Reverse Mortgage and 15 Christmases, with Brady Mullen, CFP®

0:02 So, we're recording this right before Christmas. I'm Jewish. It makes sense we have a Christmas episode. But this topic just really jumped off the page. I talked to Brady a few times. He's been he's returned guest and he talked about how a reverse mortgage can create not one but 15 Christmases. The actually could be more than that. What does that mean? Brady Mullen, cross country mortgage, reverse mortgage expert as well as published author of The Ugly Duckling. How does reverse mortgage create 15 Christmases?

0:31 Well, that's you have to you have to understand where that comes from. And I wish I could claim credit for this idea. But this idea was shared with me when I was still a financial adviser by an estate planning attorney that I did a lot of work with. I referred a lot of clients over to him because he did a great job and, you know, he and I became friends over time. And he was the one that shared this idea with me. And he shared it in a way that I find kind of compelling, frankly. He said, you know, he doesn't do reverse mortgages. He has no interest in whether somebody does a reverse mortgage or not other than he's just trying to help people. And he said, you know, imagine I'm talking to a client that's sold a business and they're getting ready to retire and maybe they have, you know, $3 to5 million, so they're not like uber wealthy, but they're comfortable. And he said, the conversation often goes something like this. I'll say, you know, Mr. And Mrs. Client. It's been great working with you for the past 15 years and helping you with your legal stuff, but I got to ask like you ever since we met, you've been talking about a vacation home in North Carolina, let's call it, doesn't really matter where, but North Carolina. How come you've never executed on that? And their response is always something like, "Well, we've got money set aside to pay, you know, that we could live on for our income. We've got some money set aside for emergencies and money for the kids. We really just that just really wasn't ever in the cards for us." And he says, and he said, "Well, I think you could do that. Do you know how a reverse mortgage works? And of course, many times somebody who's worth5 or six million dollars recoils at the idea of using a reverse mortgage because they don't understand that it's just a line of credit. And he'll say, "Hold on a second. Like, let's talk about this, but before we go into the details, I want to remind you're 65 years old and I wouldn't really be doing my job as a as your estate planning attorney, you know, helping you with these issues if we didn't just talk frankly about death." And you're going to deteriorate unless you die in some accident. We deteriorate as humans. And I imagine during Thanksgiving and Christmas, now you're in the kitchen bustling with the kids and the grandkids, helping cook, helping clean up, you know, being a part of the festivities and the activities, kids jumping up on your lap and reading stories and things like that or grandkids. And you know that just isn't going to last forever. And if

2:34 You don't take that into consideration, you're just being naive. And we need to think about that. You your Christmas spending Christmas in that way with your family is going to end someday. And so he says if that happens at age 80. Now we know we don't know when that's going to happen for each of us, but some something like this is going to happen where your kids stop by while you're on the couch to ask if you've eaten enough, to ask if you're warm and you know they're they want to help. It's just a different experience. And he says, "So if you're thinking about Christmas the way you celebrate it now, if that happens at age 80 where you reach that state where they're taking care of you, that means you've got 15 left, 15 Christmases or Thanksgivings or anniversaries, whatever you want to call it, 15 years." And he says, "If you're ever thinking of doing it, now is the time. And let me show you how I think that can work." And then he shows how you can do that with the equity that you have in your own home. So actually the mechanism of how it works is kind of interesting, but I think it's probably the most important thing to recognize that the whole reason that the whole reason businesses exist is to help people live a better lifestyle. And he just had a clever way of doing it

3:37 Right now. The beauty of the 15 Christmases, there's a lot of ways one can spend any holiday or time period with your family. You can go on vacation, you can, you know, buy presents. But the beauty of using the line of credit on a reverse mortgage to buy a second home piece of real estate is while on one hand it's borrowing on the other hand you're borrowing money you're getting an offsetting asset. So really your net worth is just some bookkeeping entries but you're in the same spot financially. Correct.

