Now or Never: Long-Term Care Strategy with Kosta Yepifantsev

Should You Use a Reverse Mortgage to Pay for Long-Term Care with Don Graves

November 01, 2022 Kosta Yepifantsev Season 1 Episode 8
Should You Use a Reverse Mortgage to Pay for Long-Term Care with Don Graves
Now or Never: Long-Term Care Strategy with Kosta Yepifantsev
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Now or Never: Long-Term Care Strategy with Kosta Yepifantsev
Should You Use a Reverse Mortgage to Pay for Long-Term Care with Don Graves
Nov 01, 2022 Season 1 Episode 8
Kosta Yepifantsev

Join Kosta and his guest: Don Graves, Certified Senior Advisor, President and Founder of the Housing Wealth Institute, Author, and Instructor of Retirement Income at The American College of Financial Services.

Serving as one of the nation’s leading educators on incorporating housing wealth into retirement income planning, Don has overseen more than 20,000 advisor/client engagements over two decades into practical, easily to implement, back-of-the-napkin, common sense concepts.

In This Episode: The ins-and-outs of reverse mortgages, how a reverse mortgage can fit into your care plan to provide financial stability for yourself and your family and the scary misconceptions of what it means to utilize this loan. 

Watch this episode on YouTube:
https://www.youtube.com/watch?v=0X9pYiJYdbc

Find out more about Don and Housing Wealth:
https://mutualreverse.com/don-graves/

Find out more about Kosta Yepifantsev:
http://kostayepifantsev.com/

Show Notes Transcript

Join Kosta and his guest: Don Graves, Certified Senior Advisor, President and Founder of the Housing Wealth Institute, Author, and Instructor of Retirement Income at The American College of Financial Services.

Serving as one of the nation’s leading educators on incorporating housing wealth into retirement income planning, Don has overseen more than 20,000 advisor/client engagements over two decades into practical, easily to implement, back-of-the-napkin, common sense concepts.

In This Episode: The ins-and-outs of reverse mortgages, how a reverse mortgage can fit into your care plan to provide financial stability for yourself and your family and the scary misconceptions of what it means to utilize this loan. 

Watch this episode on YouTube:
https://www.youtube.com/watch?v=0X9pYiJYdbc

Find out more about Don and Housing Wealth:
https://mutualreverse.com/don-graves/

Find out more about Kosta Yepifantsev:
http://kostayepifantsev.com/

Don Graves:

It's another way to access your home's equity. But this time, it's for retirees. So you don't have the burden of making a monthly loan payment. So it's not new, spooky or dangerous. And for 34 years, the Home Equity Conversion Mortgage, that's a type of reverse mortgage has been overseen and underwritten and insured by the federal government. So 34 years, it's been part of our federal government.

Caroline Moore:

Welcome to Now or Never Long-Term Care Strategy with Kosta Yepifantsev, a podcast for all those seeking answers and solutions in the long term care space. This podcast is designed to create resources, start conversations and bring awareness to the industry that will inevitably impact all Americans. Here's your host Kosta Yepifantsev.

Kosta Yepifantsev:

Hey, y'all, this is Kosta and today I'm here with my guest, Don Graves, certified Senior Advisor, president and founder of the housing wealth Institute, author and instructor of retirement income at the American College of financial services, serving as one of the nation's leading educators on incorporating housing wealth into retirement income planning. Don has overseen more than 20,000 advisor client engagements over two decades into practical, easy to implement back of the napkin common sense concepts. So Don, let's start with something that you're very, very familiar with. What is a reverse mortgage? And how does it work?

Don Graves:

Thank you, Costa for having me. Absolutely. Fantastic question. When I get that I said, Do you remember the last time a reverse mortgage came up at a barbecue or the family meeting what happened? Three people fainted three people left the table and your heart Janey made a shank out of a plastic knife and fork and came after you. Reverse Mortgages come with some spooky, right? Some mythology and some stories to it. But this 61 year old program is not new at all. What is a reverse mortgage? It really is just the loan. It's four words, for your listeners, i j a m are the initials it stands for it's just a mortgage. It's just a mortgage. When you got your first home, you didn't pay cash, most of us borrowed money from the bank paid it off over time it's a mortgage. And then when we need to do home repairs or fix up or send the kids to school, we got a home equity loan line of credit made payments, and it's over. And a reverse mortgage is simply an equity release tool, just like a mortgage or home equity loan for retirees age 62. Or better. Some programs are now for 55. But age 62, that allows them to borrow money from their home without having to make a mandatory monthly loan payment, give up ownership or come off title to the home. It's another way to access your home's equity. But this time, it's for retirees, so you don't have the burden of making a monthly loan payment. So it's not new, spooky or dangerous. And for 34 years, the Home Equity Conversion Mortgage, that's a type of reverse mortgage has been overseen and underwritten and insured by the federal government. So 34 years, it's been part of our federal government.

