse mortgage was. And I walked into my manager's office, I'm like, hey, do we do reverse mortgages? And he's like, absolutely. So I found my niche finally, nine years ago. Oh, wonderful. And to that point, I always like to say, you know, I was at a client's home and um talking to somebody over the phone. Actually, I was at my mom's house and I got off the phone one day five years ago, and she's like, I think I need to do this. And I was like, Wonderful. So my mom actually came to me. So my mom has this product. I believe in it so much that my mom actually has a reverse mortgage. So that's that's what I'd like to share about my background. So nine years doing reverse mortgages, 2002 from the industry of being in mortgages.

SPEAKER_00 1:59

Okay, wonderful. Sounds like you're really passionate about the product. Yes, yes. That's great. Well, why don't we start out by tell talking a little bit about the mortgage, um, reverse mortgage basics and then move on to a little bit about the myth and end with uh reverse purchases? And uh, I'm sure you got a lot of stories to tell us, so why don't you go ahead and start with a basic?

SPEAKER_01 2:18

Okay. So basically a reverse mortgage helps the senior tap into the equity of their home. So basically, think about it, you're living in your piggy bank, right? And you've been putting money into that. Why not use that to supplement your income? We've got when we retire, we have our Social Security and our pension if we have it. We have another bucket of 401ks and IRAs if we have it, and then we have our house. So why not tap into the house to supplement our Social Security and our pension, leave our money under management. The financial advisors that I work with love that because they want to keep that money under management. And then use the house to pay for the house and um you know anything that the client might need for emergencies and whatnot. But the basics are if you have a mortgage or your house is free and clear, there we would calculate your numbers to see if you qualify. It's based off of the value of the house, the age of the client, and then the interest rates. And then that will determine how much we will lend you because you need to have a some equity in your home. And basically, we would if somebody had a mortgage, we would pay that mortgage off. That would extinguish those mortgage payments. So now they no longer have a mortgage payment because that mortgage is no longer exists. Wow. Now you have a reverse mortgage.

SPEAKER_00 3:47

Okay.

SPEAKER_01 3:48

So now let's say we paid off a hundred thousand dollars to their lender and paid that lender off. So now the reverse mortgage is a hundred thousand. Well, when they were making payments on their 30-year fix, let's say, their balance was coming down ever so slightly. But it was coming down every month. With the reverse mortgage, now you have that $100,000, for example, reverse mortgage, because we just paid off the bank. And now instead of that mortgage payment going down or that loan balance going down every month, it's going up in reverse because they're not required to make a mortgage payment. So that's what helps our seniors stay safe in place and age in place by not having a mortgage payment when they're on social security. So that all being said, they are not required to make a mortgage payment. They can if they want to, but they're not required to. What they are required to do is pay their property taxes, their homeowner's insurance, and their HOA if they have one. So once my clients hear that, they're like, okay, this is great. So those are the basics as far as we're getting rid of that mortgage payment, and then they don't have to make one if they don't want to.

SPEAKER_00 5:02

So that can completely change their lifestyle, just having that money to do the things that they want to do now instead of putting it into the house every month.

SPEAKER_01 5:09

Absolutely. It's cash flow because think about that. Um you have people that some of their monthly mortgage payments are like $700 a month, but sometimes it's $3,000 a month. Yeah. And so if you take, you know, $2,000 a month mortgage payment times $12, that's $24,000 cash flow to them. And so that right there, even if they just break even, like they qualify enough to pay off their existing loan, that's cash flow that they have that they don't have to make their mortgage payment now.

SPEAKER_00 5:40

So now they can travel and go have fun like they always wanted to do in recount.

