Unlock Your Home Equity!

In this episode of Reverse Mortgage & Beyond, Lydia Wietsma, Certified Senior & Probate Real Estate Specialist with NextHome Power Realty, interviews Cheryl Scheidell of Barrett Financial Group.
Cheryl breaks down common reverse mortgage myths and explains how homeowners must continue paying property taxes, insurance, and HOA dues—and as long as they do, they can remain in their home without a monthly mortgage payment.
The conversation highlights:
Reverse Mortgage for Purchase — buy a home using a reverse mortgage and supplement your funds
How buyers can stretch purchasing power (“champagne taste on a beer budget”)
Built-in lines of credit for future expenses
Using a reverse mortgage as a second lien behind an existing low-rate mortgage
Real-life uses like travel, home repairs, and in-home care
This episode shows why many former skeptics become believers once they understand how reverse mortgages actually work.

📻 Radio Show Connection

Catch Cheryl and Lydia every Sunday on AM 960 The Patriot:

• Solving Life’s Next Chapter with Lydia Wheatsma — 3:00–3:30 PM
• Is a Reverse Mortgage Right for You? with Cheryl Scheidell — 3:30–4:00 PM

Host Contact Information

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

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

Lydia Wietsma
Certified Senior & Probate Real Estate Specialist
📞 Phone: 602-363-1720
📧 Email: lydia@arizonapoweragent.com
🌐 Websites:
➡️ Probate Realty Help
➡️ Solving Life’s Next Chapter

#ReverseMortgage, #AgingInPlace, #RetirementPlanning, #SeniorHomeowners, #HomeEquity, #ReverseMortgageForPurchase, #FinancialWellness, #SeniorLiving, #RealEstateEducation, #EstatePlanning

 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 and Beyond, the podcast where we take you inside the world of reverse mortgages. I'm Cheryl Schidell 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_02 0:24

Welcome to Reverse Mortgage and Beyond. I'm Cheryl Schidel, your host. I'm with Garrett Financial Group, and I'm coming to today. In the past episodes, you've seen me talk about reverse mortgage basics, um the miss, and how to purchase a home. But what I've done is I brought Lydia in here to ask me some specific questions about it so that way we can have more of a conversation. I've actually been in the industry since 2002 and I've been doing reverse mortgages for the last 10 years. I'm licensed in all states except for New York through Barrett Financial. So I've been helping a lot of people through um, you know, the US. I've got a lot of questions coming back and forth from Florida, Kansas, Michigan, Colorado, California. So anyway, um, what I've done, I'm excited to have Lydia join us. And just so you both know, everyone knows, we actually have a radio uh show on Sundays in Arizona. Uh Lydia's on at three o'clock. Yeah. And I'm on at 3:30 with is a reverse mortgage right for you, where you can catch some episodes as well from that show. And uh what I do besides talking about reverse mortgages, I bring on um referral partners from in-home healthcare to senior placement to I had a cybersecurity um expert on talking about scams just recently. So feel free to look up uh 960thepatriot.com, go to my website, reverse mortgageandbeyond.com, and then you can find some podcasts there. I can be reached at 480-817-4324 for any reverse scenarios. So what I'm gonna do today is I'm gonna pass the mic over to Lydia Wheatsma. She's a probate real estate uh specialist who works closely with families navigating life transitions. But Lydia and I, believe it or not, we I had a memory come up, and Little and I have known each other for 10 years and we're gonna visualize it. And we were starting to do like some tapings like what we're doing today 10 years ago before this got really popular. Yes, exactly. So um I've asked her to come in and ask me some questions about reverse mortgages. So I'm gonna have you take it away, Lily. Okay. Well, but first give us your background and tell us about your book and your show.

SPEAKER_00 2:41

Oh, so my name is Lydia Wheatsma. I'm a certified senior and probate real estate specialist. I too, like Cheryl, have a show on 960 the paym the Patriot. And my show is from 3 to 330 called Solving Life's Next Chapter. It was based on one of my books that I wrote last year called Solving Life's Next Chapter. It's all about probate issues, how to avoid it, pitfalls, things like that. So I've I've really enjoyed it.

SPEAKER_02 3:07

So and I'll be having Lydia on one of my podcasts as well. So that way you can learn about probate real estate.

SPEAKER_00 3:12

Yeah.

SPEAKER_02 3:13

Perfect.