Kosta Yepifantsev:

So there are, I think, at least 1020, if not 100 questions that come up in my mind as you're speaking. And I'm sure every time you bring up reverse mortgages, like you were saying, at the barbecue, there's tons of questions. Is there a difference between the old school reverse mortgages and now what the new reverse mortgages and if there is I'd like for you to talk a little bit about how the loan has changed since you started working in wealth management.

Don Graves:

Sure. And I'm coming in to my 23rd year of doing this, and it's all I do, and and around reverse mortgages. And so on my personal practice, I've had about 16,000 consumer facing conversations, and about 3000 people became my clients. And all that tells you is that as good as reverse mortgages are for many, they're not always the right thing to do. So Don, what's changed in reverse mortgages? Since the federal government, let's just take it from 1988 when the federal government FHA got involved, so this was an FHA loan, so it's overseen and underwritten by FHA. A lot of people don't know that they think it's just private people running around taking old people's houses. That's Oh, no, I said there are three programs or three programs that the federal government has and supports retirement, and they're all pretty spooky Social Security 1935 Medicare 1965 And the third is the Home Equity Conversion Mortgage. 1988. And so the premise was people living longer, they're highly indebted, they haven't saved enough. And that's going to be very difficult retirement. So what can we do? What do they have at their disposal that allows them to smooth out their retirement years? Well, 87% of retirees own a home. So the question is, how do I access the equity in my home, without putting a burden on my cash flow to do it? Well, that's where the reverse mortgage came in. So traditionally, the reverse mortgage was often seen as the loan of last resort for the house rich, cash poor widow who's rubbing two nickels together to start a fire to cook her last meal, then she's gonna die. But it really never wants that. So your question was, well, Don, what's different? What's changed? I would say, in terms of the mechanics of the loan, it's still built on the same chassis. We'll talk about that later. So that hasn't changed much. What's changed pretty dramatically, is the application of the reverse mortgage, how the tool is being used. And so again, for many, many years, when I started, there's a commercial and AARP headed out and it started out if you consider yourself house rich, but cash poor, or reverse mortgage may be for you. And a lot of folks that Oh, I don't want to be associated with that. And that's terrible that that's what poor people, but they didn't know it wasn't for poor people. So the app, so I asked people this question, to answer your question. When I talk about the application, I said, How many of you all and sometimes I speak mainly to financial advisors, I'll put it in that context, even though consumers and advisor will be listening, you will understand. So I say to the folks in my classes, how many of you all have clients who you think would honestly need a reverse mortgage, and they sometimes five or 10%, I said, Thank you, that's very honest. I said, How many of those clients would say to you, they're 100%, certain, they'll enjoy a great retirement, that's a small number to five or 10%. And here's, here's, here's the change the application change. If there were a proven resource, those who are watching or listening, if there was a proven resource that allowed you to increase your cash flow, reduce your risks, preserve the assets, you have increased liquidity for the web apps, or even add new dollars back into retirement savings. If there was a resource that allowed you to do those five things. Would you want to know how it works with a hairdryer? Absolutely. And I said now 100% of the people watching or listening to this. So yeah, done. I'd like to know about increasing cash flow, reducing risks, preserving assets, improving liquidity, or adding new dollars. And I said, Well, that's what the newly restructured reverse mortgage is designed to do. It's not so much for the house rich cash poor retiree. It's for the proactive retiree, who would like to see how to take what they have, and make sure it last and maintain the purchasing power for as long as they live. So the 5% or 10% of people may say, Well, maybe I'll need a reverse mortgage. If things get bad enough. That's not my typical client. But 100% of your listeners are nearly 100%. So yes, if there were proven resources, I'll say it again, that will help you increase your cash flow, preserve the assets that you have reduced the risk, increase or improve your liquidity or add new dollars. Yes, of course, you and I would want to say, just like that old show, when I was growing up with older brother would say something. And the younger brother would say what you're talking about Willis? You

Kosta Yepifantsev:

know, I know exactly what you're talking about. It's what's the name of that show? Different Strokes? Yes, that's it that said yes. Once you talk about

Don Graves:

the change the application of the financial regulatory agency in Washington, DC, who used to say, don't use a reverse mortgage, unless it's a last resort, has removed that language, and said reverse mortgages should be used and incorporated with the holistic retirement income plan. And so you've got schools and universities, a Nobel Prize winner, Dr. Robert C. Burton at MIT said reverse mortgages could be the solution to the global retirement income crisis, and changed the application of the tool to a broader and more diverse constituency of retirement.

