S10 E218 - Solving Money Troubles in Retirement

Can leveraging home equity and reverse mortgages actually help seniors manage retirement expenses and care costs? In this enlightening episode, host Wendy Jones sits down with Joe Bigelman, a mortgage loan consultant with John Adams Mortgage.

Joe shares his expertise on how seniors can use their homes—their largest financial asset—to cover high costs of care, including assisted living and in-home support. He explains strategies that can provide funds while allowing seniors to remain in their homes and maintain ownership. Joe demonstrates how proper planning can relieve financial stress and preserve quality of life.

Whether you’re a senior, caregiver, or someone planning for retirement, Joe offers actionable advice on maximizing home equity, securing financial stability, and ensuring peace of mind in later years.

Key Highlights in this Episode:

• Home Equity Options: Joe explains how refinancing, cash-out loans, and home equity lines can provide flexible funding for seniors’ care needs.
• Reverse Mortgages Demystified: Learn how reverse mortgages work, including ownership, loan balance growth, and how they can eliminate monthly payments while allowing seniors to remain in their homes.
• Real-Life Case Studies: Stories of clients navigating care costs and limited retirement funds highlight practical applications and benefits of these strategies.
• Financial Planning Tips: How to preserve equity, plan for long-term care, and maintain financial security in retirement.
• Veteran Benefits: Information on aid and attendance programs offering monthly financial support for eligible veterans and their spouses.

Resources & How to Contact the Guest:

Call Joe Bigelman at 248-302-3652
Visit: John Adams Mortgage

Podcast Schedule: Tune in to Next Steps for Seniors with new episodes dropping twice a week at 7:00 AM!

Every Tuesday: Educational and insightful content to help you navigate the practical steps of aging.

Every Friday: Spiritual and emotional support to encourage your heart and mind.

Be sure to subscribe on Apple, Spotify, IHeart Podcasts so you never miss an episode, and if you enjoyed today's show, please leave us a rating and review!

Learn more : https://omny.fm/shows/next-steps-4-seniors-with-wendy-jones

See omnystudio.com/listener for privacy information.

Transcript

SPEAKER_01 0:00

This is Next Steps for Seniors with your host, Wendy Jones. Each week, Wendy brings resources and information to help guide you through those next steps with elderly parents and loved ones. If you have questions or topic suggestions, you can call us at 248-651-5010.

SPEAKER_00 0:19

Hello and welcome to Next Steps for Seniors Conversations on Aging. I am Wendy Jones and I am so blessed to be with you all today. And as you know, I have just an incredible passion for sharing information with others, especially as we age. And guess what? We all do. It's not a secret. It happens to everyone. But as we age and as we go through life, and a lot of us are taking care of our parents, some of us are the parents in this situation, but regardless, this information you're going to hear today is going to be priceless because our topic is solving money troubles in retirement. And we all could get there. And when we do, we want to be prepared for it. And that's why you're listening to the show right now. So our guest in the studio is from John Adams Mortgage. His name is Joe Beagleman. Hello, Joe. How are you today?

SPEAKER_02 1:12

Hi, Wendy. It's honored to be here and feeling great.

SPEAKER_00 1:15

Yes, we're excited to have you. You're a mortgage loan consultant and very experienced in how we use our homes because you know most people do have a home. And as we age and we have them, you know, that's probably one of our larger assets. But, you know, to talk a little bit about the care as we age, 70% of people need some kind of care as they age. And guess what, everyone? It's not free. Right?

SPEAKER_01 1:40

Yeah.

SPEAKER_00 1:41

It's private pay. It's out of pocket. And we spend our whole life working so that we have money to enjoy our lives. And then 70% of people have to pay for care. So now we run into a problem sometimes. And that's why you're here today.

SPEAKER_02 1:58

Yeah, yeah. I hear it over and over again. And it's it's an issue. We have to deal with it.

SPEAKER_00 2:02

It is such a big issue. So, how how do we use our largest asset? I mean, a lot of people, like we talked about, have homes. What are some options if you know we need to pay for assisted living, for example? And it's $7,000 a month per person.

