Everyone Who Owns a Home Should Consider a Reverse Mortgage, with Matt Harrison of Movement Mortgage

0:04 Most often people think of reverse mortgages after they own a home. And it's true that everybody who owns a house free and clear should look at a reverse mortgage as a potential tool to help them. But one of the most underutilized pieces of the puzzle, and one reason it caused me to launch this podcast, is ability for people qualified to use a reverse mortgage for purchase or HECM for purchase or HECM for P as often referred to, but to use the money or the equity of the property to assist in port of buying a property to limit the cash down. We're excited to have Matt Harrison, the reverse mortgage guy, who's reverse who's a retirement mortgage professional with Movement Mortgage, and he's been on the program before. Matt, thank you for coming back to the program.

0:44 Yeah, I appreciate it, Bill. Thank you. So, I guess the first question I would have is do you know what percentage of reverse mortgages are for purchase? I don't think it's that high a percentage, but it should be much more than it is.

0:57 Yeah, that number is really low. It's less than 5% of all reverse mortgages are actually used to purchase a house. And I think that's really just the fault of us as an industry really not educating our real estate professionals and the general public on how this program works because it is a huge difference. You know, if you're over 62 and you're looking at buying a home, to have a reverse mortgage as an optional financing tool to purchase a house is a game-changer.

1:29 You know, one of the reasons I launched this podcast is I believe that we should be doing as an as a country 10 times the reverse mortgages we are. And a lot of that has to do with a purchase. I think everybody who buys a house for cash should evaluate a reverse mortgage as part of that program. Not necessarily get it, but at least should run through the numbers with a professional. And I think that this is an opportunity for us as real estate agents to open up more home buying opportunities to our customers because rather than buy for just a have cash, they might buy an $800,000 home with a $300,000 reverse. And even for mortgage originators, so you know, we all everybody talks about how challenging the market is right now with rates going up a little bit, but here's a chance to create new business for your partners and for your clients that doesn't otherwise exist. So, it's definitely topic every Realtor®, every originator, and any business financial business professional should consider. So, let's talk about what does the product look like? If you're going to buy a property, you know, how does one a reverse mortgage come about can use that to purchase a house?

2:27 Yeah, great question. So, you know, really when you look at buying a house in the market today, it you know, if you're over 62, you can buy a home three different ways. You can buy it with cash, you can buy it with a traditional mortgage, or you can use a reverse. Now, you know, as an agent, real estate agent that I once was, right? I did real estate for 14 years prior to getting into the lending space, I knew how wonderful it was if as an agent I had a cash buyer. That was a strong offer, fast close, I didn't have to worry about any financing.

3:01 Beautiful. Love it. Right? Beautiful. Beautiful. But when you start to think about your retirement years, is putting 100% of your cash into this next purchase the most efficient way that you can manage your money? And that's really where we start to dissect how does a reverse mortgage fit into this, right? Because let's just say that I you know, I sell a $500,000 house and I want to buy a $500,000 house. And I take that money and I put it all the way in, right? So, you know, I've got my little props here today, Bill. So, if you've got if you actually have cash, right? And you get $500,000 of real money, you're going to buy yourself a house and you're going to get this. This is a this is a squishy, right? It's pretend money. This equity, but you can't go to the grocery store and buy anything with this, right? It has to be cash. So, in our retirement years, you have money coming in and you have money going out. That's our cash flow position. And you know, if we can have more money that we can retain in our retirement that we can use in our retirement, it's just going to make a little bit more sense. And so, here's some Here's some really easy math. It's just kind of fun to look at this. Let's say that you wanted to buy a $500,000 house and you're 62, and you have 500,000.

