Leveraging Your Home's Equity for a Financially Strategic Retirement, with Kevin Guttman

0:01 Soon as age of housing affordability challenges, there are many retirees who have tremendous net worth, but unfortunately it's locked up, whether be the equity in their home or in stocks, bonds, and investments. And their children and grandchildren looking to buy their first home, and yet they don't have a way to do that doesn't cause them perhaps tax issues. Well, there is one. And one of it is the reverse mortgage, which has been often thought to be for people who need it, has become a fantastic for tool for people who don't need it. Whether be for improving retirement or accessing money to help other people on the way. We're excited to have today an expert on jumbo reverse mortgages and for reverse mortgages for high net worth using strategic strategy, I'm sorry, strat- strategies. Ken got men who is with he's a reverse mortgage specialist with C2 Financial. Ken Kevin, thank you so much for joining us.

0:52 Hey, thanks Bill. Good to be here. Now, when you tell people you do reverse mortgages, they must assume you're talking to impoverished people who have nothing but a house or eating dog food, they finally qualify for the reverse mortgage, but reality with the changes in this product it's become much more attractive to high net worth individuals as a way to create more liquidity in their program. Talk a little bit about that.

1:13 So, here's what's happened in the last few years. We've had a few companies come into this space that are offering jumbo or proprietary reverse mortgages. And this is June of 2026, half of all of reverse mortgages now are proprietary or jumbo reverse mortgages. And they're in the higher valued areas of the country where properties are a million and up. And what's happened, Bill, is you have these people that have all this equity locked up. And you know there's only three ways we can access our equity. We sell the house, we do a cash out refinance or a home equity line of credit have a mandatory payment, or we do a reverse mortgage where the payment's optional. So, what people of means are seeing is, wait a second, I've got all this money sitting there doing nothing. I could take part of it out and start using it to help my family, charity, people I care about, and I can watch the money do good while I'm still here. We call it giving with a warm hand instead of a cold hand while they're still here versus when they're not here. So, there's several strategies I've seen my clients do, and some I wish they would do, to leave actually more wealth to their family.

2:25 So, one thing is that comes up is you mentioned an alternative is a refinance or a line of credit, which require payment, but more than that, the qualifying is for a traditional mortgage, and often times even very wealthy people high net worth may not qualify because of tax strategies are using to minimize tax payments on their investments so living on perhaps tax-free income, they're living perhaps with some big write-offs in the past that kind of shelters the income from taxation. So, talk a bit about what's the qualifying like for a jumbo reverse versus a regular versus a regular refinance or HELOC.

3:00 Yeah. So, with a jumbo, both borrowers, if they're married, need to be 55 or older. They need to have about 60% or more equity. It needs to be their primary home. They need to have paid everything on time the last 2 years. We don't look at credit score, we look at credit history we look 2 years back. So, no late payments. If there are late payments, we would just escrow for taxes and insurance, but a lot of people don't like to do that. And then they have to have the right property type, single-family home, town home, even a condo could work. Even a two to four-unit complex could work as long as they occupy one of the units as their primary home. And they have to maintain it, and they have to have enough income to show they can pay the property taxes, insurance, maintenance on the home. And that's pretty much it. So, most people qualify with just their social security or their pension fund.

3:55 Wow. So, that's one of the other reasons is that it might be hey, if you can't qualify for refinance for whatever paperwork reasons, this is an alternative that you can qualify for and then also you can qualify perhaps for more meaning what you know, having done forward mortgages myself in the past you know, they may qualify for $400,000 but they really want $600,000 because they want to do something else, buy a second home or something like that. So, perhaps with the with the

4:20 Low loan to value loan to value limitation you talked about, there's some limitations. So, let's talk about what you can do with the money. Now, I'm a real estate agent and I and I'm also on a mission to help restore the American dream where people, you know, come to America, they work hard, they raise their families, they own a house, own a piece of what we're doing here so they feel invested in it. And that's really broken. In my 40-year career, you know, homeownership has gone down and you know, I know young people they are often despair of ever owning yet their parents or grandparents with tremendous equity will say, well, I can't just write a check for it, right? Cuz if they if they, you know, sell the house, they're out the house. If they sell the stocks, they significant tax complications or income complications. But in essence, a reverse mortgage is almost like writing a check for it, isn't it? They want to buy a house, they want to give a down payment to their children or grandchildren, it's almost like writing a check out of your equity of your house if you have that loan to value available.