SPEAKER_00 3:13

So um, thank you, Cheryl. So I'm really excited about this specific topic because I love reverse mortgages. I've used them. I have a lot of clients that use them. We find them a lot in probate situations. And I had to learn about them because of my probate work. Yeah. So so let's kind of dive into like more of the basics of it. Um Cheryl, tell us um those um and and what it uh what it is about the what exactly is a reverse mortgage?

SPEAKER_02 3:44

All right, we'll start with the basics, what a reverse mortgage is. What is it? Okay, so a reverse mortgage is it helps the senior access the equity in their home. Right. So we're gonna help you. You're living in your piggy bank. Yep. So we're gonna allow you to crack open that piggy bank and tap into, so you've been making payments. Now we're gonna help you take some of that money out so you can age in place, right, get a new roof, take the grandkids on a vacation, whatever the case may be. Yep. So what happens is whether your house is free and clear or you have a loan on your house, um, we'll have to run the numbers. Right. Because the way the program works is it's based off of your age, the value of your home, and the interest rate. Okay. So the older you are, the more access to the money you get. So someone who's 82 is gonna get more money than someone who's 62. Right. Okay. Okay. So if somebody has a free and clear uh home, they're gonna get access to a lot more than someone who has a loan that we're paying off. Because what's gonna happen is when somebody still has a loan that we have to pay off, we are going to pay off that loan with the reverse mortgage. Now they no longer have a mortgage payment. Right. Then what's gonna happen is depending, is it's a low loan to value because we've got to leave equity in the home so it doesn't go upside down. Right. Because think about it this way every time you make a mortgage payment, you are making a payment and your balance is going down on your 30-year fix if you have that ever so slightly. You're telling me about a forward mortgage. Correct. So if you have an existing loan, that's a 30-year fix hypothetically. Every time you make that payment, your balance is going down ever so slightly, but it's going down. Right. But when we pay off that loan, now you have a reverse mortgage loan amount. And then you're not required to make a payment. So your balance is going up in reverse. And that's how they came up with this. So we have to have a low loan to value. Okay. Used to be closer to 50% loan to value, but with the market uh changes and volatility, we're more like 37% to 43%, depending on your age. Okay. And that's how we get to that number. Right. And then we would pay off. So I have some people we just pay off the loan, right? And that's all we can do. So it's like, but now they don't have a mortgage payment payment, which is awesome. So then that's cash flow to them, right? And then we have others that we pay off that loan, but then they have a little bit of a line of credit, maybe $25,000, maybe $100,000, maybe $500,000. And then they can pay off, you know, bills or whatever they want to do with that money. Right. So that's the basic of how that works. Okay.

SPEAKER_00 6:20

So and who would be like a really good candidate for a reverse market?

SPEAKER_02 6:24

Okay. So 62 and older is the government program. So someone, one person has to be 62 in the household to do this loan. Now we do have loans that go down, proprietary products that go down to 55 years of age and then up to 4 million in loans. But um they need to be 62. My first case that I had, uh, I was talking to an 80-year-old mom. We were sitting at the kitchen table like this. Yep. 80-year-old mom, son, daughter-in-law, daughter. And I didn't even know what a reverse mortgage was myself. And I had to go and learn. And so I actually had my manager, now this is 10 years ago. Right. I had my manager on a speaker phone to help me answer questions. Right, right. The next day, the son called me up and he's like, okay, we want to do this for our 80-year-old mom. Yeah. And I said, Great. He goes, I just have a couple of questions. And then I asked, he asked me a couple of questions, and then he said, Okay, my wife and I want to do this too. Wow. So we did two loans from that presentation. Right. But the wife was 64. Okay. The husband was 58. Okay. So we overcame the guideline of one person has to be 62 in the household. Okay. And but the numbers were ran off the youngest of the borrowers. So the 58-year-old. Right. Because we want to, because hypothetically, the younger borrower is going to be living longer. Right. So we want to leave enough equity in the house so the house does not go upside down. So that's the same thing. And so that they can stay in the house and what happens with the other spouse. Yes, exactly. Exactly.

SPEAKER_00 7:58

So you kind of have talked about this, but what's the difference between a reverse mortgage and a regular forward mortgage? Which we all most of us have a forward mortgage.

SPEAKER_02 8:06

Right, like a 30-year fix or 5-1R. So the difference between a reverse and a forward is the biggest thing, no mortgage payments. Right. Because it's just being tacked on to your balance, your loan balance. So there's no mortgage payment. That is the biggest thing. Um, the other thing is that there's age requirements for it. You know, because I have younger people saying, Well, can I do this? Right. And I'm like, Well, you're 55. Right. And so those, those are the main things. Okay. This also is good until you're 150 years old. Okay. So some of the forward traditional loans, 30-year fix, right, you know, 40-year fix, but then also the HELOCs, you know, um, have a a a 10-year interest only payment and then it amateurizes after that. Right. So these are the big things that this loan is good until you're 150 years old. So you can't outlive this loan.