4:07 Oh yeah. Like if you think about it, so he shared this example and the example that I use in my book where I spell he his example was a little bit

4:16 Low resolution. It was just like why don't you just use a reverse mortgage? But you know I've been building financial models for 25 years. It's kind of my thing. I'm kind of nerdy that way. And so I was like well we can calculate that. Let's calculate that. So if you think about it just high level if you if you have a million dollar home and you take out $250,000 of your equity to go buy a vacation home how much equity do you have left? And the answer, that's a trick question. The answer is a million dollars. You just have it in two assets now instead of one. So you could even argue from a diversification standpoint that you're actually a little better off because you're in two markets instead of one. I mean, that's not the big the biggest reason you would do that, but it's true.

4:51 And so you still have the same amount of equity. And his point is if you if you do that, you haven't really changed your equity position in total. But now if you're if you put $250,000 down on say, you know, a 700 or a 715 720,000 house, you don't have to put the minimum down, right? You could put you could put let's see$ 250 of 715 I think is somewhere around 35% down. You can cash flow on a 35% down vacation property if you rent it out when you're not there. That's a that's a big enough down payment that you'll cash flow as long as you don't you know as long as you do it I want to say carefully but I don't mean as long as you don't do it terribly. It doesn't take a lot of genius to buy to put 35% down

5:30 Conservatively. I think the people maximize the revenue find out they get the wrong tenant in there but the ones who do it conservatively using proper management techniques or a management company. Either way they can find that they can you know get some cash consistently for a property like that.

5:45 Yeah. Yeah. And so in the model that I use, I show them paying a short-term property management company. It has to be short-term, right? Because you wouldn't you wouldn't go spend two weeks in your property if it's long-term rented, right? This is a short-term rental that we're talking about. But you don't have to become a landlord for the first time at age 65 if you don't want to. You could you could if you put 35% down, you still have enough room to pay a very good property management company to keep that thing humming along, keep it repaired, keep it nice, keep good tenants in there, market it, all that good stuff. And you'll still cash flow. And so the beauty of this is you just bought a vacation home that you can use as little or as much as you want and it was 100% financed and it cash flows, right? Because the reverse mortgage is what you used for the down payment, but the loan for the rest of the property is a regular maybe a DSCR loan or whatever kind whatever the best loan you can qualify for. You get that loan. That property is 100% financed and it cash flows. And then when you run the scenarios on okay yes if you don't make a payment on your mortgage on your reverse mortgage then it will acrue over time but you also have a property that is that is cash flowing and it's got appreciation and debt payown all those things involved and if you think about the reverse mortgage may be accumulating at 7% per year that's going to double roughly over 10 years. I know that's not people think of the rule as 72, but that's an annual compounding. 7% 6.95 doubles every 10 years when it's compounding monthly. So, if you've got a reverse mortgage that doubles roughly every 10 years, that's about a 7% growth rate on that reverse mortgage. The vacation home for you to get a 7% total return on that with it a little bit leveraged with the appreciation and the cap rate and the cash flow and the tax benefits, by the way, because you get tax benefits for second homes and investment properties depending on how it's treated and how much you use it. But you can probably get 11, 12, 13% on that investment that you put into that property which you've borrowed at 7%. So at the end of the day, you're increasing the net value, the net wealth of the family

7:49 While also putting a vacation home into your lifestyle. And let's say you use that for the next four years, but the next year you're like, you know what, we're going to spend this Christmas instead of going to the vacation property, we're going to go to Texas or Hawaii or whatever. Well, you're just going to collect the revenue from that vacation property that you didn't use. Like, it's a beautiful strategy. Real estate is one of the only investments that I know of that you can enjoy while also creating financial wealth at the same time. Right? We don't do that with our stock portfolios. I like having a stock portfolio, but I only like it because it gives me comfort knowing that I'll have some wealth in the future. But real estate can do that and give you something to enjoy at the same time. There's not a lot of other kinds of wealth that can do that. And this is just a really clever way of doing that in a way that builds wealth and puts lifestyle into somebody's, you know, last 15 or 20 years of time with their kids and grandkids that's very memorable. And so really you're just using this as one example of what one can use that equity for that it's current because time of year. But the idea being that rather than assuming you're limited to what you have in the bank and what you can qualify for in a loan, there's another option which is to extent you have equity in your home, you can either pull it out on one house or take it out on another house. But either way, there's ways you can use that equity without paying for it monthly. Which you can choose to pay for it or not, but it creates some additional flexibility. And that I think the other part that you're making the point of this is this encourages people to use some of their assets while they're still alive and enjoy them rather than pass with all the assets.