SPEAKER_02 2:17

Yeah, yeah, it's significant. Uh, and you know, everybody's situation is totally different. So, you know, it is their biggest asset, usually their house. So, how can you use your house to leverage that? It depends on your financial situation, right? Like, do you just need cash out of the equity of your house? Do you own your home free and clear? And you can, you know, get by with just taking cash out. Do we want to get into something more interesting like a reverse mortgage, where if maybe you have a payment on your house but you can't afford the payment and the care at the same time, a reverse mortgage is a really nice option for you where you don't have to make a payment anymore. Uh sometimes it's just an equity line to let you, you know, get you by. Sometimes it's downsizing, right? Sometimes you're just in too big of a house. You know, so there's a lot of different options out there. It just depends on somebody's financial situation.

SPEAKER_00 3:02

And we don't really know until we get there, and that's why we like to do programs like this, because I don't want anyone to be stuck. And I have a client right now, and this is why you're here today. I have a client right now who his wife has dementia and she needed to move into a community that is caring for her 24-7, which is costing him eighty, two hundred dollars a month. Wow. And he has a home that he's living in, so he wants to have enough money for him as he ages, but all of his money has been going to his wife. He redid his house first, he paid for private care first, he did as much as he could, he spent probably hundreds of thousands of dollars getting a first-floor bedroom, doing all the things that we want to do to keep our loved ones home. And then after all that money was spent, she eventually aged out of that and needed to move, and now he's out of money.

SPEAKER_02 3:53

Such a tough situation.

SPEAKER_00 3:54

And it's heartbreaking, and this is so common.

SPEAKER_02 3:58

It is. It is. I hear it more and more. And you know, maybe it's it's prices that have gotten higher or just people not saving enough money or didn't have the ability to save enough money. But like in your in that situation, tell me what what you would do. Does that person have a mortgage currently?

SPEAKER_00 4:13

No.

SPEAKER_02 4:14

Okay. So you don't have a mortgage, they're just paying their taxes and insurance.

SPEAKER_00 4:18

Right. And he's thinking he should sell the house, but then I'm thinking, where does he go? But what what would you what would be the answer in that situation, for example?

SPEAKER_02 4:25

So it depends what the house is worth. Depending on what it's worth, sometimes you can actually take cash out of the house on a reverse mortgage, like you can get a lump sum payout at closing.

SPEAKER_00 4:35

Let's say it's worth $200,000, just as a hypothetical.

SPEAKER_02 4:37

Yeah. Yeah. So, you know, it may not be enough money to take care of, you know, the bill, depending on the financial situation. But like, you know, let's say if he could get $100,000 or $150,000 out of the equity of the house, is that enough and can he maintain the payment? Or maybe with a reverse mortgage, we can actually give them some cash and not have a payment, which would be really nice for him. He could actually stay in his home. See, the problem is if you actually sell your home, where do you go? What do you do with the money? And then you're gonna have a payment, right? That's where reverse mortgage comes into play because let's say he can get $100,000 on a $200,000 value and then never have a payment again. You know, maybe that's freeing up enough equity and cash with what he has on a monthly basis.

SPEAKER_00 5:24

Right, and he does have a yeah, he has a small IRA, but that's what he's been using, right? To go through it. And now he's not. Exactly. And I'm in my head, I'm like, but wait a minute, you're not gonna have any money.

SPEAKER_02 5:34

Right, right. Yeah, a reverse mortgage is actually a perfect scenario.

SPEAKER_00 5:39

In this case.

SPEAKER_02 5:39

Yes, it really is.

SPEAKER_00 5:41

Okay, so talk to us how that works. Does the bank actually own the home? And who does a reverse mortgage? You do, loan.