5:13 Exactly. So, this actually happened with one of one of my clients. I helped them get a reverse mortgage and a few years passed and their equity had gone up, value had gone up. And so, they refinanced and the whole purpose to refinance was to pull money out to give their daughter a down payment to buy her first house. And Bill, you've probably seen the research by the National Association of REALTORS® last year where they showed that people who own real estate have a 40 times higher net worth than renters. 40 times higher. So, if a renter has a 10,000 net worth, somebody who real estate has a 400,000 net worth. So, the point is the sooner we can get our family, our kids, our grandkids owning real estate and building wealth, the better. So, I have encouraged people in the past. I haven't anybody take me up on this yet, but an advanced strategy to that is helping your child or your grandchild buy a two-to-four unit complex. They can put 5% down as long as they live in one of the units. The rent will help them qualify for the mortgage. And then they live there a year or two, but then they go live where they really want to live, cuz they may not want to live in a multi-family complex, but they have an investment property then that's going to throw off cash flow every month. So, I would love for a client to take me up on that, cuz I think that's a brilliant strategy.

6:37 So when you move out of the two-to-four unit, you don't have to pay it off like I think on a HECM you'd have to pay it off on a on a FHA insured So, this would be helping a grandchild or a child buy an investment proper or

6:49 Oh, them buy got it. So, and think about what that does to the net worth of your of your legacy and family, right? You could leave your kids three or four hundred thousand dollar cash, or you can leave them a three or four hundred thousand dollar down payment on a two-to-four unit property, and in a few years they could have equity, cash flow, and be off to the races as far as their financial wealth building situation.

7:10 Absolutely. It's a huge advantage. I did have somebody last month help their child buy a duplex, but they didn't use a reverse mortgage, they just used traditional financing, but it can be used with traditional financing or reverse mortgage financing. The advantage of the reverse mortgage, of course, is the payment's optional.

7:30 One of the other strategies that I know that you talk about is second homes. I think with today there's also opportunities to combine second homes with Airbnb type rental for part of it. So, you going to have a second home that you use 70% of the time, 60% of the time, but you can also I'll get income maybe on the peak seasons that you're not using it, peak times that you're using it such. Talk a bit about the advantages either taking the equity from residence and buying it for cash or, you know, other options on buying a second home.

8:01 Yeah. I've actually had clients do this because I live in Colorado. In the winter it gets cold here and people want to be warm. Really? It gets cold in Colorado in the winter? I

8:10 Not great, huh? I forgot that. I was there in January one time. I forgot how cold it is. Yeah. January is a cold month. So, they want to go to Arizona or Florida or Texas, somewhere warm. So, what they've done is they may own their house outright here, primary home. They get a reverse mortgage on it, they take a chunk of cash out, they go pay cash for the second home that they want to live in where it's warm in the winter. And then when they're not there, like you said, they can rent it out and they have an income stream. So, you have two homes, one they live in, reverse mortgage, no payment. Second home, they paid cash for, no payment, but now when they're not there, it creates an income stream for them. So, it's just a brilliant, you know, if we can help people actually access their equity and start using it to build more to build more revenue, more money cuz you know, Bill, when you're in these retirement years, cash flow trumps everything. The people are looking for cash flow beyond social security and they don't really want to touch their investments until they have to. So, they want to let that money grow. So, a reverse mortgage just gives them more flexibility and more options.

9:22 I was listening to an interview with the president of my brokerage, EXP Realty, Leo Pareja, with one of our top producers who does he sells invest investment properties in a resort area, Yosemite, California, near Yosemite Park National Park. And so there are areas that are really there are areas like LA that are negative for Airbnbs, but there are other areas that are very embracing of second homes because they're tourist sites and they need the inventory. They need people to come in and visit and stay someplace. And so he was explaining how that somebody has a second home where it used to be you'd buy it and it would be vacant and then you'd rent out for a year or two and then you'd trash that with the new systems you can you know get income on it maybe 30 or 40% of the time and there's enough there's a whole world of providers that do clean up and lock out and security and check up and all that kind of stuff to where there's very little maintenance that you can offset this second home with significant income though in this case if you buy it for cash you don't have a payment but you know you could maybe finance it maybe you need to maybe you know you want to make the payments on your reverse mortgage interest but at least this way you have a way to collect some of that a good share of the time.