9:26 I literally have a client who they're opening up probate for $5 million probate and the father lived, you know, not modestly, below modestly. And his son said, "I don't know why my father wasn't spending some of this money on taking care of himself. He worked so hard and he worked and he take care of his health. He had the money to get medical care." Well, he had the money. He just had it in his property. It was free and cleared and was worth about a million dollars. Had he, you know, got a reverse mortgage. It gave him more options. And so, I think that's the key thing that you talk about with this product is this product is like the Swiss Army knife. It doesn't mean any it's necessarily the right tool for anybody, but it does so many different things. Is worth evaluating and I think in particularly you talk about evaluating this along with financial advisors or professionals.

10:13 Absolutely. I think it's probably the most underappreciated financial tool I've ever seen in 25 years in finance. Well, I know you talked about it before on this podcast, but what was your light bulb moment where you looked at this and said, "This is not just a mortgage. This is a variety of possibilities that if used right, if used wrongly is a problem, but if used correctly is a fantastic tool. What was the moment that kind of clicked for you that you saw the reorg being a powerful tool?

10:39 Oh, that's easy. It was it was Dr. Pfau's book about it. I've liked and followed him for a long time. He's a for those of for those listeners who don't know who he is, he's a he's one of the most recognized thought leaders in the financial planning space. And when he wrote a book about it, I thought, whoa, what's going on here? I need to learn about that. Like, if he's talking about it, I should listen. He what I love about him is he's completely objective. He's not a financial adviser. He's the head of research at the American College of Financial Planning, financial services. He has no interest financially in anybody getting a reverse mortgage or he just produces research and studies for financial adviserss to use to create better outcomes for their clients. So he's completely objective and brilliant, by the way. He's a great guy. And yeah, when he wrote a book about it was like, well, there must be something about those that I don't understand. And ever since then, I've been kind of on a kick about, wow, this is this is probably the most overlooked financial tool that could put I mean, put an increased lifestyle in somebody's in somebody's life in so many different ways, right? You're talking about people on two ends of a spectrum. One, there are people who are literally struggling to make ends meet while sitting on $700,000 of equity. That's ridiculous. Like, if that money were in an IRA, people wouldn't think twice about spending it. But because it's inequity in a home, they feel like it's somehow taboo to spend it. That's an emotional problem. It isn't that's a confusion about the way wealth should really work. So that there's that end of the spectrum and then there's other ends of the spectrum like this example that we talked about where people could just use this tool to have a vacation home in their lives that they didn't think about and they're not maybe broke. It's not like saving them from destitution. But there's all sorts of ways to use it. I think of, you know, Frank. So, I'm going to I'm going to challenge you a little bit, Bill, because I'm not a huge fan of the term of the of the Swiss Army knife comparison. And maybe I can be persuaded either way. Like, I'm not I don't look down my nose at it, but I think a Swiss Army knife is a bit of a it's not really a good tool for any of the things that it does specifically. In other words, it's not the best knife. It's not the best can opener. It's not the best, you know, saw. It's not the best

12:42 Corkcrew. It's a little bit of all those things, but it's none of them. It's not specialized to do any of them well. And I think that's really not fair to the reverse mortgage because the reverse mortgage is just a line of credit. How you use the cash is completely up to you. And cash isn't there's no such thing as good cash or bad cash. It's just cash. And if you have access to cash, it is it's fully functional as cash immediately. So it's not you're not compromising anything by having a line of credit attached to your house. Whereas I feel like with a Swiss Army knife, you're compromising some quality on all of those tools to have them all in your pocket at one time. So, I mean, I'm just throwing that out there just to sort of create a little

13:24 Well, as a big fan of the Swiss Army knife, I have one at my desk. I would say the chief advantage of it is it's there when you need it. Yeah. And