SPEAKER_02 5:46

Yeah, yeah, yeah. Yeah, a loan consultant. Yeah, okay. Yep. A reverse mortgage is a program where instead of making a payment every month, you don't have to make a payment. So, you know, on a normal mortgage, when you make a payment, your your loan balance goes down. On a reverse mortgage, every month you don't make a payment, your mortgage balance goes up. So you still own the home. Okay, it's just a mortgage being placed on your home that is like negative amortization, right? It's going the other way. And we do a calculation. We we see how old you are, what kind of health you're in. Uh it's a calculation on how much cash you can take out. You know, we don't want ever the mortgage to go over what the value is of the home, right? So there's a calculation of how much cash you can take out, what's your projected lifespan.

SPEAKER_01 6:34

Okay.

SPEAKER_02 6:35

And then, you know, when both people pass, that's when the heirs have a decision to make, right? Because, you know, let's say in this scenario, down the road, your your value is going to keep appreciating over time, your mortgage balance is going to increase over time. At some point, you'll have, you know, and and hopefully it's in a really long time from now, but at some point you pass and your heirs have a decision to make, right? If there's equity in the home, they can still sell it and and get whatever's equity. The difference. Yeah, get whatever's equity equity is left. But let's say it reverses, let's say values come down or that mortgage balance goes up too high and it's just not worth it to sell it, you can just give the give that home back to the bank. You don't have to do anything with it. So in most scenarios, there's equity where your heirs will sell the house. But like in this situation, and like many others, doing a reverse mortgage makes a ton of sense. You know, especially if you want to stay in some place for a very long time and and not have the burden of that monthly payment.

SPEAKER_00 7:35

Yeah, I really want him to stay there and still be able to pay. I mean, is my have you know, she might live another year and year and a half. And but that would be enough to get him through that.

SPEAKER_02 7:45

Oh, for sure. So and then And he will never have a payment again as long as he stays in the house. So it's okay.

SPEAKER_00 7:53

Well, it sounds like you got yourself a client, John Adams mortgage.

SPEAKER_02 7:56

Right.

SPEAKER_00 7:56

So does the bank actually own the house if you get the reverse mortgage?

SPEAKER_02 8:00

No, no. So you still have the ownership of the home. The bank, just like a regular mortgage, has a a lien on the property.

SPEAKER_00 8:07

Okay.

SPEAKER_02 8:08

And so you can still sell it anytime you want. You can refinance out of a reverse mortgage if you want. You know, but we don't want to put somebody in a reverse mortgage that is gonna change their mind all of a sudden a year or two later. Like this is a long-term plan to stay in the house.

SPEAKER_00 8:22

Mm-hmm. And then the family has the decision to make to sell the home. Yeah. And then they pay back the loan, basically, by selling if they just get the difference.

SPEAKER_02 8:29

It's like a normal sale. You look at the value, you look what's owed on the mortgage, and you get the difference in equity after you pay your real estate fees and transfer tax and orange title policy.

SPEAKER_00 8:38

Is there any way that it would not work that you could lose your home?

SPEAKER_02 8:43

The only way you can lose your home is if you don't take care of your home. So most of the time a reverse mortgage is set up where you're still responsible for your real estate taxes and home insurance. So like let's say you stop paying your taxes or insurance and they start you know forcing the issue of it, you could lose your home that way. If you let your home totally get in a really, really bad position condition-wise, you know, that could be a problem too. Like you gotta do it.

SPEAKER_00 9:09

Well, the bank so the bank's watching. They want to make sure the house stays good and cared for.

SPEAKER_02 9:14

Yeah, I mean, there's a lot of you know, it's very subjective with that, but like, you know, it's very hard. I want to just make sure it's clear, it's very hard to lose your home in a reverse mortgage situation. As long as you maintain your taxes and insurance, you're probably gonna be just fine.

SPEAKER_00 9:28

And guess what? We all already know we have to do that. That's no secret.

unknown 9:31

Right.

SPEAKER_02 9:32

And sometimes we can even include those in the reverse mortgage where you don't even have to pay those. So, you know, if there's enough equity and you don't want to be even be responsible for taxes and insurance, sometimes we can include those as well.

SPEAKER_00 9:42

Okay, so I love this idea because seniors are on, I mean, we're all on an income, a budget, but seniors are on a limited budget, right? That's all they get. Whatever they're getting from Social Security, and if they are blessed to have a pension, that's it. That's all they get. And they're living the rest of their life on it.