10:35 Absolutely. Yeah, you're right. This whole short-term rental industry is a phenomenon where people are people when they go to a place to visit or vacation they would prefer to stay in a home than a hotel. Because your whole family can be in the home you can cook meals there if you want. It's just it's just so much more convenient than a hotel. You actually spend more money staying in the hotel because you have to eat out all the time. And you have to get multiple rooms if you have you know more than two people or three people in a room. So yeah, you're right. It's a wave that many people are catching and riding and generating all this revenue that we didn't even have think about Airbnb it's relatively new we didn't even have it 20 years ago.

11:26 Yeah, I think it might not be new cutting edge as an investment strategy but it's new cutting-edge as a like a side gig for your property strategy. It's kind of like, you know, Uber and Waymo and all these different technologies that they may or may not be 100% for you, but they're something that can be connected to what your strategy is and make it work for you. I know another way that you talk about for high net worth individuals who have equity in their homes to utilize it is to purchase insurance with the equity and then make them take loans on that if they need to, whether it be pay taxes, short-term, long-term, student loans, again, helping kids with houses. Talk about the strategies on buying insurance.

12:11 You know, there's not that many tax-free sources of income anymore. You've got a Roth. You've got a health savings account. You've got mortgage proceeds. Bonds, except some states charge taxes. And then you've got life insurance. So, somebody has a permanent life insurance policy, they can take a loan out on it. And you can use it you can use the money however you want. You can use it to live on. You can use it to give away to your family, to charity. It's just one of the sources, like I said, there's only a handful of tax-free income that people can tap into. And when they do so, like you said, it reduces their tax bill, gives them more flexibility, more freedom, more money to live on. And to help their family if they need to or they want to. So, again, rather than waiting till the end, most insurance policies pay out when somebody passes. Well, with a loan, you can access the proceeds while you're still here. So, I have clients who've done this where they want to help they want to help their kids or their grandkids now while they're still here, while they can see the good that it does. And by the way, when do people need the most help? When they're in their 20s and 30s or when they're 40s and 50s?

13:30 20s and 30s. Exactly. Yeah. Yeah. Yeah, and so it becomes a whole, you know, buying life insurance for kids, grandkids. Again, all part of a part of a sophisticated strategy, but something that's beyond the scope of what reverse mortgages are often thought to be. And then, you know, I anything also, you know, you talk about unlocking your inheritance while you're alive rather than after. So, things that you can do or maybe you wouldn't want to liquidate your stocks or sell your house to say pay for a wedding, a reverse mortgage allows you to maybe access some of the equity for something that might be worthwhile. It might be life-changing. Might be worthwhile. Talk a bit about using it for a wedding or starting a business or paying for college or memorable vacations. Talk about customers who've done that and how it's worked out for them.

14:17 Yeah, I think about a lady I helped in Grand Junction, Colorado, Grandma Pat. And I always ask people, I say, you know, what do you want this to do for you? Cuz, you know, when somebody buys a house, they don't really want the mortgage, they want the house. Same thing with a reverse mortgage. They don't necessarily want the reverse mortgage, they want what it can do for them. So, I asked her, how are you going to use this? And she says, well, I was a single mom, raised my daughters, and now I have three grandsons, and my daughter's a single mom, and I want to create some memories for my grandchildren. And so, she goes, I'm taking this reverse mortgage so that we can take one memorable vacation every year. So, I said, where are you going to go this year? And she was taking her kids down to Turks grandkids down to Turks and Caicos. And then she had all these vacations planned, and she said, when I'm gone, my grandsons are going to remember their time with me on these memorable vacations, doing these events, excursions, et cetera. Then I've had we've already talked about the real estate side, but I've had other people, like you just said, take out life insurance on their grandchildren. So they take the proceeds from the reverse mortgage, make a lump sum deposit or payment for life insurance, a one-time payment, and now their grandkids have this permanent life insurance that is growing that they can use later on for college or weddings or down payment or you know, whatever they want, buy their first car, etc. So, savvy people are clueing in to say, "Wait a second. This isn't a loan of last resort. This isn't a loan for poor people. This is a strategic financial tool that I can use to actually build more wealth for my family."