Kosta Yepifantsev:

So the chassis is the same. But let's talk about those tools that reverse mortgages used for. And I want to get into specifically long term care and retirement, how can a reverse mortgage provide funding for long term care and retirement expenses?

Don Graves:

Sure, and this is dear to my heart. Okay. My mom's been in a facility one year and three months. She was spending she's 89 years of age he was spending $7,000 A month part time Oh, part time help coming in for dementia care, did that for three years, and we just ran out of money. So you understand and your listeners certainly should understand that planning for long term care is often the biggest overlooked and under Plan for expense and retirement. And it's projected to impact some 65 to 70% of retirees in some capacity. Thank you for what you're doing on your show highlighting that because it's very important. So the question is, how do reverse mortgages work within long term care? I wrote a whole article about that. And certainly, I'll make that available to your listeners at the end. But you only have a certain amount of tools or asset buckets in retirement, to provide income for what you may need for an extended care plan. You've got your you've got your income, Social Security, pension, maybe you still working. So your income, your investments, 401 k IRA, which brokerage accounts Hipple, spiders, Bitcoin,

Kosta Yepifantsev:

right. And that shows, yeah,

Don Graves:

you've got life insurance and permanent and whole life, you've got annuities, which fall under life insurance. And you've got long term care disability insurance. So out of that, you say, Well, what if something happens, I'm going to use these three buckets. And that's not just with long term care, that's just retirement, retirement is going to be long and unpredictable. You and me and most people wake up every morning, look on the news and see who invaded who what new variant is out. You know, what's happened in the market? got killed overnight, right? It's uncertain, it's absolutely uncertain. And so are those three tools, your income, your investments, and your insurances? Enough to provide for a basic retirement income plan, let alone the long term care needs you may have? And I would say no, 87% of retirees have housing wealth. That is you own a home? What can that home be used to do? I want to share my screen, and I want to share? And this will be in the show notes for the listeners. But for the viewers? I'm going to try to share this. Let's open. Can you see this? Yes, we can. All right. Now, one of the ways when you get a reverse mortgage when you get a reverse where I can't draw on this screen? And but let me let me come back to myself here. Can you see me again? Yes. Okay. All right. So I'm gonna put this triangle for your, I'm holding a triangle for the listeners. That's not the Jay Z side. So the, the amount of money you get from a reverse mortgage is based on three things as to triangles, number one, the age of the youngest borrower 62. Or better, some places allow 55 Number two second point at the triangle, the value of the home. And the third point of the triangle is the what's called the expected interest rate or the long term industry. Now, based off of those three things, a certain amount of money is going to be made available to you, in the middle of the triangle. If you've got a mortgage or home equity loan, we're going to subtract that from the number in the middle of the triangle. And what's that, that's going to leave you what's called a line of credit. Now, here's what I want to go back to on the screen here. To those who are listening, I'm showing a chart I mean, you show notes of people who are on the left hand side ages 65. And then home values 200 400 600 $800,000. Now watch this, a person in a $600,000 home. Today, age 65 can get around $234,000. And a line of credit or reverse mortgage line of credit. Now here's here's what's important. By the time they reach age, 8020 years later, it's now grown, the unused portion of that line of credit is now $701,000.30 years later, it's $1.2 million. That will be in the show notes. But what I want to show you is that a reverse mortgage has a built in guaranteed growth factor. And its line of credit cannot be frozen, kept cancelled or reduced. So you tell someone, did you know that you're sitting on your long term care plan? You're sitting, you're living in your extended care plan? What do you mean? I said, if we could turn your home into a reserve that was growing at 567 percent and couldn't be frozen, kept cancelled or reduced, accessible to you at any time for any reason? Would you want to see how that works? So that's an example of long term care. I showed one more time. So Mama, my mama was diagnosed here at age 85. And then let's say she had a reverse mortgage, and she didn't own a home. But if she did, we would have done this. So let's take someone with a modest home $200,000 Not a lot of them exist anymore, but they're out out there in Falmouth, Kentucky, where my family's from, but let's just look at a $400,000. Home. And you can pull out 154,000 Or stablish $154,000 line of credit. At age 20 years later, it's $461,000 607,025 years later. Now the age when most people start getting sick and needing Long Term Care is right in there between age 80 and 90. What does that mean? Be able to have to be have an accessible reserve that you can draw from where there's some applications, right? Number one self funding, I didn't get qualified or I didn't medically meet the requirements for traditional long term care or life insurance would link benefit? I couldn't do it? Well, sure you can you still have a home. If you turn the home into a reserve fund that's growing? Well, you may have anywhere for 567 $100,000 when you need it. What if you do have a traditional policy of some sort, but you don't know if it's going to be enough? So this function is as a type of coinsurance as, as it were, well down what if I do qualify, but I've got the money to get the policy, but I'm a little concerned about the future. Within my question is, Mr. Mrs. Jones, if we could use your home to replenish the income that you're using to pay for the premiums with this insurance? Would you want to see how it works. And so those and there are many more examples with the bottom one sure to be able to sit on a to be sitting on a reserve fund, that could be growing in your favor to be used for a myriad of things, particularly an extended care plan. Who wouldn't want to see how that works? Is there one person listening to me are watching that you would say if I told you, if we could use your home to create a reserve fund for an extended care plan so that you wouldn't have to worry about the future? or worry about prematurely cannibalizing assets that you need. Would you want to see how it works? Who listening and watching would say no, not on what's out that works.