SPEAKER_02 9:57

Yeah, it's mostly fixed income.

SPEAKER_00 9:59

Yes, we live healthy, everything's going great, but the second you need care, and it's usually later in life after you've spent all your retirement funds, like this poor gentleman, right? It's very common. We get the calls all the time into the office.

SPEAKER_02 10:13

Yeah, and people are scared of that reverse mortgage for whatever reason. It's really a great, great program in the right situation.

SPEAKER_00 10:20

Which I believe this is the right situation as your age. Yeah. I mean, if you've if you're in your 80s and you have a house and you want to stay there and your loved one needs care, I mean it's the perfect scenario.

SPEAKER_02 10:31

Because where would that person go, you know, for uh he's in a 200 thing. And what what would you pay in rent every month? $2,000, $1,500, right? It's not even worth it. It's not worth it.

SPEAKER_00 10:42

Yes, this is why you're here. Give your phone number so people can get a hold of you, Joe.

SPEAKER_02 10:46

Thank you. It's 248-302-3652.

SPEAKER_00 10:51

And we'll be back in just a moment. Welcome back to Next Steps for Seniors Conversations on Aging. We are talking about solving money troubles. And how do we do that? We do that with your home. How about it? I love it. We've got Joe Beagleman here from John Adams Mortgage. He is a mortgage loan consultant and just a wealth of knowledge because as we age, yes, we need funds and we are on a limited income. So everything you've saved, let me talk to the young people for a minute. Everything you are working for right now, you need to be saving. Please don't spend everything you make. Because as you age, you're gonna need a little nest egg, so to speak. And as you even are in your 80s and 90s, that's when you need some kind of care. And to be honest, that's the money that you're gonna need. And if you spend it all traveling and living your best life, which I still want you to do conservatively. You gotta plan like you're gonna live to a hundred. That's what I tell everybody. Don't you tell them that too, Joe? Yeah, I mean, right. Plan like you're gonna live to a hundred years old. Because if you die early, then praise God. And if you don't, then you got enough money.

SPEAKER_02 12:07

Yeah. Enjoy life, but save a little.

SPEAKER_00 12:09

Yes, we can also save a lot of fun, of course. So let's go back to because I really appreciate it. First, I want you to give your number one more time. If you're interested, let me just say this. Grab your pen and paper, everybody. Because if you're interested in at least talking to somebody to see if this is the right step for you, how much is a consultant, like just for them to call you and ask questions?

SPEAKER_02 12:31

It's free. So just to get my opinion on what you should do is totally free. Don't be alarmed at calling. There's no pressure at all. I'll give you the best advice I can, just like you're a member of my family.

SPEAKER_00 12:42

Based on your situation.

SPEAKER_02 12:44

Exactly.

SPEAKER_00 12:44

Okay, and your phone number one more time.

SPEAKER_02 12:46

It's 248-302-3652.

SPEAKER_00 12:52

Fantastic. And definitely call Joe Beagleman. Great guy. I've known him for a while. And definitely does a great job for you and cares about you and your situation. So let's go back to situations because you know, depending on the circumstance, let's say we have a family that just needs cash, upfront cash for whatever something happened. What's the best way to get cash when you don't have it?

SPEAKER_02 13:17

Yeah. Yeah. So there's two ways to get cash quickly, and they're can be very inexpensive. So one's a home equity line of credit. It's usually free to get, really easy way to access equity in your home. And if you can handle a monthly payment on it, it's a great way to get an infusion of cash. It's usually an interest-only payment based upon whatever the prime rate is. Uh right now it's kind of in the mid to high sixes. So a really nice way to get some cash. If you want something more stable, like a mortgage to get cash, you could always refinance and pull cash out of the equity of your home. That scenario would have a principal and interest payment, so you'd have to be able to maintain the payment.

SPEAKER_00 13:56

So your payment could go up, but you're getting a lot of cash. Right. Right.