15:58 Right. Right. Yeah, another one I know you talked about was using a reverse mortgage to unlock the equity while life for charities and various causes. Talk a bit about customers who've done that or and sisters who've used that to their advantage.

16:13 You know, we all have causes we love and we believe in helping orphans or digging water wells or

16:25 Rescuing people from human trafficking, etc., etc. So, the largest gifts people will leave when they pass is their estate. But, they can start giving part of their estate away now to the causes, the ministries, the churches, the temples, whatever they believe in now. So, I actually had somebody do this. There was a cause that they believed in. They wanted to help build orphanages overseas. And they had their house free and clear, had all this equity. And so, they tapped into it with a reverse mortgage. They gave this money to this organization that built these orphanages, and then they got to go visit and see the good that they were doing. Just think what that does for your soul, you know? It's just It's just You feel so good that you're helping people who struggle with clean water and eating more than one meal a day and here you are changing the whole life of you know, 40 50 orphans that their quality of life just drastically improved. Now they get an education, they get nutritional meals, clean water, etc. So, that's one example of what I've seen people do. But truly the sky's the limit. I always say a reverse mortgage is like a fingerprint because people can use it with whatever their imagination or creativity can come up with. They're not locked into you can only use the money this way. In fact, there's only one restriction the government puts on reverse mortgages or companies put on reverse mortgages and that's you can't buy an annuity because in essence you've already unlocked that equity. You've already annuitized that money. So, they don't want you to tie it up for more time or more money. That's really the only restriction.

18:09 Other than that, people can do whatever they want. It's their money. It's their equity. I think that's the key here is that we're The one thing about the current economy, if you really think about it in so many different ways is that we create different ways to unlock value and the people can then use it at their convenience. If you think about, you know, like my wife and I both have with two older paid off cars. I've always believed in having a car that was paid off. As much as I'd love to have nice new cars. And so we looked and said, you know, what? I said, "Honey, you know, we really need to upgrade here because we're going on longer trips and such. But the cost for a car in California is so expensive. Even a paid off car would cost me 500 bucks a month. And I said, "I don't think I would spend that much on Uber rides in a month to be honest." And so as a result, we use Uber or Lyft and where I live Waymo and save and unlock somebody else's car for an hour at a time or 10 minutes at a time. And the same with reverse mortgage where it used to be you had a choice. You could sell the property or take a forward mortgage and have to make payments. And now we have this additional opportunity that unlocks the equity, it's only limited by your creativity, how you want to use it. And I think also, obviously, if we're high net worth individuals, it's worth a discussion with your estate planner. It's worth a discussion with your wealth advisor. My experience is, in general, attorneys are very negative on reverse mortgage at first blush because primarily, they don't really know the details of it. The first versions of these loans were toxic. The servicing on these loans is still toxic for people who don't have a relationship with a great reverse mortgage originator like Kevin. And one of the reasons I launched this podcast was to help people make the decision instead of picking a 1-800 number advertisement on a cable TV ad with a company that doesn't care about you.

19:55 They're just going to sell your servicing rights and maximize their profit. Have a relationship. So, Kevin, talk a bit about customers may have who may be know a little about now about some of these ideas. Some sound interesting, but they need to really run it by their advisors, their accountant, their attorney, their wealth advisor. How involved do you get in that process to help them understand the process or put together maybe a professional proposal that a professional can evaluate?

20:18 Yeah, absolutely. You know, I love meeting with other professionals and helping them see the value of this. And those that are open to learning and open-minded, it can be a game-changer. I think about one guy one time was telling me that 2/3 of people are going to need some type of long-term care insurance. And as you know, Bill, most of it starts at home. You bring somebody in to help you clean and cook and do errands and dress and bathe and that kind of thing. So, people think long-term care is you go live somewhere. Long-term care starts at home. So, what this guy was saying is, I love helping people get an insurance policy with a long-term care rider or living benefits rider. They're transferring the risk away from their estate or their family to the insurance company. By the way, most caregivers are family members, and they most of them have to leave their jobs and it shortens their lifespan by the way. So, the smart people say, "Wait a second. I don't I don't want to impact my family financially or with their career. So, I'm going to get long-term care insurance through a life insurance policy with a rider and have enough money to pay for care. My equity is going to buy the policy, the insurance is going to pay for the care. It's a win-win-win. So, that's a brilliant thing if people just would be open to the idea and willing to accept I may or may not need it, but I'm going to be prepared for it. You were talking about Waze and or Waymo and Uber and stuff. The other thing that you've done is you've eliminated auto insurance, you've eliminated auto repairs.