Kosta Yepifantsev:

So Don, here's the thing I want to kind of summarize. And also I need some confirmation so that I'm following because I'm assuming, and I'll tell you, I think one of the things about reverse mortgages is like, it just sounds almost too good to be true. Because if I look at the chart, if if I understand it correctly, what a reverse mortgage does, is it allows you to take money, borrow money, essentially against your equity. But because the home will naturally appreciate over time, I mean, just like most mortgages appreciate over time, and statistically, they every single year, they grow by 2%, then whatever you loan against the home, is a safe loan, because it's secured by the equity in the home or by the home itself by the real estate. But you're saying that you actually are that that the value that you pull out in the form of the line of credit will actually grow as time goes on? So my question is, is, let's say I take $150,000 out at 65. What happens if I spend that 150,000? Do I? Does it does it act as like a credit card with an increased credit limit? Do I only get to spend the portion that's allowed to me as the equity grows? And how do I know that the equity is going to increase or the line of credit is going to increase?

Don Graves:

Sure. So be reminded viewers and listeners that this is not my program, of course, then three years. And this is under the auspices of the United States Department of Housing, and their sub specialty and subgroup is Federal Housing Administration. Any of the rules I tell you were developed in 1988 34 years ago at the time of this taping. And so when it started, someone has a $400,000 home, let's say they can get a reverse mortgage line of credit of $150,000. I said, Great. Everybody listening or watching has had a line of credit. Someone says No, I've never had a line of credit. And I say do you have a Visa Mastercard Discover? Well, yeah, no, there's your line of credit. Right? That's a no, no, Visa says we're, you've got a lot of great $250,000 Have at it. So I didn't spend any of it well, if you don't already. But at the end of the year, Visa said you know what, we liked you so much. You're so wonderful. Your line of credit. We're going to not have to be 150,000 but there's going to be 160,000 You say great and the next year they say we liked you so much it's$175,000. So the basis of a reverse mortgage line of credit is the unused portion of it is always growing. So if you have 150,000 $1,000 available, and you take it all out and spend it you go down to a casino, put it on read. I told you not to do that. I said if you do it, but I'm black, but you went down and put it on red. And you say, Don, I spent it all. Okay, well, you've got four things you need to continue doing. You or your spouse, one person has to live in the house. You got to take care of it. pay your property taxes keep insurance in force. They say yeah, yeah, I'm doing that. So don't stop. Nothing changes, except you just spit everything on your Visa credit card. But there's no payment required. You don't have to live the home, you didn't give up ownership or come off title. You just spent the money. And so Donald would have only spent 50,000. were great. Now you've got a loan balance of 50,000 Thank visa, you took out 50,000 You went on a cruise and Somalian pirate waters to see if you can make it through live and all that was exciting. And yeah, and but you still have $100,000 left, not just left, but$100,000 left and growing. So now you've got what you owe me$50,000. Do I have to start making a payment down? No, no, that's going to be due and payable when the last surviving borrower elicit when does the reverse mortgage become due and payable. When the last surviving borrower permanently departs the home moves to ceases or goes into a nursing home for 365 consecutive days because of physical or mental incapacity. So what happens in the end, in the end, your $400,000 home 20 years from now is now worth$800,000. Right? That's 4% interest rate that's pretty conservative. The money you borrowed $150,000 You took out and you sprinted out to casino 20 years later, that's accruing interest if you've not made a payment, so maybe you owe me four or 500,000. I'm making up big numbers. I'm from Kentucky, so I need the zeros. So now you've got down the road, a home that's $800,000 and you've got a loan balance of 500,000, then you're dead or you moved. Typically the children sell the house for 800 pay off the 500. And there's 300,000 leftover and they split that that's the mechanics of the reverse work. Wait a minute, what happened is the house didn't appreciate at all. It's still $400,000. But I owe you 500. Well, that's when the federal government gets involved FHA, it's F A and H insured loan. And one of the four nevers is, you'll never be required to owe more, or you'll never be required to pay more than the home's worth. Should you owe more. So if the house was only worth 400, but you owe 500, it's a wash, no harm, no foul, no judgment taken out against you, your heirs or your estate. The FHA insurance fund makes you whole. So there's a protective feature. There's something for your heirs and a state if life goes as usual. But if things get a little upside down, you're protected.