4:26 Yes, you could buy it cash. Or, you could get a traditional mortgage. Now, traditional mortgage will allow you to keep more of your money liquid, right? You don't have to put it all down, but now you have to make a monthly mortgage payment every single month. And the money that you saved, that doesn't necessarily mean that you get to keep that because over the next 15 to 30 years, you're going to pay much more than the money you saved in interest over the lifetime of that loan. So, it helps, but it doesn't. So, where does the reverse come into play? With the reverse mortgage, let's say it's a $500,000 house and you're 62. You might have to bring in 325, maybe 350 is the amount of money that you would have to put in as your down payment. Now, the reverse mortgage alone is going to bring in the rest as far as your financing. So, you're able to retain roughly $150,000, maybe more, if you're 62. Now, if you're older, the math changes a little bit, but if you're 62, you might be able to keep $150,000 in your retirement account where it can build for you, where it can grow, and you can use that in retirement. And then the benefit of the reverse is that at this point moving forward, your obligation to make a principal or interest payment becomes completely optional.

5:52 You know, there's another way to look at that same scenario cuz I was literally in that. I was looking at I had $500,000 cash to buy a house. I was considering, you know, relocating to Florida, keeping my current house with my wife here as a as a second home. But my primary residence where I do my business and be majority of the year would be in Florida. And so I worked the numbers out so I don't owe any more payments cuz it just didn't work. And the money in the bank the money in investments I wasn't really using it so I could afford to put it down at so I thought. But the most I had was $500,000 excess cash. I didn't want to add any more loans and I had other options but I didn't really want to pursue any of those. But I realized I was talking to is either you or one of your colleagues well yeah but I could buy an $800,000 home because I can get a $300,000 reverse. And all of a sudden I was looking at a 500 and a 520 and I just wasn't crazy about it. Well, 800 adds a whole another bedroom and a little better location and like wow that made the deal from undoable to doable. And no more monthly payment, no more money out of my pocket. And yeah, there's the interest on that loan but the property's appreciating as a bigger house as well. And so it really caused me to say how do I not know this? Like you know, whether you want to lower your cash requirement from 500 to 350 using your scenario or buy your purchase raise your purchasing power from 500 to 800 or whatever the number is.

7:13 How do I not know that? And the answer is I just don't think we as Realtors® learn this product as well as we should. And I also feel like the originators aren't educating as much as they can. Hence the purpose of the podcast and what we're here today. So I appreciate I appreciate that. Now the product has been around theoretically for a long time. Are you actually doing these purchases? Are you actually doing reverse mortgages that end up in purchases?

7:35 Yeah, it has been. I mean for since 1989, you know, the reverse mortgage that's backed by FHA has been around. The purchase aspect of it has only been around since 2008. So, it hasn't been around all that long. But I mean I'll leave you a story that was, you know, and this one is one that I use often when I'm teaching my clients. When I was doing real estate, I had a client that called me and said, "Hey Matt, we really need to sell our house." And I said, "Well, you know, is the house doing okay?" They're like, "Yeah, the house is great, but my wife fell, you know, fell down the stairs. She broke her hip. The doc says, 'No more. You've got to get out of this house. You got to get me this single-level rambler.'" And I said, "Okay." So, I went over and I did a listing presentation for them and the maximum amount of money that I could get out of their house was about 500,000. And I said, "Well, where do you want to go?" And, you know, they mentioned a community up the street. All of their friends were there, had the amenities they wanted. It was it was perfect for them. And I said, "Okay, that's a great option. There's one downside. The starting price up there is 700,000." And I just watched their faces fall. You know, Bill, they just looked at me and they said, "Well, we don't think we can do that." And I said, "Well, let's go through your options. Do you We have 500 from the sale of your house.

8:58 We just need to find $200,000 to make this work." I said, "Do you have any retirement funds?" They said, "We do, but we only have about $400,000 in there." And I said, "Okay. Do you want to draw that?" They said, "No. That's taking half of our retirement and that scares us right now at our age." I said, "Okay, well, what about doing a traditional loan? You take out a $200,000 loan, you might have a payment of 12 to $1,500 a month." And they said, "Well, I'm on Social Security. We just don't have the ability to do that and even if we could, that would really take our cash flow month to month and really reduce it and that kind of scares us and that's why I said, all right, what about do you have do you have family members that could gift you money? I was pulling all the stops. And they said, Matt, we really don't. I said, unfortunately, there is no way for you to get into this house and I flat out lied to them, Bill, because this reverse mortgage program was available. I just didn't know about it.