SPEAKER_02 13:59

And in certain situations, that makes a lot of sense. You know, and that versus like a reverse mortgage. A reverse mortgage is probably the most expensive type of mortgage to get because there's so much monitoring that goes through and it's such a long-term type program. So we use a reverse mortgage if we need to use a reverse mortgage, if it's appropriate for your situation. If not, if just a simple refinance or cash out or home equity line works, great. It's more inexpensive for you. And if you can handle the payments, wonderful. That's part of the whole financial consulting part of this is like what do you need in your retirement? What's your situation like? Do you need cash infusion? Do you need no payments? You know, where are we at? What are we trying to accomplish? Aaron Ross Powell, Jr.

SPEAKER_00 14:41

So where did taxes fall in all of this? Like, is the income taxable? Talk to me a little bit about that in all the scenarios.

SPEAKER_02 14:48

Yeah, sure. So whenever you're pulling money out of your equity of your home, none of it's taxable.

SPEAKER_00 14:53

Okay, that's a win.

SPEAKER_02 14:55

It's a huge win. It's a huge win. So whether it's a home equity line, refinance with cash, or taking a reverse mortgage and getting a lump sum in cash, or even on a reverse mortgage, you could have a line of credit where you access cash over time. None of it's taxable. It's beautiful.

SPEAKER_00 15:09

In all scenarios, you can't think of one that's taxable.

SPEAKER_02 15:12

No.

SPEAKER_00 15:12

Okay, well then why are we not doing this? Do you know how many people call me that don't have enough money to pay for their care?

SPEAKER_02 15:19

Yeah, and most of their money is tied up in the equity of their home. So, like it's a really nice way to use equity for care or living or you know, what whatever the situation is.

SPEAKER_00 15:30

Why not?

SPEAKER_02 15:31

Well, you know, if you had a mortgage that you got during COVID and it's two or three percent and it's such a low interest rate, refinancing that mortgage would push your interest rate up to it make it quite a bit more expensive. Or you know, but in that scenario, maybe we leave the mortgage alone and do a home equity line, or if you're in a situation where you just can't make your payment anymore, then we jump into a reverse mortgage because you don't have to make a payment. So, you know, if we think of a family that has a loved one that that needs a lot of care and they've they've run out of their cash and they have equity in their home and they're thinking of maybe, you know, should we move out, should we move to a different place?

SPEAKER_00 16:10

Well, a lot of people think they should sell their home, but they don't have to.

SPEAKER_02 16:14

No, they really don't. And most of the time it doesn't make sense to sell it. You know, because when you sell it, you have all the fees that are associated with selling, and then you have to go move somewhere and pay rent again, right? Or buy something else. Aaron Powell, Jr.

SPEAKER_00 16:25

What are all those fees for selling, just out of curiosity?

SPEAKER_02 16:28

Yeah, I mean, usually you have you know both realtors on both sides of the transaction. So you have a listing realtor and a selling realtor, you know, the seller's realtor and the buyer's realtor, so that's about six percent. Then you have transfer tax that you pay to the state of Michigan, that's almost a percent, about 0.86%. And then you have an owner's title policy, which depending on you know the sales price, could be anywhere from you know $1,500 to you know three or four thousand dollars. So the the cost, if you think of it, is probably like seven and a half percent of your your price.

SPEAKER_00 16:58

I mean, you're technically losing a lot, I mean, a decent amount.

SPEAKER_02 17:01

Yeah, so it it's taken away from your equity. And and look, sometimes it's right to sell. But if you're in a situation where you can't make ends meet, selling doesn't necessarily solve that, right? Because you have the fees and you have to go pay rent somewhere. You may just want to do a reverse mortgage where you never have a mortgage payment again.

SPEAKER_00 17:22

I am just loving this. I have chills because I'm so happy that you are talking about this right now. I am sure there are so many people thinking this is for me. There's no cost to doing this, correct? Once the consultant part, they're gonna talk to you.

