TRANSCRIPT FOR THE JUNE 4, 2016 “ON THE MONEY” SHOW

Hosts: Roger Johnson, CFP®, AIF® and Aaron Bert, CFP®, AIF®

It’s an Ask the Expert Saturday morning on News 96.5 WDBO and this is On the Money, brought to you by Central Florida’s oldest and largest independent firm of certified financial planning professionals, that being the Certified Financial Group in Altamonte Springs.  And with us this morning we have two — well maybe two and a half — two of the certified financial planning professionals with the Certified Financial Group.  Roger Johnson is back in the studio with us.  Good morning, Roger.

Good morning, Kirk.  How are you?

I couldn’t be better, sir.  Good to see you.

And also, Aaron Bert is with us.  How are you Aaron?

I’m super duper.

And who’s the half part that I was referring to?

That would be my oldest son, Bennett.

Hi, Bennett, how are you?  You want to say hi? Sure? Okay.

It’s a reversion <?> of the Two and a Half Men.

There he is.  Are you going to be a certified financial planning professional when you grow up, or are you going to be an astronaut?

Maybe.

Maybe, okay.  A man of few words.  So, Aaron and Roger.  You’ve got to tell us, tell everybody, what are we here for?

Well, we’re here to talk about your financial life.  Your questions, call in and ask us a question.  Hopefully we’ve got the answer.  We’re going to talk about all sorts of things, but basically your financial future, your retirement plans, we can take questions on stocks, bonds, real estate, mutual funds, IRAs, 401(k)s, exchange-traded funds, life insurance, you name it.  Social Security claiming strategy, all that good stuff.  So, we’re here to take your calls.  We do this during the week at our office.  We do financial planning and we then follow with investment management for some clients.  But, we first try to start with financial planning to make sure you’re on the right track for whatever your goals are.  The main one that we end up planning for is retirement.  So, we’ve got some workshops coming up too.

Yeah, we’re going to talk about all of that.

And more.

And more.

And more.

And we’re going to talk about four ways to create your own pension today.  We’re going to talk about spending your health savings account or investing it.

Alright.

And we’re going to talk about the five most important years for your financial life.  But most importantly, we’re going to be taking your phone calls as Roger said.  Here’s the telephone number 844-220-0965, 844-220-0965.  First thing I’ve got to tell you guys is, Aaron.

Yes sir.

My neighbor, who I have a new neighbor.

A new neighbor, okay.

The couple moved in last year and they’ve made a few improvements and they put their house up for sale about two weeks ago.

It sold quickly didn’t it?

This morning I woke up, there’s a sale pending sign.

Well yeah, we’ve been seeing that a lot lately.  The housing market has been picking up obviously because home prices — people have just — I don’t know.  They’re very bullish on the housing market right now, which is a good sign actually.  Because if people are buying and selling houses, then that means that everything else that goes into those homes is being bought and purchased, so home improvement stores — or furniture gets bought, appliances get bought, people have to make those appliances, and TVs, and all that other stuff that has to go into that house.  So yeah, it’s a great — it seems to be good.  Now, obviously we don’t want too much speculation because speculation helped hurt the housing market back in 2008, 2009, but the good thing I think this time is that the banks aren’t really the ones loaning out the money because of the tight regulations enacted by the Dodd-Frank bill that was passed back in 2008, 2009.  So, a lot of private people are actually loaning out money to people that are flipping houses.

There’s been a lot of pent up demand.  I mean years and years of the young folks coming out of college, looking at where are they going to live, and they’ve been choosing to rent for so many years.  And just simply because they looked at what happened to their parents or what happened around the economy and the country of everybody having such problems with that real estate downturn in ’08 — ’07, ’08, ’09, ’10.  They just got discouraged away.  But, I think now they’ve seen the light and they’ve realized having a piece of real estate is an excellent part of one’s net worth and a good investment.  And maybe they’ve found that they’re going to stay for awhile and not move around so much, so they decided to buy some property.