SPEAKER_00 9:01

That's great.

SPEAKER_02 9:01

Yes.

SPEAKER_00 9:02

Okay. So what happens to a home when the loan or the what happens to the loan when the homeowner passes away or permanently leaves the home? Like we deal with a lot of you and I both deal with a lot of seniors. Many of them get the reverse mortgages and then they have to move into assisted or memory care. So what happens with that? Okay.

SPEAKER_02 9:21

So um it always has to be the primary residence. Okay. So I've had people say, Oh, I want to do this on my second home. On a rental or something. Yes, it has to be a primary residence. So how this works is I always tell um the borrower and then the adult kid how this works is there's mortgage insurance on this property. Yeah. Okay. And it's not cheap, but it's a one-time line item on closing. Right. And how it works is when let's say if the person passes away, uh-huh, the beneficiaries have an option to either refinance the home or to sell the home. Right. So if they choose to re uh to sell the home, they would have up to a year to grieve, to purge, and get the house ready for sale. Right. Now, in that year, it's gonna be in three-month increments. Yes. So because the the lender wants to make sure you're doing something, right? Right, right. So you need to keep in touch with the lender and tell them what's going on. And they're gonna check in with you because they wanna make sure there's no squatters in the house and that type of thing, right? Exactly. Because that has happened. Yes, it has. So they have up to a year to grieve, to purge, and get the home ready for sale. Now, if we're in a market like we are today and the values are here and the loan is here, they would pay off that loan like they would a traditional sale. Right. They pay off their loan, they pay off the realtor fees and the closing costs, and then whatever's left over, it's it's theirs. Right. Right? The beneficiaries to divide up however they need to. Yeah. If God forbid we have another 2008 and the value is lower, flip-flops, yeah, and the loan amount is higher, it's a non-recourse loan. Yeah. So what that means is you never pay more than the value of the house.

SPEAKER_00 11:07

Right.

SPEAKER_02 11:07

So whether it's a dollar or $500,000 that you're upside down, whatever the deficit is, the beneficiaries are not responsible for. So I always tell my clients that everybody puts into the mortgage insurance bucket, even though it's not cheap, it's just a one-time fee. It's in the closing cost. You it's rolled in, you don't see it. And then everybody pays in. That way it's a safety net. Like we don't have another 2008, and then everybody's happy.

SPEAKER_00 11:30

And there are some tax benefits for the families when they when it is upside down like that. So I always uh tell families, let's do a short sale on it and let's get you that tax benefit. And that's what I've I've even educated some of my attorneys on that as well. So that's I stay away from that. Yeah, yeah, yeah, yeah. No, I get it. I get it. That's good. So what are the we're gonna talk about myths because everybody hears reverse mortgages and they go, I've heard they're bad, but they don't know why they're bad or why somebody said they were bad. So let's kind of go through some of those myths because they're it is really myths, is what they are. Right. So what is the what are some of the more common myths that you hear about with the reverse mortgage?

SPEAKER_02 12:13

The bank is gonna own my home. Yep. I hear that. The biggest one, the bank's gonna own my home. The bank does not own your home, you still own your home. They just title has a lien on it. So then that way, when something happens to the house, you sell it, um, it's refinanced, the bank is gonna be paid back. Right. So it's just like if you had a 30-year fix, right? You have a lien on the property, title has, you know, it's the same thing. Yes. So the bank does not own your home, you still own your home. It can be in your name or in the name of your trust. So that's the biggest one. Another one, people say, they're like, Well, they don't have any kids, so this is a good lung for them. It's like it doesn't matter if you have kids or not. Right. And just in FYI, a lot of the times when I'm talking to the adult kids, they're like, Well, we already have our own retirement. Right. So this is just gravy. They're like, this is the best kept secret. What's the catch? I'm like, well, maybe your inheritance is in here, but maybe it's just a little bit less because mom and dad are enjoying themselves.

SPEAKER_00 13:08

Exactly. And the parents had a better um quality of life during that time. So that and that's really what you want. Yes.