SPEAKER_02 17:37

Yeah. So there's no cost in getting my opinion on where they're at, what they should do when we go and make a decision. A reverse mortgage is actually the most costly type of mortgage there is, you know, so it can be significant in cost, but you don't have to pay it out of pocket. We'll take that out of the equity of the home. A home equity line is the cheapest way to access cash, and a refinance would be, you know, maybe you know, a couple grand or so. But a reverse mortgage can be expensive. It could be five, ten, fifteen thousand dollars. It can be an expensive.

SPEAKER_00 18:04

But you wrap it in. And it's really if you need the cash. So first would be the home equity loan. Second would be the refinance. And third would be reverse mortgage.

SPEAKER_02 18:14

Okay. We only do a reverse mortgage if it's absolutely necessary for you to live out the rest of your life and feel comfortable. Which is super important.

SPEAKER_00 18:21

Well, and just for the record, nobody wants to leave their home. Right. If nothing else, they're like, keep me home. I mean, I'm gonna die with my boots on. That's I hear it all the time. Right.

SPEAKER_02 18:30

Yeah, and you know, people you know say to me sometimes, oh well, you know, I have all this equity in my home and I wanted to leave it to the kids. And, you know, if I take a reverse mortgage and it's negative generalization, I owe more in the mortgage than than what I've done before. I can't leave as much equity to my kids. But if you ask your kids, hey, do you want me to live the rest of my life out in a in a comfortable way and and be able to enjoy life? They'd rather you enjoy your life, right? Like so, you know, doing a reverse mortgage, be able to stay in the house that you love, not have a payment anymore. Gosh, could you imagine not having a mortgage payment as you're retiring and how much money that frees up for you? And there could be cash out at closing or a line of credit where you can access cash as you need it over time.

SPEAKER_00 19:11

It's priceless. It's honestly priceless. And listeners, if you're tuning in right now, you know, Joe Beagleman, you can see here his passion in his voice. He cares about people, he cares about what he does. You've been doing this a while.

SPEAKER_02 19:23

Yeah, yeah, 27 years.

SPEAKER_00 19:24

A couple few years. So he's knowledgeable. Why not call and just ask? Hey, what's the best scenario for me? And especially if you're a little tight on funds right now. I mean, this could be your answer, and it's sitting right there every day when you walk in the walk in the door.

SPEAKER_02 19:42

You know, and this is happening to more and more retirees, is they're running out of money. Whether it's that costs are high, groceries, gas, you name it are higher. They don't have enough saved up, so what do you do? Right? How can we make this work? And there's solutions. You just have to call.

SPEAKER_00 20:00

Exactly. Exactly. John Adams Mortgage, share your phone number one more time with our listeners.

SPEAKER_02 20:05

It's 248-302-3652.

SPEAKER_00 20:10

I want to share one more thing. If you are a veteran, first, I want to honor you and thank you for serving our country. But there is a benefit called aid and attendance. And this is just a little tip of the day. Because if you served our country during wartime and you were an active participant, you don't have to be on the front line. You can serve anywhere during wartime and were honorably discharged, you can get what we call aid and attendance. And what that is, is a loan basically from the government that you don't have to pay back. It could be up to fifteen hundred, sixteen hundred dollars a month for the veteran himself, and then also money, I think it's up to two thousand now, and money for the spouse. So please, especially if you were not divorced, if your husband served, because we all know women live a little longer in general, then you, as the spouse of a veteran, could also get up to $1,500 a month towards your care.

SPEAKER_02 21:06

That's amazing.

SPEAKER_00 21:07

It's called the aid in attendance, call the Veterans Association. You can also call our office. I love that you all have tuned in today. Thank you, Joe, for what you do every day.

SPEAKER_02 21:16

It's been a pleasure. Thanks for having me.

SPEAKER_00 21:19

Absolutely. I think your answer is right here. If you are short on funds and you have a home, call Joe Beagleman.

SPEAKER_02 21:26

Thank you.

SPEAKER_00 21:26

Have a blessed day, everyone. Thank you for tuning in to Next Steps for Seniors. Our podcast drops twice a week, Tuesdays and Fridays at 7 a.m. Find us on your favorite podcast platform and be sure to subscribe so you never miss an episode. To learn more about Next Steps for Seniors, visit us at Next Steps Number Four Seniors.