13:32 I think the thing that I would the reason why I like to refer to it as a reverse mortgage is it might not be the best mortgage in terms of the price for an interest rate on particular thing versus a Ford mortgage. You got a little better, I think, pricing or a little, you know, more flexibility on products and things like that. And it might not be the best line of credit. You might if you got one though the problem is that line of credit is subject to being closed or the bank goes out of business and calls it due or you know some sort of thing. But it is the best when it's because it's available and I think the line of credit feature is a great protection for people's equity. I think having one a line credit when you don't need it is great for protecting your equity when you don't need it. And the reverse mortgage, again, it's not always the best mortgage, but it is the best mortgage for certain people in certain circumstances. And that's kind of my thinking of the of the Swiss Army knife. It's I use that more than any other tool. I use it more than any other knife or any other screwdriver because it's right there. But and I think that's my the other thesis of my podcast is

14:47 Everybody in America who buys a house for cash or owns a house free and clear should at least consider a reverse mortgage. Probably 80% should get one, but at least they all should consider it. And so now you're going from no mortgage to a mortgage. Well, why? It's a Swiss Army knife. That's my that's my thinking. But, again, I don't mean to put it down. And I just mean to say is that viable and it should be looked at and should be used regularly.

15:14 Yeah, I completely I completely agree with all of those things. My thought is like I' I became convinced and I was having this conversation with Dr. Pfau coincidentally and I was going over a particular case some nuances with this or that and asked his opinion on something and he shared something that I always I've always just remembered and it echoes in my ears which is show me how somebody is better off without access to their equity. Like it's just access. So you don't have to use it. You can if you want to and if you decide to use some of it you can decide whether or not to make payments on the balance. But show me how somebody is better off without having that in place. And there are a couple of there's a couple of scenarios, I guess, like if you knew you were leaving the house in the next few years, you wouldn't pay the cost of putting that in place.

16:02 Or if somebody really had a problem with access to cash. I mean, we all know people where if you had access to three or $400,000 of cash, that can ruin people if they

16:13 Aren't disciplined, right? That is a real thing that we have to contend with. But other than that, it's really hard to come up with a situation where somebody who qualifies for a reverse mortgage is better off without one. And I also find most people who are very wealthy have so much of their assets involved in creating more wealth. Right? Wealth people I know all own massive real estate portfolios or big interest in big companies and they're always being given opportunities that the rest of us may not see because of their financial status. I know very few people who have or just sitting on liquid cash and are happy to be there for the rest of their lives and wouldn't need access to the equity of their house. I just I just don't I don't ever see that person. That's not to say I don't see people houses are paid off. The opposite. I see that person and that equity represents too much of their overall assets to be flexible and I also look I also think that there's liability protection. Having a line of credit against your house puts that loan ahead of any other liability. Having that access to line of credit. I you know obviously reverse mortgage servicesers don't want people to take a line of credit when the house burns down but people could have and the people are really suffering now for not having done that and I really feel like I would never fraud the bank but I certainly think that if you have a checkbook you're allowed to draw lines against a credit against your house. I would have drawn a credit for everything I had after the fire the Palisades and then if that's illegal let the bank tell me that and I'll pay them back. But I wouldn't want to have to argue the point when I don't have the money. Rather argue the point when I have the money. So those are those are outlier cases. But I would just say you're right. There's no there's almost nobody not better off. Okay. Almost everybody's better off with access to equity.

17:58 Nobody's not better off. Yeah. Just reverse that one. Everybody's better off with access to equity. I think that's definitely and obviously if you're not 62 or five, then that those aren't options. But I think anybody who has access below over those ages should at least consider it and get the plan. And Dr. Brady or your favorite reverse mortgage regina at least get the answer. Okay. So let's talk a little bit. You know, I love Dr. F. It was interesting. I had him on twice. The first time YouTube banned the episode because we got too much into financial planning. And I thought that's kind of weird because I'm not a financial planner. I'm not selling the service. Neither is he. Of all, you know, here's an academic person and me just an innocent I want to learn about it. And then and I had him a second time and YouTube didn't bend that one. I stayed out of that. But one of the concepts he talked about and I know look he's an academic so it's as an interviewer, you know, my challenge is to get him to speak a language that real estate originators and real estate you know professionals and financial planners can understand. Talk a little bit about the sequence of returns and why the reverse mortgage kind of fits in. I think almost now I think of it as being kind of the grease between the gears to make things work more efficiently when they're not set up perfectly.