SPEAKER_01 5:44

Yes, exactly. And that's so that's to that point, those are some of the things that you can do. You can take those grandkids on memorable vacations together. And and um I get the chills every time I talk about this. But you can take your grandkids, make memories together, you can buy that new roof or AC or tires on the cars, you can pay off those credit card debts. Um, aging in place, we have people that uh remodel their master bathroom and take out that bathtub so they can age in place and use the bathroom if they are wheelchair bound eventually. Um, in-home health care. So if somebody has somebody who they've hired 20 hours a week, but they really need 40 hours a week or overnight stay, they can pay for that. Um there's just so many things. Um, including, I always like to bring this story up. My first story I'll share. Um wonderful. I have a lady and um a husband and wife in the Santa Barbara area. So that's one thing I should share. I can do mortgages nationwide, except for New York. Okay, but uh I personally licensed in Oregon, Arizona, California, Nevada, and Texas. So but I can help somebody anywhere. But I do have some clients that I've already done their loan in California, and he's starting to have some memory issues. And she came to me and she's like, I think we need to refinance a reverse mortgage, so you can refinance a reverse mortgage. People don't understand that, don't know that.

SPEAKER_02 7:17

Okay.

SPEAKER_01 7:17

And so because she's thinking ahead that there's a possibility that her husband might have to go into memory care. So why not use the house to pay for his memory care facility and then keep the money under management so it can continue to grow so that way she there's something left for her when the time comes, if that's the case. We don't know when our time is, but at least they're not draining their savings to pay for his housing. So um, so that's just a nice, you know, you know, they live in almost a free and clear house and it's worth 2.3 million. Right. And so why not let the house pay for that?

SPEAKER_00 7:59

So they're just tapping into the equity and and how many people want to stay at home anyway, so that allows them to stay at home by making those modifications.

SPEAKER_01 8:06

Yes, exactly. Exactly. As to the point, I even saw a house that they just remodeled and put one of those, because they were in a two-story house, they put one of those little chairs clips that take them upstairs.

SPEAKER_00 8:18

Yeah, I see the commercials all the time. Yes.

SPEAKER_01 8:20

So yeah, so the modifications, absolutely, absolutely.

SPEAKER_00 8:23

Neat, neat. Well, um, let's talk a little bit about the myth. I know that there were so many myths about the reverse mortgages because they used to be such a completely different product years ago. But that's all changed, hasn't it? Yes. Yeah. And uh one of the myths that I hear people talking about is they think that they don't own the home any longer. They think the bank owns it.

SPEAKER_01 8:45

Can you tell me a little bit about that? Absolutely. So you still own your home, the bank has a lien on it. So just like a traditional loan, the bank has a lien on it. You still own title, and so it's the same thing with the reverse mortgage. You're still on title, you just have a lien against the property. So the bank does not own the home. When you hear those stories, oh, the bank took my house away. Well, when I talk to people, I had a client in California again, and he he's like, I don't like my neighbor lost her house. And I said, Well, what happened? Well, she did like to gamble, and I said, Well, maybe she wasn't paying her property taxes and her homeowner's insurance. And he's like, Okay. Well, to that point, after talking with him a couple different times, he ended up referring three other people to me, and then he ended up doing his own loan for a reverse mortgage. So he went 180-degree turn from not liking them at all to getting one himself.

SPEAKER_00 9:43

So many myths start that way, just by a little bit of misinformation, correct, correct.

SPEAKER_01 9:48

So, yes, you know, that's and that's what it is. This is just all about education and learning what you don't know. And, you know, once I start going over an individual's numbers and then they can see that their house is actually a wealth building tool for them. Meaning, let's say hypothetically, we've paid off somebody's loan, but they also have a hundred thousand dollars available. I'm just gonna use easy numbers. They have a hundred thousand dollars available to them. Um, we used to give them all the money at once if they wanted it at closing, so that all that hundred thousand. But now we put a guideline into place because believe it or not, there are people out there that like to spend money.

SPEAKER_00 10:31

So no way.

SPEAKER_01 10:32

Yeah, right? And so we had to put a guideline in place that will give you up to 60% of that money at closing. So somebody could take $500, $5,000, or up to $60,000 if they had $100,000 available to them. Well, that other $40,000, let's say they take $60,000, that other $40,000 is actually available to them 12 months later.