SPEAKER_02 13:15

And just in FYI, there's $14 plus trillion of equity out there. So why aren't we using it? Right. Absolutely. Why am I going to somebody's house that their water is turned off? Right. And they and they could be getting a reverse mortgage. Right. I've qualified people $800 a month, and I've qualified people a million dollar homes. So it doesn't, it's not a last resort for people. Right. So if people think that's another myth that it's a last resort. It's not a good thing. I hear that a lot too. Yes. So we we have people like I have people, this is a wealth building tool for people. Absolutely. I was just about to say that. Yes. And so why not? Why are we save, save, save? I agree.

SPEAKER_00 13:55

Safe safe, save, but tap into it when you need it. Right. And I I talked to a lot of financial advisors, and a lot of them have they've switched. So it used to be where a lot of families would take money out of the financial advisor and keep the house and sell it at the very end. But they have learned, and you've probably heard this too, that if you tap into your house equity first before you tap into your retirement, your heirs actually make more money at the end.

SPEAKER_02 14:23

Well, and that's the that's the way to look at it too. Think about three buckets. So you have three buckets. You've got your Social Security and pension if you have a pension. You have your 401ks and IRAs if you have those. And then you have your house. So that's why financial advisors love us because keep the money under management, tap into the house if you need to to use it for income on a monthly basis. I had a gentleman pay off his loan, get a reverse mortgage, and he's like, Sheryl, I'm gonna go um hunting when I'm closed. I'm like, okay. So he's like, I'm gonna pull $5,000 out, and then can you put $500 a month into my checking account right every month? And like, yeah, we can do that until his line of credit runs out. So he got $5,000 out. He went hunting, and then he gets $500, he $500 a month every month until that money runs out. Right. Wow, that's great.

SPEAKER_00 15:13

Yeah. Okay. So another myth is um heirs get stuck with the debt. And you kind of touched on that a little bit, but go through some more detail on that one.

SPEAKER_02 15:21

Right. So it's just no matter what, they have to have something done with the house within 12 months. Yep. And then so they can refinance it into their own name, yep, or they can sell it. But no matter what, the bank has to be paid. Right. So, and if it's upside down, then the mortgage insurance covers that deficit. So that's the biggest thing. But it has to be their primary. And once they move out, whether they pass away, they go into independent living, assisted living, memory care, whatever, something has to happen to the law.

SPEAKER_00 15:50

I had years ago, I had a uh client by her mother's house who had passed away with the reverse mortgage. Yeah. And it it was the perfect situation for her. So, you know, families can buy their their homes. Right.

SPEAKER_02 16:03

The refinance, because and that I'll just tell this story because this is a great story. So I had a client that um, well, I spoke at Wine Limer and Wealth. Yeah, and I had somebody come up to me and she's like, You need to do this for my mom. And I'm like, Okay, let's go talk to your mom. So we went and talked to Crystal, and um, she was a hairdresser in assisted living. She was working three days a week at like 73 years old. Wow. To make her mortgage payment. Yeah. So we put her into the reverse mortgage, but as we were going through the process, I needed to get some information from her CPA. Okay. Well, the CPA sent me the paperwork back and it had all been blacked out. Oh, okay. And so we got on the phone with the CPA, and the CPA found her she was comfortable with me and gave me the information. Then the CPA said, I didn't know we could do this. Yeah. I ended up doing the CPA's loan. CPA's like, you need to do this for my sister. So I did it for her sister. She said, You need to do it for my sister-in-law. I went to the sister-in-law. She was laid out on her lazy boy. She did not even get up for me. I gave her a hug. Hello. I said, Do you know why I'm here? She says, You're here to sell me something. I said, No, I'm here to educate you. That's what we're here to do, is educate. Because once they get educated, they're like, Oh my gosh, I didn't make sense. How come I don't know? You don't know what you don't know, right? Yeah. And so then she was giving me a hug goodbye when Emma and I left. And then the daughter said to me, I've never seen a transformation like this. I sat on the front row, I'm getting the chills. I sat on the front row at her funeral. But then the daughter, so to your point of what you were saying, then the daughter was old enough to buy she, well, she ended up just refinancing it into a reverse mortgage. And so five clients out of that one, because they get it and they got educated. So I just always like to share that story.

SPEAKER_00 17:50

Here's a good one for you. Um, since you and I have both been in the industry for a long time, we've seen changes with reverse mortgages over the years. So, what are some of the changes, uh positive changes that um that the government has done for these uh mortgages?

SPEAKER_02 18:05

Well, one of the biggest ones that I believe is um back in the day, if you were married, what was happening was uh people would do the loan on the oldest spouse spouse. And then so they can get as much money out of the house as they could. Right. Then that spouse passed. Yes, and then the other spouse couldn't refinance and they were losing their home. Yes. So a new guideline change over the years is if you were married, right, you both have to be on the loan. Right. And being on the loan protects you. Yes. Because when that individual passes on, that second spouse doesn't have to do anything. Right. They don't kick you out of the house. Right. And and here's a story. I spoke with some people five years ago, and he wanted to do it and she didn't.