19:15 Yeah. So I think that concept is a lot simpler than people often try to make it. So it's pretty straightforward. When people talk about sequence of returns, what they're really talking about at its base level is you have a slush like you don't want to be subject to the markets when you need money because it doesn't always align with your best interest, right? The stock market doesn't align with your specific life. So, if you need money in a given time when your accounts in the in the stock market are down, you don't want to have to sell those at a loss or in a in a in a trough in the market cycles because your life doesn't depend on market cycles. It depends on your life. So, if you have a medical issue or if you want to buy take advantage of something, you know, buying some real estate or whatever, when you need the money, if the market's down, that's an inopportune time to need the money. So having a having a line of credit as a backs stop gives you the ability to use that cash instead of selling assets while they're down. And then you have options after that. When the assets recover, you can always take them back out and pay back the line of credit or not, whatever you want. And the reverse mortgage makes a perfect, they call them volatility buffers. It makes a perfect volatility buffer for a couple of reasons. One, lines of credit are extremely good volatility buffers anyway because they are cheap. And people might talk about, oh, but reverse mortgages cost more than traditional mortgages, but it costs a lot less than selling assets when they're down. And if you put in a price to get a line of credit attached to your home, and that line of credit is increasing, it's a beautiful it's a beautiful backstopper. It's a beautiful volatility buffer because it doesn't it doesn't cost you opportunity cost. So, if I wanted a volatility buffer in my life and let's say I wanted to put, you know, $150,000 in the bank for a rainy day to use as a volatility buffer, well, that's seven or eight or nine or 10% that I'm not earning on that cash because it's sitting in the bank, right?

21:04 You add that up for one or two years and you're already paying way more than the than the cost of putting that line of credit in place. And line of credit is beautiful because it doesn't cost you anything just to leave it there because it's not

21:14 It's not something that would have been otherwise invested. It's just a line of credit sitting there, right? So, it's a cheap it's a cheap pool for a rainy day fund.

21:24 And then the other advantage is I have complete control over my cash flow if I want to use some of that money. I don't have to make a payment on this type of line of credit. It's one of the few lines of credit that work that way. Loans against life insurance policies are one of the other things. Margin accounts can kind of work that way once you hit but if you hit certain limits, then you'll have to make payments. But life insurance policy loans and the reverse mortgage line of credit are the only two credit lines that are at least widely available that I know of where you can borrow up to a certain limit and decide whether or not you want to make payments. So you have complete control over your cash flow. It's a beautiful volatility buffer. It's a beautiful backs stop.

22:00 Excuse me. Some of the examples I see are people trying to defer gains to the next year. Like I had a really good year this year and I wouldn't want to sell stocks now. But I might want to sell them next year and go into next year's income tab. And how do I do that? Well, I can borrow the money now in a line of credit and then sell the stock in January and repay the interest, you know, for a couple months and I still get depreciation for those the time I haven't sold the stock. So again, the lines of credit are very powerful tools and all this does is extend this to the homeowner and talk let's talk get down now the brass tax on the product. Somebody who owns a house free and clear million dollars, $2 million. You know, what would be the minimum loan to value for somebody, you know, at the lower age, lower age, 62 or 65? What kind of loan to value could they get on a line of credit and what are the costs to put that into place?