SPEAKER_02 10:53

Okay.

SPEAKER_01 10:54

And then it's actually growing a half a percent of whatever their interest rate is. So hypothetically, if their interest rate is um in the fives or the sixes, whatever the rate is, it would be a half a point above that. And then they their money would be growing at that that interest rate. So they won't get a check or anything, but let's say that 40,000 is not 40,000 after a year, it might be 42,000. Okay. So then they have more money. So it's just, you know, a great way to have another, you know, wealth-building tool for you. I had a lady, she had a free and clear house, million dollars, and she took out a hundred thousand to refin uh to remodel her casita. And I told her, I said, okay, next year when this money comes available, do not take all of it out at once because it's compounding interest. And so it's growing for her at a higher level when you have more money in there. So a lot of people don't know that little tidbit.

SPEAKER_00 11:55

And now that makes a lot of sense. I know we talked to a financial planner and they had advised us to do a reverse mortgage as as part of an overall financial plan. Now it makes sense why he suggested that.

SPEAKER_01 12:05

And then that way you're also keeping money under management with him.

SPEAKER_00 12:08

Yeah, yeah, absolutely. So it's a win-win for everybody. Exactly, exactly. So, in order to qualify for that mortgage, do you have to have your house um free and clear with no mortgage?

SPEAKER_01 12:18

No, but we what we do is we go off the youngest person in the household. So one person has to be 62. So one of my first um proposals that I did was for an 80-year-old mom. The son, the daughter-in-law, and the daughter were there for the presentation and um went over everything with them. And by the time we were done the next day, the son called me up and he's like, Okay, just a couple questions for mom. I said, Great. I answered those questions, and then the son said, We want to do this too. So they got it. And so, with that example, the wife was 64, the husband was 58. So we base the numbers off of the youngest of the two, so the 58-year-old.

SPEAKER_00 13:02

Even though he wasn't at the minimum of 63. Correct.

SPEAKER_01 13:05

You only need to have one person that's 62 in the household, and it's off of actuary charts. So the youngest person, and this, by the way, this loan is good until you're 150 years old.

SPEAKER_00 13:16

Okay. So I think that covers most of the things. I think we're gonna be good on that. Yes.

SPEAKER_01 13:19

Yes. And we have proprietary products outside of FHA that go down to an age of 55 years and up to four million dollars. Okay. So that's how you know I'm able because the FHA product is just a million million one plus. Okay. But the um proprietary products like that I do um for higher higher level houses go up to four million. So I've got another lady in in um $2.8 million house, and she wants to remodel the front of her house. And so she took out $350,000, started remodeling. But then I also have um my clients that are living check to check and have thirty dollars left over at the end of the month. And so it's just nice that we can get rid of that mortgage payment for them, give them some peace of mind. Okay, I can sleep at night, I have more money to do what I need to do with to make it you know, through the everyday life challenges.

SPEAKER_00 14:14

So but now what happens if you have that reverse mortgage? Can you still sell your house?

SPEAKER_01 14:18

Yes, yes. So this is what happens. It has to be your primary house, your primary residence. You can't live six months in Baltimore and six months in Anthem and want to do uh your reverse mortgage on your second home. It has to be your primary. Okay. And so um, that being said, when you no longer live in the house, one of two things have to happen. If um you uh you're still with us here on this planet, then you can sell it. You just pay off the loan like a traditional uh transaction. You pay off the bank, the loan, the accrued interest, the realtor fees, the closing costs, and then whatever's left over you get.

SPEAKER_02 14:54

Okay.

SPEAKER_01 14:54

But let's say hypothetically you've passed away, then your beneficiaries have the option to either refinance the house into their own name because maybe they um want to move in themselves, they want to rent it out, whatever the case may be.

SPEAKER_02 15:11

Okay.