SPEAKER_00 18:55

Okay.

SPEAKER_02 18:56

And five years fast forward, they call me, they're like, we're ready. The husband is 94, okay, the wife is 78. So there's that big age difference. So she would not have been able to do it, possibly. But we did the loan because they needed it in home health care. Yeah. And um 94. Yeah. He did pass on, but she didn't have to do anything since. So it's just it's a blessing. That's one of the things that's like.

SPEAKER_00 19:23

I have seen reverse mortgages change people's lives for the better. I mean, I have yet to see one be bad. Yes. It really, I mean, it truly is a really good loan.

SPEAKER_02 19:35

Yeah. And so that's one of the reasons why we get a bad rap, is that they they're like, oh, people are losing their job. Yeah. Well, that's the other thing, is that, you know, people think that um the bank takes their home. Well, sometimes it's the client because when you have a reverse mortgage, you are responsible for your property taxes, your homeowner's insurance, and your HOA. Now, that being said, I had somebody in California say to me, um, I don't like reverse mortgages. He was a realtor. And I said, Tell me more. He's like, Well, my my my neighbor lost her house. And I said, Okay, what else is going on? Yeah. And he said, Well, she did like to gamble. And I said, Well, maybe she lost her house because she didn't pay her property taxes, right? Well, he ended up letting me work with one of his friends, right? Did a reverse mortgage. Yep. He ended up giving me a client that he did a reverse purchase with in California. And then within nine months, someone who didn't like reverse mortgages ended up doing one himself. Yep. Yeah.

SPEAKER_00 20:33

So really it's important for people to know, and I know you go through this with your clients, is they have to pay their um taxes, HOA, and insurance.

SPEAKER_02 20:42

Yep. Okay. Yep. So as long as they do that, they're fine.

SPEAKER_00 20:45

Yes. So this is the part that I really like because it's purchasing a home with a reverse mortgage. I'm assuming that that can be done, correct? Okay. Yes. And um, and I I think it's something that people don't even realize that can be done. So um, so it does work with a purchase. Yes.

SPEAKER_02 21:03

So um we supplement their money. So basically champagne taste, beer budget. Yep. And let's say hypothetically that somebody wants to buy a $500,000 house, right, but what they really like is in the $650 range. Yes, right. Yeah. So what happens is maybe, you know, depending on their age, they don't they don't have to come in with that whole $500,000. Right. They might have to come in with $400, let's say. Right. And then we supplement the rust. Right. Then they're holding on to that money, giving it to their financial advisor to invest for them. Yeah. The other thing, because I know we have to wrap up here, the other thing about um purchases is that you can have a line of credit with that. So with a 30-year fix, you can't do that. But when you close a loan on a reverse mortgage, you can actually have a line of credit tacked onto that. Right. I had somebody close on her loan, she did her large down payment, and then she had an extra 50,000 left over. She gave, she she deposited another 25,000 as a line of credit. Right. Because if the AC went out or whatever, let the house paid for the house. Don't put it on a credit card and all that kind of stuff.

SPEAKER_00 22:16

Yeah.

SPEAKER_02 22:16

Another product I want to talk about one more real quickly before we wrap up. Is um you can actually do a second mortgage behind a traditional 30-year fix because you know you have those people that have those low interest rates. Yes. And they're like, I don't want to get rid of that. And like, that's fine. I can still help you out. Right. So I had somebody come to me. He had a a first and a second, low interest rate on the first, and the second had a high interest rate and he was making a high payment. We were able to qualify him to pay off that second mortgage. He wouldn't have that mortgage payment on the second loan. He wouldn't have any mortgage payment. And then he would be able to um use some extra money from that too afterwards as well. So, anyway.

SPEAKER_00 23:06

Oh, that's exciting. Yeah. It is a great product for men multiple things. Traveling with your kids. Yes.

SPEAKER_02 23:13

Um, you know, fixing things up in the house, in home health care, getting a new roof, all the stuff. So anyway, but thanks for being with me here today, Lydia. And um, thank you for checking in with us here at Reverse Mortgage MBO. For any scenarios, you can find our contact information in the show notes. I can be reached at 480-817-4324 and reverse mortgageembbeyond.com. Thank you.

SPEAKER_01 23:40

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.