Kosta Yepifantsev:

Do you recommend that everybody in retirement utilize a reverse mortgage?

Don Graves:

I recommend that every homeowner, okay, retirement, understand what a reverse mortgage could do for you? Absolutely. 100%.

Kosta Yepifantsev:

So why do we not know and I know this is a question that I asked literally every single person that I talked to in long term care. Why don't we know more about this? Because it seems especially with that very last component that you were talking about where if the home doesn't appreciate to the value of the loan, the federal government could come come in and kind of bridge the gap. That's a huge hedge against risk. I mean, why do most people not know that when you retire and you own a home, this is a great option for you?

Don Graves:

I think most people don't know because of the mythology that surrounds it. That that someone listening? I can guarantee you're watching you went over to your cousin Tracy's for Labor Day for the barbecue. Yes, she did. And Uncle Junebug came out of her spare bedroom and everybody said, Oh, Juba, what are you doing? And Tracy's spare bedroom and he says, Oh, I got that reverse mortgage. And I lost my house and everybody to barbecue says, Oh, I knew it.

Kosta Yepifantsev:

Donna thought the exact same thing when we said and

Don Graves:

the you know what happened? Then on Sunday, they went to church and they told the deacons and they made the announcement for church and Mondays at the beauty shop and Tuesday was at the barber shop. And by Friday, everybody in town knew someone who had a cousin who had an aunt who had an uncle got a reverse mortgage and lost his house. That's that's how it goes. And then someone says, Don, well, what do you say? I said, I'll go Juba told the truth. Oh, Lord, you're taking old people's houses. I said, No, I'll go Junebug didn't tell the whole truth. Because therefore requirements when you get over Reverse Mortgage, I mentioned them early, leaving the property, take care of it, pay your taxes and keep insurance in force. Now what Junebug didn't tell you nor the people who show up at the front page of most stories, is he hadn't paid his property taxes in three years. And I don't know what happens in Tennessee, or Atlanta. I do a Kentucky. If you don't pay your taxes, you're going to have sheriff sale tax lien show or eventually foreclosure has nothing to do with a reverse mortgage. But see, that doesn't that's not a good story to tell. I'm a Junebug while you live in Tracy spare bedroom? Oh, I was raggedy. I didn't pay my taxes for four years now. Unless no good. I got that reverse mortgage. And I lost my house.

Kosta Yepifantsev:

Let me let me there's a mythology. Yeah, absolutely. So that and that's a great answer. And I think it gives perspective to everybody that's listening or watching. With regards to generational wealth, though, and I can't, because your answers are very, are very important. And honestly, I'm enjoying them because I did not know anything about the the detailed concept of reverse mortgage. And Morgan and I both are producer Morgan got the exact same thing. As you described it. I was like reverse mortgage. That's like predatory lending, right. That's what that's what you immediately think. Right? So, absolutely. So how does reverse mortgage impact generational wealth within your family? And I want to I want to take it one small step further. Okay. Do you think that because long term care is so expensive, that generational wealth, and its ability to pass on to heirs is already so significantly impacted that this is a good hedge against that risk?

Don Graves:

But that's a softball to the major league baseball player. Absolutely. Absolutely. I listen, I'm biased. This is my Martin Luther King. I have a dream part of the show where I stand up on soapbox, and I say I've seen the future. Yeah. 23 years, I've been doing this. And my sister called me I was president of a nonprofit called Habitat for Humanity in Philadelphia. And my sister said, Little Brother, I've got a business you should look into. I said, Alright, and that which is not unusual. He's 14 years old. And he has always given me ideas. And she told me about this one. And that's all No, you've done it this time makes sense to you. You go straight to Paris city. You take it home with people's houses, don't talk to me about this again. That was it. And I didn't talk to her for a year regarding that matter. And then something happened circle back. And so what does that do you tell him about a year ago? And I said, Let me investigate it. And so in Philadelphia, there were eight there were five housing counseling agencies that did reverse mortgage counseling. I called them all. I had breakfast with three of them. I said, What's the gotcha the catch the AHA, right? I went to HUD home, HUD had Homeownership Center called a hawk center, downtown Philadelphia Wanamaker build, and I went talk with them, what's the gotcha the fine print the AHA, I went to Fannie Mae. And after I finished all of that, I said, Wow, well, this could really be beneficial to people who need it. But it's also beneficial for folks who don't think they need it when it comes to building generational wealth. So So I want to unpack it. And you said something very important. Listen, you don't have generational wealth, if you can maintain your own wealth for as long as you live. It's so my favorite part of riding on the airplane is when the flight attendant says have to give to play and loses pressure, she takes out that that oxygen mask, and they used to say it differently, they said that put your ozone first before helping your children. They stopped saying that they said put yours on first before helping others, which means this to the listeners and viewers. If you don't have enough financial oxygen to last you, as long as you live and maintain its purchasing power. We can't even begin to have a conversation about generational wealth. So your person retired January this year, this year of 2022. And they had a million dollars. Now, they've got a little more than 700,000. And in December, they got to take $40,000 out to live on. They're going to run out of money most likely, because the$40,000 that they're taken out because of inflation, real practical inflation, right? When I got my haircut yesterday used to be $10 and $18. That's 80%. When I went to my favorite restaurant, my meal was $10 anymore. It's $12. That's 20% Practical inflation means now the markets down and your$40,000 is only worth $30,000 practically. So you're going to run out of money. So generational wealth means you have to have enough money to sustain you, because we're living longer haven't saved enough and we're highly indebted. So you got to have enough money to sustain you for the length of your retirement, and maintain the purchasing power with inflation being what it is. So before we can ever talk about generational wealth, what can I do to make sure you have enough financial oxygen to sustain you? And the reverse mortgage and listen, I've got two books behind me and, and I've got a master class that people can go and view all this, I'll give it to you, if you let me know. But but for the listeners, you say, I don't know about that reverse mortgage or housing, wealth, listen, just go to housing, wealth, masterclass.com Real simple housing, wealth, www dot housing, wealth masterclass.com. And I want you to give me the first seven minutes, don't give me Don't give me a minute more. And then the first seven minutes, if you say this is ridiculous, this has no application for my life, there's an exit ramp that comes up at the seven minute mark, and you just take the exit ramp. But if when you listen to me, at the seven minute mark, you say, Wow, this is important. Continued housing wealth masterclass.com. So one, we got to we got to preserve the wealth we have, first of all, let me know about generational wealth. Retired CEO of large multinational pharmaceutical company, he had$5 million in Merrill Lynch. Now most people that go that's a lot of money. Not if you're used to spending $100,000 A year it's not a lot of money. You had a lifestyle, the match that they had. So his Merrill Lynch advisor was going to put together a multi generational wealth building strategy using life insurance. And his client said, Hey, can't we use the reverse mortgage? Now the adviser said, No, that's for poor people, that that's not for you. But he kept bothering his advisor, and he said, If you don't call someone, I'm gonna do the research and call myself. Now why would a retired CEO living in a fire Moon fire mandalas he lived in a four and a half million dollar home in stone Harbor, New Jersey. Why would he do a reverse mortgage? I'll tell you why. He had $2.1 million in mortgages against his property. Every month, he is paying $21,000 a month for debt servicing. That's okay, he's wealthy, he could afford it. But he also wanted this multi generational life insurance plan$20 million. And the premiums on that were going to be $15,000 a month. Now, where was he going to get that money without impacting others? Well, they came to me and I just simply showed him, we can do a reverse mortgage on your four and a half million dollar home that will eliminate your existing mortgage payment. And we freed up $21,000 A month in cash flow 15,000 of that went to fund the premiums for the life insurance policy. And all that did this without impacting his career, we actually freed up $6,000 Right Man $20 million policy for his children, grandchildren and great grandchildren to fund all of these things, multi generational wealth without impacting his cash flow. Because his advisor just took a minute to say, ah, whoever thought of that, right,

Kosta Yepifantsev:

and Don, can I interject really quick? We're sure many set when he passes away, or moves or what have you. The value that the House appreciates to versus what he took out in loans, the family will get to keep that difference is that correct?