10:03 Wow. We ended up getting them into a home across the valley for 475. Were they okay? Yes. But was it where they wanted to be? No. So, here's the math for them. At their age, cuz I re-ran this as soon as I found out about the program, I'm like, oh, I wonder if this would have worked. Listen to how cool this is. I would have been able to sell their home for 500,000. They could have purchased that home for 700,000 and they would have had to bring in 400,000 as their down payment requirement. Now, remember, they have 500,000 off the sale of their home. They could have purchased that 700,000 home and added an additional 100,000 to their retirement account.

10:46 Right. And they would have been in the community they wanted to be in with their friends and the amenities, everything that they wanted and needed. And it would have been a win-win-win scenario all the way around the board. I just didn't know about the program, Bill.

11:01 Right. I you know, I just feel like in every business, the key to success now is pushing out from the center to the edge cases and doing a better job of supporting edge cases. It'd be nice if I had to deal all day long with 30-year fixed-rate refinances with tons of equity, perfect credit, and you could just do them all day long. But the reality is that to build a business, you've got to really create value for your customers. And if the market gets more competitive, you know, with Google and Facebook and these AI companies and Zillow's and your business rockets and national banks. It gets more competitive and yet there's opportunity there that if we get better. It's like don't wish the market was easier, wish that you were better. And here's a case where you can use this tool and either partner up with somebody like Matthew specializes in it or learn it yourself. And I think for originators who are struggling today that you've built that you've been in business 10, 20 years. You're doing a couple deals but not This is a product that can really help you build a business by helping more people who need it and don't know about it. And that's really the been the callus behind the process. So, I do know, look, I'm a listing agent and you're right. I get phone calls and offers on properties that are all cash.

12:21 And the reality is the way our California Association of Realtors® form is written borrowers can almost always offer cash and then get financing as long as it doesn't cause the seller delay or expense. And so what that means to me is when a when a guy says to me, "I'm paying all cash. I'd like to get a hard money loan." Great. I'll offer the inspection or appraisal or whatever access you need. And when the time comes to come with the paperwork, you know, it is a little more work. It does slow things down a little bit there too. But, you know, if the buyer's happy then we're selling the house. That's good news. And a reverse mortgage kind of falls in that category in many cases where a smart real estate agent, if they know they're pre-approved. That's the key. You can offer cash and as long as you get your loan lined up in time have the same effect or you can learn about reverse mortgage well enough to teach the listing agent about the product. And that probably requires you being a regular reverse mortgage specialist or in your case retirement mortgage professional. Because I as a listing agent, somebody calls me who does forward mortgages all day long and now they're going to do a reverse mortgage, I'm not sure we're going to get tied up on that situation, right? So, talk a little bit about the mechanics because if you're going to do that, at some point you have a conversation with a listing agent. Most of them, like me, don't really know you can do this.

13:43 Many of them who do know they can be done, don't believe you can do it in time. So, how do you how do you help comfort the listing agent to get the offer accepted? Or what's your strategies?

13:52 Yeah, so that you've hit so many different pieces here. So, let me kind of dissect some of those. I think the first piece to this is making sure that you're knowledgeable as an agent. Now, where can you get that knowledge? Well, please talk to a reverse mortgage professional that does this on a day-to-day basis, okay? If you're Let me give you an example. If you have something wrong with you and you go to a general practitioner, you know, as far as a doctor, they're going to be able to give you a an idea about what's wrong with you and help you get better, right? But, if you have a problem with your knee and need surgery on your knee, you're going to go to an orthopedic surgeon that specializes in knees, right? You're not going to go

14:32 I just did that 4 months ago, to FYI. I mean, your general practitioner doctor's great and wonderful, but they don't specialize in knees.