SPEAKER_01 15:12

Or they can sell the house. Now, um we could be in a market like we are today and the value of the house could be up here and the loan balance is lower, so then they would just pay off the loan balance and the um realtor fees and closing costs, and then they would get the difference. But if we have God forbid another 2008 and it's upside down, it's a non-recourse loan. And so that means the bank can't come after you because there's mortgage insurance on it with an FHA product. And so if the loan balance is more than the value of the house, then the beneficiaries are not responsible for the deficit. So once the adult kids hear this, they're like, All right, let's do this. Yeah. This is great, you know. And so, um, and so that's why there is an extra, you know, line item closing cost for the mortgage insurance, but that's like an insurance policy, you know, that it's you know, so and with that said, the beneficiaries get uh up to 12 months to grieve, to purge, and get the house ready for sale. But during that time, that loan balance is still going up. Oh, okay. And so that's that's how that works. Um a lot of times the beneficiaries all two things, they'll be like, what's the catch? This sounds too good to be true. Right, right. Well, the catch is is that maybe your inheritance isn't 400,000, maybe it's 250,000. And a lot of those adult kids are like, Well, we already have our own retirement, so we're good. We want mom and dad to enjoy their golden years, right?

SPEAKER_00 16:54

Yep, yep.

SPEAKER_01 16:55

So, um, and then I just lost my thought train of thought what I was gonna say before, but that's okay.

SPEAKER_00 17:02

Well, really sounds like you have the best of both worlds where you're able to tap into that equity and have that cash, but you don't have to worry about the risk with a fluctuation of the market prices of the house.

SPEAKER_01 17:13

Yes, exactly.

SPEAKER_00 17:14

That just makes a lot of sense.

SPEAKER_01 17:15

Well, and I've actually had a pastor almost refinance with me four times because you know, as the market was changing, he was aging up. So his age went up, the value of his house went up, his loan balance was still low, and so we kept he's like, I want to retire. And so we kept he was just drawing out of his house, and so you can refinance. Um you have to wait 12 months though. It's not like a traditional loan. Oh, okay. So there is a guideline in place that they have to wait at least a minimum of 12 months. Okay. And then we have to make sure we don't just refinance anybody, we have to make sure that there is a benefit to the borrower in order to refinance the loan because it's not, you know, it's not cheap. There's some some costs involved. So we want to make sure.

SPEAKER_00 18:01

Tell me a little bit more about those costs.

SPEAKER_01 18:03

Well, it's the traditional costs like you would have on a on a regular loan, your appraisal fees, your um title fees, credit, that type of thing. But then also the mortgage insurance comes into place. And so, and that's uh insurance policy. And then so that's gonna change from loan to loan and scenario, you know, house to house, because the value of the house, it has to do with the value of the house and how that um what that cost is. So you kind of got a bad rap for that, but it's it's a security, uh, you know, an insurance policy, basically, way of looking at it, because then the beneficiaries are not gonna have to pay for that difference.

SPEAKER_00 18:43

So and of course there's always that insurance policy, even with the FHA loan, isn't there? But right.

SPEAKER_01 18:48

That's yeah, that's the end it's the mortgage insurance. Yeah. Because if you think about it, there's mortgage insurance on a first-time home buyer. So that's what this is. It's just uh m mortgage insurance on the reverse mortgage. Yeah. So just the way it's calculated, it's a little bit more than the first-time home buyer. Okay, good too. It's case by case. Yep.

SPEAKER_00 19:05

Yeah.

SPEAKER_01 19:05

All right.

SPEAKER_00 19:06

So now let's talk about one of my favorite, the purchase. Okay. Yeah. It seems like the last few years where the appreciation over the last five years is so so qu so high, and then you have the higher interest rates, and people plan all their lives to have to get their dream home and their dream area, and and those dreams can really become unaffordable now. What can you do in that situation?