22:01 So, how much is that? That's way more than, you know, plus if there was a payment or a cost of the car. So, same thing with this, same idea. Be savvy, be smart, be wise, say, "Okay, wait a second. I don't want to be a burden to my kids, to my grandkids, or to my wife, my spouse. I want to shift that responsibility." So, long-term care is a huge thing. 2/3 are going to need it, only 12% of people have it.

22:28 Yeah. You know, my next door neighbor, unfortunately, his wife has had long-term care 24/7. They just changed the nurse which is over. I want to say for 3 years now and you know, fortunately, she's still alive. She's a very limited life. But, you know, what would you do if you didn't have that insurance? They got long-term insurance long time ago back when it was much less expensive than it is today. And through he worked at a university. What is that worth? It's worth a fortune. So, again, these are all things that you can look at and as appropriate, but more importantly, it's about the flexibility and talking to professionals is important. So, again, if you're watching this the key we're not here trying to sell you on getting a reverse mortgage. I want to sell you one as a tool in your toolbox and make sure when you talk to your advisors on creating a plan, this is one of the tools you look at and say, "Is this going to work for me? Or how can I make this work for me to unlock the plan we want?" Kevin, I know you've been you know, at this for a while with reverse mortgages. One of the fascinating statistics I saw was amongst the top originators last year that the number of reverse mortgages actually went down. Now, I know overall you know, sales were down a little bit and overall mortgages were down because of high interest rates. Talk a bit about cuz I know that we should be doing 10 times the reverse mortgages that we are given how many people own property for cash, how many people buy property for cash. What do you see as that trend and what do we do to reverse it?

23:49 Yeah. I think it's education. I think it's people I say it this way, ignorance is expensive. And sometimes the topic of reverse mortgages comes up and people say, "No, I don't need that. I don't want it." Because they're going off a version pre-2015 before some big changes were made to make the program safer.

24:08 Yeah. For seniors. This is the most regulated mortgage in the country. By states, by federal government, by Congress, by HUD. So, at least this is what I tell people, at least learn about it. You may not do it, but at least understand it. At least have that tool in your toolbox if you need it. And by the way, sooner is better than later. You remember Bill when we were in our 20s the financial advisors told us, "Start investing now. You'll never get this decade back." the 20s are so important. That is the 60s for a reverse mortgage. Why? Because these loans can come with a line of credit. This is financial planner told me one time, "I know the secret sauce of these reverse mortgages is the line of credit." I'm like, "You're right. It's the line of credit." Because there's no financial product out there that's insured, protected from the market, grows tax-free, the proceeds are tax free. And it's flexible. It's liquid. That's the only That's This is the only thing that has all of those things. And when people start seeing it as a financial tool instead of a mortgage and it locks their mind, unlocks their brain, they say, "Wait a second. Now I see how I can use this."

25:21 Well, Kevin, not only are you knowledgeable and expert in this and we've talked a few times, you have more acronyms after your name than really first person anybody know. I really appreciate you taking the approach that you do in educating and educating our platform here today on reverse mortgage. You know, thank you so much for being on today and sharing with us the particular part of reverse mortgage for people with net worth, with high net worth and how they can use this tool. I really appreciate your time with us today. Thank you so Oh, if you want more Kevin Guttman, let me put up the website luxuryreversemortgage.com. And this is just newly launched. So, go on there if you want to see more information about Kevin. Luxuryreversemortgage.com. And the number below is his contact info with his phone number [phone number]. If you're driving, can't get that down, just reach out to me. I'd be more glad I'd be honored to make the introduction to get you forward. Kevin, thanks again so much for being with us today. I really appreciate again your professional attitude on educating and giving us so many different options to consider. And then so you can give you a call to follow up on that. Thank you for your time today.

26:18 Thanks, Bill. I actually enjoyed it. Information on this reverse mortgage where we get together every week and issue a new episode usually with like today a top producer in the business, but not always one as I think educational and in this case focused on the luxury side. I found that very interesting myself. Hope you did. Give me your comments. Thumbs up, thumbs down, comment, text, email. I'm @BillGross Probate on social media. As always, make today your best day ever. Thanks so