22:51 The heristic that I think of is the easiest. It's not exact, but it's a good rule of thumb that applies because a lot of people want to know, well, what is the what is the loan to value or the principal limit factor is what we call that in the reverse mortgage space. And there just isn't a single answer to that question because it depends on age. But just take somebody's age and subtract 30 and that's pretty close to what the loan to value would be of where the line of credit will begin. So the initial line of credit will start about at your age minus 30. So if you're 65, it's going to be about 35. If you're 70, it's going to be about 40. That's a rough estimate. And that way you can kind of understand where it will begin. And then once it's in place and they use the appraised value to determine where the line of credit will start. So if your house appraises at let's say a million bucks just to make because it's all a ratio. If it's less or more then it's going to be the same ratio. So we'll just use a million because it's a simple number. But if your house is worth a million bucks and your line of credit starts at say 350,000 because you're about 65 years old. They're going to use the appraised value to determine that and then it's going to be the percentage of that appraised value. But once it's in place it starts compounding and will compound for the rest of the life of the loan which could be as long as you live there. So, and then what does it cost to put in place if I'm not if I'm not drawing out money right away? I know if I draw money out, the bank can make some money right away and the cost might be less if I'm just putting a line on a straight line of credit. Or what is the minimum to draw out in order to get a line of credit in place?

24:16 Well, the minimum is like $50 or $100. You don't you can pay for all of the costs of a reverse mortgage out of pocket if you want to. Most people don't do that. They roll the cost onto the line of credit. But the there's no there is a minimum because if with a reverse mortgage if you pay it down to zero the serer will close the loan and say thank you for your business.

24:35 But for people Yeah. But if but for me like if the if the variable rate HECM exists the when I turn 62 if it exists the same way then as it does now I will be signing on my 62nd birthday. Like why wouldn't I want an increasing line of credit compounding for as long as I can?

24:53 Right? That just makes sense. Now, it's going to cost you 2% of the value of the home up to the HECM limit, which is about one and a quarter million. So, the most it could cost is about 25 grand. But if you think about that, going back to this idea about having it as a standby line of credit, if I want if I want a buffer of conservative access to cash, if I put a hundred or $200,000 in cash just for a rainy day so that I can leave my investments alone and that way I can access money when I need it, the opportunity cost there is going to cost me $10,000 a year of, you know, 5 to 10% that I'm not earning on that money if it were invested. Like if you really just compare the cost in the long run, it's a really good deal,

25:33 Right? Well, and not to mention possible liability issues. Again, you know, if you're sued, the first part of the equity is being protected. I've been in plenty of real estate deals where somebody is, you know, being it's one of my main lines nowadays is people being sued by somebody and they have a homestead, which is in California like $75,000 to protect that equity, but the rest is all vulnerable. Well, if you had a line of credit in place before you were sued, the line of credit gets paid off before the lawsuit does. So, it's part of a I think liability protection program as well. There's a lot of reasons why you have that in place. I think definitely worth getting to. So, look, pretty obvious. We can go on you've literally written a book on the subject. So, we can go on and on about the topic.

26:12 Oh, yeah. I could I could go on and on and on and so could I. I think, you know, this is one of those topics that I've just really come to I was embarrassed when I learned that I knew so little about this product being in real estate for so long. I originated a few of these loans a long time ago. I was a mortgage originator. I'm now a real estate broker, but I deal with people whose most commonly the seeds pass and the kids have this property, reverse mortgage, and I help them get that property properly sold off if that's the way to do or keep it. And I learn so much. I always learn when I talk to you. I know that you're a great resource. People want to reach you can reach you on LinkedIn Brady Mullen M- Ulen on LinkedIn but more than that you actually have a book on the subject talk a little bit about your book

26:54 Well that was what the balance that I was trying to strike with that and by the way I co-authored that with my brother who's a CPA my background is in financial planning and the balance that we tried to strike was so Wade Pfau's book is amazing but it's very dense it really is almost incomprehensible to people if you don't have a flare for finance if you don't find that intrinsically interesting ing, you might have a tough time getting through his books. His author or his audience, excuse me, is financial adviserss typically, not the general public. So, it's very dense stuff. So we wanted to provide something that was that was authoritative and helpful, but also digestible by people who aren't necessarily geeky from a financial perspective, right? We're all affected by personal finance because it's the fuel, right? We all we all need to manage our money. So we tried to make it something that was digestible, talk about concepts and why people would use these. Whereas he goes a lot into the statistics and, you know, the Monte Carlo simulations and things like that, which is awesome, by the way. It's fantastic. But I know a lot of people that can't get through his book because it just isn't their thing, which is perfectly fine. So, we call it the financial ugly duckling because people's intuitions to compare it to the wrong thing are very strong. They want to compare it to the cost of a mortgage, and that's just incorrect. It isn't it isn't a traditional mortgage. It does so many things that a traditional mortgage cannot do. And so you have to compare it on its own terms. It's similar. It is a mortgage just like a swan is similar to a duck. Webbed feet bill stuff like that. But it's also a different animal altogether and it deserves to be analyzed on its own terms.