SPEAKER_01 19:28

Okay, so this is the best kept secret. I'm telling you, realtors, they just need to call me and talk to me because champagne tastes, beer budget. Think about it. And I can't believe I'm saying this in Arizona, but let's say that somebody wants to downsize and they want to downsize. I have some clients up in Prescott and they want to downsize to 800,000. Yeah. It's like, okay. But um, there's gonna be people that they want to downsize, and and let's say they're selling their existing home and they're only gonna have four hundred thousand to work with. But the house that they want that you can find for them is five hundred and fifty thousand or six hundred thousand.

SPEAKER_02 20:08

Yeah.

SPEAKER_01 20:09

Well, why not supplement their down payment with the reverse mortgage? Maybe they only have to come in with three hundred thousand for that five hundred thousand dollar house, depending on their age, and then um two hundred thousand is used as a reverse mortgage for to help them get that house, and then they still have a hundred thousand dollars in their pocket. So their financial advisor's gonna like them too. Yeah, yeah. So by doing that, you're you're um you're feeding the equity into the home with your down payment. So it's a larger down payment. It's not gonna be a 20% down payment, it's gonna be more like a 60% down payment or higher. And so that's what you want to do is you want to um fund the equity into the home, but then they're not gonna have any mortgage payments. And to that point, I've got a really quick story here. I had a lady come to me who was purchasing, and she was buying, she was 66 years old. So someone who's 66, her numbers are gonna be different from 86. Someone who's 86 is not gonna have to put down as much as someone who's 66, so it's backwards. So that being said, she's 66 years old, she's buying a $600 plus thousand dollar house. This is years ago, and she came to me and she wanted a 30-year fix. And I said, Okay, I'm gonna show you the numbers for the 30-year fix. And at that time, we could do 5-1 arms. I showed her the numbers for that, and then I said, and let me show you the reverse purchase. She's like, Well, I don't want that. And I said, Okay, let me at least educate you because next year I don't want you to say to me, Why didn't you tell me about that? Right. And she's like, Okay. So she um calls me back the next day and she's like, I want that. And I said, Okay, what changed? And she's like, Well, if I do the reverse purchase, I don't have to make a mortgage payment, is that correct? And I said, Yes. That being said, she said, Well, my payment would have been $2,000 on this 30-year fix, and I'm really good about my money, so I'm gonna give that $2,000 to my financial advisor to invest for me. And I'm like, good for you.

SPEAKER_00 22:13

So So now can grow.

SPEAKER_01 22:15

Yes, yes, and she didn't have to make a mortgage payment, and she's in her house that she wants to be in.

SPEAKER_00 22:20

That's wonderful. Now she can do the thing she wants to in a house, bigger house than what she could have afforded. Yes, otherwise. Yep. Just the best of both worlds. Champagne tastes beer budget. Yep, yeah, yeah. Absolutely. Well, that's fantastic. You've given us so much information, and uh you you just teased us long enough. Tell us how we can get a hold of you to get more information about reverse mortgages, uh, reverse purchases, or even a specific situation that someone may ask.

SPEAKER_01 22:44

Yes, I'm happy to run numbers for anybody. Um, it's very simple for me to do. I can be reached at my phone number is 480-225-7111, or my email is Cheryl S at Barrett Financial.com. And this was great. Thank you for having me.

SPEAKER_00 23:00

Yeah, so thanks for joining us, and thank you for all of you joining us as well. And remember, if you have any questions about the reverse mortgages, Cheryl's so knowledgeable that she can really guide you through that process. Feel free to give her a call. And all of our contact information is listed in the show notes below.

SPEAKER_01 23:17

Again, this is Cheryl Schidel, NMLS number 886425 with Barrett Financial, an Equal Housing Lender. Please remember that loan programs, rates, and eligibility guidelines are subject to change and may vary based on individual circumstances. Nothing discussed in this episode constitutes a loan offer or credit decision. Any examples or scenarios shared are strictly for illustrative purposes. All loans are subject to credit approval and underwriting conditions.