14:42 Right. As a reverse mortgage professional, all I do is reverse. What I live and breathe every single day and there are a group of us that are around the country that do this on a day-to-day basis. So, first off, get the education from you know, myself or from, you know, anyone else out there that is a professional in this space. That's going to be the first key. Second, how do you talk to your client about this? So, if you're my client, Bill, and I'm an agent, okay? And I say, "How do you want to buy this house?" And you say, "Hey, Matt, I want to buy it cash." And I say, "Great. I appreciate This is a script. This is recorded, so write this down. I appreciate the fact that you can buy this home cash. However, I'm aware of a pathway that could provide you more liquidity in your retirement. You're going to be able to save more of the money that you have right now and still achieve the same goal of not having to make a principal and interest payment. Would you be interested to learn more? That's it. And what I've just given you is options. I've given you is a lifeline to be able to say, "Okay, I don't have to park 500 grand into this next house. I might only have to park 300 or maybe 350 or if you know, if you're old enough, 250." So, I'm giving you some options that are available there. Now, as far as logistics go, obviously, let's say you put an offer in on a house and the listing agent's like, "Okay, I have no idea what this loan is." Very crucial that, you know, as a lender, we're educating the listing agent on this as well. And I'd get in front of it. I'm going to be talking to the listing agent while the offer's being presented so I can tell them, "Hey, this is pretty much as good as cash.

16:28 We only have to look at, you know, do they have the ability to bring in the funds to get this closed?" If that answer is yes and we've already documented that, then we're good to go with this. Now, as far as timing, this is huge. Not every company out there that can do reverse mortgages can do them in an efficient way. I know because I've worked with four of them. The company that I'm at right now, we have a 17-day guaranteed close on purchases. In most There's a couple of states that just because of the amount of time that we have to disclose things, it might kick out to 20 to 25 days. But that's the guarantee that we have on our purchase business because we believe that strongly in it to make sure that we get it done. Now, there are other companies out there I and I've worked with them. They can take 30 to 60 to 90 days to get a reverse in a purchase transaction closed. And in a real estate environment, that's just not going to work on a purchase. It just isn't. So, make sure whoever it is that you use, they have the system behind it to make sure that they can get the deal closed quickly.

17:40 I also think you have to have the client kind of on board and ready to go, too. Like, if you bring up the subject the day they're writing an offer, that's going to be a rockier road versus if you as the buyer is getting ready to budget, and think about where they're moving, and look at houses, you say, "Hey, there's this there's this option out here you really should consider." And introduce them with a professional then, they can get the, you know, process rolling and education going and digest information on their on their own timetable, much more efficiently. So, again, I think it's really important that this is not this is not a call to the average and struggling loan originator to do a reverse mortgage for purchase, and put your clients well-being in your hands. It is a call to say learn about this product and or you know, reach out to a professional who specializes in it, refer to them, and help your client get what could be a much better outcome. And so, are you able I know I know Movement very well. I mean, I used to do a lot of business with them for various reasons. And I know that they're they get their guarantee, like that's part of their culture. That's who they are as a company. Are you able to do these I'm in California. Is California a 25-day state versus the 17-day state? But, are you able to do it in 25 days consistently?

18:59 Yeah, you know, I can just tell you just by virtue of what we've done in the past, we have hit that I have not had a purchase transaction not close on time.

19:10 Wow. Well, if you give 30 days, now, where are there going to be issues and problems? Well, if we have issues, let's say it's a condo that's not approved. Obviously, that's going to delay getting, you know, a reverse mortgage in place because it has to be an FHA approved dwelling. If there's something up with the you know, an HOA where, you know, we're not able to get documents and things like that. But in your normal day-to-day, this is how we move through a closing. Yes, we are able to hit that time frame, 17 to 30 days. No issues, no problems. And you know, we're going to make sure that the client has counseling already done. We're ready to go. We're just waiting for a contract so that we can, you know, assign it to that application and then we're off to the races. So

20:01 So it is an FHA loan, you need the FHA mandatory clauses on your offers or and so on. The FHA condo approval process, do you guys I know I worked with Movement a while ago, more regularly. I don't really work with many buyers, so it's not as involved. But I know that there was a time you guys had kind of a special approval process for condos that weren't FHA approved, they met the criteria. Is that something you still offer?