Don Graves:

Right plus the life insurance plus whatever is preserved. Remember, we're not cannibalizing his portfolio, he's not having to pull out$200,000 A year there. So they'll get whatever leftover in the home value. They can even retain the home if they want just

Kosta Yepifantsev:

take it as long as they gotta pay it off. But what happens okay, so what happens if like the house burns down? Do they have to rebuild

Don Graves:

it every now and again. So sit down with my house burns down? I said what if it burns down today? I J. M is just the mortgage? So if you've got a mortgage now, don't you have done the lender require you to have insurance?

Kosta Yepifantsev:

Yeah, yes. I mean, do you have do you have a nickname like Teflon Don like is that because I mean, here's the reason why I say that is because you're selling a product with a stigma and you and it literally is like I am I am going to leave this this show today and tell everybody that I know about a reverse mortgage because it's incredible. And I'm just curious, like what what did you do before this?

Don Graves:

I've had an eclectic background. Okay. I was a CEO before I did this. I remember my sister called me I was president and CEO of Habitat for Humanity that served as clergy and can Pastor and the church pastor and so I've got a I've had a very eclectic background. Yeah, but a background which has placed me right smack in the middle of serving people and serving a greater purpose when you

Kosta Yepifantsev:

when you talk to people about retiring, okay, and you don't necessarily have to focus on the reverse mortgage for this answer, but when you talk to them about retiring, What's the best advice that you can give them and not just when they're like elderly but for like, people my age like I'm 33 years old, so like, if you were looking at me and saying, you know Costa, so that you have a successful retirement you need to do X y&z?

Don Graves:

Yeah, that's a hard question in a lot of ways. But an easy question in other ways. You can retire not have a lot of money. But you have a strong community, you've got friends and family, church or synagogue, you've got people around you. That's really an indicator that you'll have a successful retirement. Because you've got to, you've got a network of support group and something purposeful, that keep you going, I would really say, I'd strongly encourage folks to get in a community be part of a community. All that that's aside from the financial because that will sustain you. But to be home with no money in the roof goes or something happens and you don't really have people you can count on man, you can die of that you could die early, to console, I want folks to have a purposeful, community filled type of retirement on the economic side. Be a triple A consumer, use all your available assets, and use your income, your investments, your insurances, and don't be afraid to examine your housing wealth, to say, Listen, I started to say I've had 16,000 consumer facing conversations, and 3000 people went forward to become my clients. And all that tells you tells you two things that as good as it is for many. It's not always the right thing to do. But the second thing someone said to me, you're not very good at what you do.

Kosta Yepifantsev:

I mean, that's it. 20% closing rate

Don Graves:

60,000 people and then only I said because I know it's not for everyone. I don't believe it's the conclusion to every matter. But I do believe it's a conversation. That's absolutely worth having.

Kosta Yepifantsev:

And before we wrap up, okay, so if reverse mortgages falls into the same vein as Medicare and Social Security. Why don't politicians use it as a political football, similar to the other two?

Don Graves:

Because of Uncle Junebug, Uncle Junebug lives in their constituents mind?

Kosta Yepifantsev:

Okay,

Don Graves:

He rent space. And so now what's interesting, though, someone, I said, Listen, that Ronald Reagan signed it in. It's unlike Reagan. Well, Bush, Bush sided. And Clinton and Bush two, and Obama, it Trump and Biden said, Every president since Reagan, has re upped the program, it's now to part because there's so many retirees, and this is so important to the federal government, that it has its life. But the mythology and the misconceptions abide, and certainly is something that's been around six years, they were bad. There are some bad actors. In their early days now, I haven't seen many bad actors last 10 to 12 years, and the program has been strengthened the reverse mortgage Stabilization Act of 2013 1517, strengthen protections for non borrowing spouses, limited the amount of money you could get up front. Someone said, How's that a strength? Well, the strength is we're planning on you living longer, and we want to make sure you have some to leave for your children. So it's actually based so there have been some protections. You can't take out all the money upfront and a lump sum. Don was out of protection. So you don't go down Atlantic City and spend it on.

Kosta Yepifantsev:

I mean, I red I do like red though!

Don Graves:

There's a surpising number of people who took out all the money in a lump sum and didn't have money the next year to pay the property taxes. And I showed up at Tracy's spare bedroom and told the story. So the government says we're not gonna let you take all the money in the first year you have to do it over two years. And those simple changes didn't change the mechanics of the program. But it slow people down from making some bad decisions buying the granddaughter Princess Diana wedding, and just slow things down. But the biggest uptake is that you've got Ohio State University, Cambridge, Texas Tech, MIT, the American College, Stanford Center for Research, Boston College, you've got major institutions saying you cannot ignore housing wealth, and still expect to accomplish a sustainable retire MIT. So I've got tons of third party credibility and articles. I don't have to prove it. I just have to people have to get them stop thinking about Uncle Junebug coming out traces, spare bedroom walls. Yep. Just to take a closer look. And after if you take a closer look, and you do that, and that, listen, housing wealth, what I say are forgotten asset class, housing, wealth masterclass.com. We just refilmed that just reshot it. So it's new, and seven minutes. And I say, Listen, I'll be the first one to tell you. I don't think this was for you. But I'll also be the first one to say I think it's foolish for you to try to go through retirement, and not use all use all your resources. See, last night of this taping, the Phillies, the Philadelphia Phillies clinched, going to the World Series kofta oh, we're excited people just climbing up and down polls and whatever. And I told someone I said, you know, World Series starts on Friday. And the Phillies are going to put eight men on the field for offense, and we're going to win, we're going to beat the Astros. And someone says, Wait, man, you know, they're nine men on the field. I said, I know. But the Phillies are going to win the World Series with eight. You watch and see. That's asinine. They're not putting eight people on the

Kosta Yepifantsev:

I know! I was going to say, Don! Is there something you know that I don't!

Don Graves:

That's asinine, but but think of the retiree that has housing, wealth, this big asset. And they're saying I'm going to plan for retirement and not consider that asset. That would be like Phillies taking the field with eight men, believing they're going to beat the Astros with nine in the World Series. It's not going to happen. That'd be like the Chicago Bulls with Michael Jordan's. And we're just going to put four on the on the floor against five and you would never do that. So to the viewers and listeners that this is the member I warned you about that I have a dream sleep place. You can't go into retirement and not consider what can housing wealth do for you may not choose to use it, it may not be for you. But don't take the field. With eight people, four people are the Eagles are six, no, they're not going to take their next game with 10 men on the field now now they're gonna put all of it use all your available assets. And that's the best way to prepare for retirement.

Kosta Yepifantsev:

Don, I believe that I want to ask a long term care specific question to close. And the reason why is because you know, your mother is in a there's a nurse isn't a long term care facility. So I would say to her patient, I would consider you to be a caregiver in a lot of ways. And obviously, you're an industry professional as well. So we always like to end the show with a call to action. What's your best advice for someone entering the long term care industry, as a patient, a caregiver, or an industry professional.

Don Graves:

If you're a patient or caregiver, seek outside counsel, don't try to do just with your family alone and find a specialist or consultant to help you navigate. And my sister and I are both in the industry. But we still had we want an elder elder law attorney for some thing. So I would say on the consumer side, make sure you got a team in place to help you navigate because it's hard my one sister quit her job the other sister went halftime trying to take care of mom at home. And and that's just tough. I mean that now they ended up with health problems. For the for the financial professional entering into kind of the extended care planning long term care planning space, please, please, please be sure your AAA advisor, as you're talking and developing, your client is sitting, use all of their available assets. And in this case, I'm talking about even their extended care facility, church, synagogue, brother, sister, son or daughter children, their income, their investments or insurance is in their housing wealth. Don't leave anything Unturned, right? And at this point, a lot of people say well, I want to leave the house to the children, if you go on Medicaid, or you know that they're going to take whatever they can recover from the house. So there's a way in this not for this show that we're going to we could use the reverse mortgage, to do a lot of creative things. Keep mom in her house longer. You can make gifts and distributions within the limits of the law. That's where you consult your elder law attorney. But I'm going to show you ways that mom was going to live and eat the house. If you think at some point like my mother, inevitably she may end up x y and we got three years out of this $7,000 a month. And we squeezed three years out of that turn because we did have a plan or even the best laid plans but what we didn't have was housing wealth because mama didn't own the home. So if you own a home if you're listening you're watching owning own home. Please consider housing though. If you're listening watching you say I don't own a home but you know someone who does your brother your sister, your mom, your dad, your aunt, your cousin, someone you know owns a home and they may not be living the type of retirement they imagined. They can use housing wealth to at least understand how it could benefit from them and then again, the free masterclass housingwealthmasterclass.com go on over there and take a look at it seven minutes out just at seven minutes. You know, this was for me, not for me.

Caroline Moore:

Thank you for joining us on this episode of Now or Never Long Term Care strategy with Kosta Yepifantsev. If you enjoyed listening and you want to hear more, make sure you subscribe on Apple Podcasts, Spotify or wherever you find your podcasts leave us a review or better yet share this episode with a friend. Now or Never Long Term Care Strategy with Kosta Yepifantsev is a Kosta Yepifantsev Production. Today's episode was written and produced by Morgan Franklin with production assistance by Mike Franklin. Want to find out more about Kosta? Visit us at kostayepifantsev.com

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