28:26 And so in terms of actually getting a loan like this, I would think the first step is really to if you have an inkling or if you have if you have a house that's owned free and clear, you're buying house for cash, feel free to do that. You want to talk to your originator. Call you up, set an appointment with you, do you do an analysis individually? What's the what's the process look like from g I'm interested and have questions to actually getting the product?

28:47 Well, they can they can we can run figures and run numbers before anybody commits to anything. And I would go back to, you know, we kind of talked about this earlier, but someone who qualifies for a reverse mortgage, it would be tough to create a scenario where they would be better off without one, right? But if I'm going to pay a million dollar for a home with cash, you know, I'm locking up a million in equity. If I pay, you know, $700,000 or $600,000 and I use 400 from a reverse mortgage, then I've retained $400,000 of my money that I can access.

29:20 And people often look at that and they'll think, "Yeah, but then you borrowed 400 grand and you owe interest." And I'm thinking, "Yeah, but I'm earning interest on the 400,000 that I kept and it's accessible to me." Like what's the downside in that?

29:32 Right. Right. I'm not paying making payments on it necessarily. So I'm not strapped for cash like I might if I borrowed the money was leveraged to the hill. Well, and if I ever wanted to pay it off in full, I saved $400,000 to begin with by using it in the first place.

29:46 I could always just use that money to pay it off if I wanted to. And here's a crucial tax step, too, Bill, that we haven't really talked much about.

29:54 Some people might say, "Well, I want to pay cash for the house, and if I need the equity later, I'll do a reverse mortgage then." Well, there's a lot of that is possible, but there's a lot of downside to doing that. The first of which is you're going to pay more for the for the reverse mortgage the longer you wait and it will be smaller. Like you're better off getting it early and letting it compound because it's less expensive and it gets bigger that way. But the other disadvantage to doing that a lot of times people don't think about and we do CE classes for CPAs and financial planners about this exact topic which is if you pay cash for a house and take the money out later with a cash out refi. The interest isn't deductible. But interest on a reverse mortgage is as deductible as interest on any other mortgage. Now not all mortgages are create deductible interest. So I want to be clear about that. Has to be used to purchase or improve the home. And there's a there's a limit on how much indebtedness can create deductible interest. But if any mortgage is deductible, then a reverse mortgage, you serving that exact same purpose, would also be deductible. But it isn't deductible if I if I don't use it to purchase the house, but I just do a cash out refi later.

30:55 Right? The interest isn't deductible. And that's huge because we're talking about 1098s that could be two, three, $400,000 large, right? Creating massive deductions. And you won't get those if you if you just do the cash out later when you need it. It's not the same thing.

31:10 Again, offers some more options and more flexibility. Brady, obviously we go on and on. Somebody who's interested should reach out to you. And again, his contact info is on the screen here down below. [phone number]. Brady Mullen, Brady Mullen at CCM for Crosscountry Mortgage.com. One of the top companies, one of the top originator companies in the business and also one of the top reverse mortgage companies. And Brady being an expert. Brad, thank you so much for joining us. I really appreciate the time. I always learned so much from you and thank you for being on today.

31:38 Thanks, Bill. Thanks for your efforts in helping get the word out about these and for us you hey there's a way to make your next 15 Christmases or maybe in my case it's Hanukkah's better as well as some add financial flexibility. Hope you learned a lot today about how to use this product in different ways. I think that's the key is so many different options. I do this every week. I interview mostly originators like Brady but oftentimes management or vendors. I'm at Boss Probate. If I can help reply, like this, subscribe, send me an email. If you want to be interviewed on this, send me an email as well. And as always, make today your best