20:25 Oh, absolutely. Yeah, so Movement Mortgage and again, we're in 50 states, all 50. So we're able to help, you know, anyone in all 50 states. But if there's a condo that needs approval, we have a dedicated condo team. All they do is approve condos every single day. That is all that they And it's not just for reverse, it's for forward traditional mortgages as well. So

20:48 It's a big advantage that Movement has. I just don't think you guys really talk about that enough as a as a person in the in the I remember this from Boy, it's been about 6 years since I was went to some of your guys' rallies and was working with local forward originators. But this is a big difference. When you have a condo and it's not FHA approved, to be able to offer the product is really amazing. I think if you ever if you're a listing agent to run it by a movement originator and say, "Hey, is this thing going to be approvable? Here's the documents." Because to be able to advertise a property with FHA approval, lower rate, you know, it's a it's a selling point to a customer, so definitely worthwhile.

21:27 Yeah, definitely. And if for some reason the condo is not able to go FHA, if it's value is high enough to where the proprietary program reverse space could work, that's also an option. So, we have a lot of different programs that are at our disposal. I would say that, you know, far and wide the more popular is the FHA-insured reverse just because there's more bells and whistles to it. There's just so much more you can do with the program.

21:52 Right. But we do have the proprietary reverse also available. Well, fantastic. You know, one thing it just as we kind of move towards the end of our time here, I noticed that I've noticed been talking to people as well, that you label yourself as a retirement mortgage professional as opposed to loan officer, as opposed to originator, as opposed to reverse mortgage specialist. What does reverse mortgage professional mean to you? The message you're trying to convey to your clients and to the marketplace?

22:21 Yeah, that's a great question. You know, I for me, I feel it's my professional responsibility to help my clients enjoy a better retirement. And while I don't have, you know, the acronyms next to a financial planning background or CPA, we work in tandem with financial planners and CPAs almost on a daily basis. And so, it's a holistic approach to say, "All right, you're in a home. Here's your cash flow position. How do we look at this and put you in a better spot?" You know, for a lot of people a reverse mortgage is going to work out great. For others, there's some other techniques and different pathways and plans that we will implement. So, what we do, I really don't see myself in the business of selling loans. I see myself in the business of again helping my clients manage their real estate asset, debt, and wealth over time, and help put them into a better spot so that they can enjoy the best retirement cuz let's be honest, we only get one of them. You know, so and we can we can use that retirement money that we have efficiently or not as efficiently. And that's really the two options we have because there's a finite amount of money that we get. So, can we find the most efficient way to do that? And that's really what myself and my team really specialize in is creating efficiencies around what you're currently doing with your home right now. And can we put you in a spot that's going to provide you more cash flow, more net worth, and at the end of the day more safety and security in your retirement.

23:58 Well, I appreciate obviously the specialism. That's kind of why I've, you know, come back to you a couple times here. You've been a great asset on our podcast. I think you're also a great asset in the marketplace for people looking for specifically reverse mortgages because that's your that's your focus. I know your company does forwards as well and do a great job. If you're interested in getting in touch with Matt to learn more how to unleash the power of home equity or to buy a house using to get more home or to make the home purchase more affordable using reverse mortgage, reach out to Matt Harrison. The website is the If you want to make it easy, reverse mortgage guy.com. Reverse mortgage guy.com is down on banner below or his phone number and his contact information is well on the screen. And I guess I've worked with Movement Mortgage for about when you guys started. I want to say about 10 years. I don't you know exactly how long it's been, but really one of the I think one of the good guys in the industry. You know, we have some big companies I think that their goal in life is to push around their monopoly power and to remove themselves from the customers because of their size and strength and movement to me has been a collection of professionals who seek to serve you have service first and as a result has succeeded. I really believe that with all my heart. They're a great company. Matt's been a great asset to the program. So Matt, thank you so much for your time today again and look forward to working with you going forward as well.

25:14 Bill, thank you so much. Appreciate it. And for the rest of you, this is Reverse Mortgage Podcast. We get together every week usually with a mortgage originator, sometimes manager or vendor to learn how to help us serve our customers better. If I can help with any comments on this, put in the comments or send me an email or text. If you want to be interviewed on the program as well, let me know. Or just in general if I can help you regarding getting the right originator connected, reach out. I'm @BillGrossProbate on social media. As always, make today your best