First time home buyers though, you know, it’s still a good opportunity too because mortgage rates are still so low.  I mean they’re still at historically low rates so people are seeing housing prices go up, they still see mortgage rates are low, and they’re saying maybe it’s time to get in because the rates are going to go up and the home prices hopefully will continue to appreciate.

On your website I think it was last April, you all had a —

The six month <Inaudible> by renting a home?

Yeah, and one of the reasons why was owning a house can tie you down and owning a house can tie up your money.

This is all true.  But also owning a house can help you build equity if you plan on staying there for a long time.  So, really everybody’s individual situation is different as far as home ownership is concerned.  If you’re going to be there for a long time, then obviously owning is probably better than renting.  But, if you’re a person who’s moving around a lot, then maybe renting is the thing to do for you.  Everybody’s situation is different.

Speaking of, this week’s must read?

Yes, sir? Oh yeah, this week’s must read —

On our website at financialgroup.com we scour the Internet for articles that we think would be of interest for our listeners and this week’s must read is the five best investments that I made in my 20s.  And it’s on our website at financialgroup.com and we are going to talk about that in a little bit here.

Nobody has enough money to make any kind of investment in their 20s, Roger.  Nobody has that kind of money.

Well, it’s more simple things.

Getting started.

Yeah, well, it’s things like —

<Inaudible> latitude <Inaudible> stereo.

You want those sneakers, man.

No, it’s simple things like getting your college degree is a great investment.  I mean, it’s not an investment in the stock market, it’s an investment in yourself and your future because I mean really, that’s one of the most important things that you can invest in is your reputation.  The other things were like buying thank you notes.  You know, just simple things like buying a box of thank you notes and writing them out when you have job interviews or when you get gifts from people, or just a little handwritten note goes a long way.

They still do that.  It’s amazing.  I know, it’s the best touch.

When I get a personal, handwritten note it’s so much nicer than an e-mail, or a text, or a wave.

Yeah, the problem is if I write them, then you can’t read what it says because my handwriting is horrible.

Yeah, I’m left handed and it’s even worse.

Aaron, that’s really, really important.  I would teach that to my students at UCF.  I always go do it the old school way and buy a box of thank you notes and write on them, thank you, and —

Yup, there you go.  The other thing was a 401k.  So in your 20s when you get your first job, usually employers offer 401k pay.  Start putting money into it.  Whether it’s just a little bit, or at least get up to the match, or —

<Inaudible> match it.

Yeah, and then work your way up to maxing that out.  So, start your 401k.  The other thing is credit.  Don’t bury yourself in credit when you’re in your 20s.  Student debt, don’t bury yourself in student debt if you can avoid it.  Don’t be putting things on your credit card.  I mean you’ve got to live within your means, basically, is what that’s all about.

Easier said than done.

And then the last one was to take a little bit of me-time because in your 20s before you have a family, and children, and other things going on, find some time to get your me-time in is what it was saying.  That’s an investment in yourself is to set a little time aside.

Is that anything like sowing your oats? Is that what you’re saying?

I don’t — that’s not —

<Inaudible> well it was a long, long time ago.

Oh yeah, from a man in his, what, 30s?

Yeah.

Right, right.  You can check out this — read the rest of the story at their website, financialgroup.com.  Just click in the Rest of the Story — what is this?

On the right side.  It’s on the right hand side.

This week’s must read.

<Inaudible>

I loved last week’s.  I read it and then I watched the Monte Carlo race.  The Formula One race in Monaco.  The money mistake even the super rich make.  That was the 100th running of that.

Yeah.  That was pretty — I think it was one of the first times in recent history they’ve sold out and that’s why it was televised.

I put that on my bucket list after watching that race.  I’m a big Formula One fan.

Yeah.

Hearing those open wheels, I mean, it just scares the heck out of you.

It’s a lot of fun.  9:15, quarter past 9:00, on News 96.5 WDBO.  This is On the Money brought to you by the Certified Financial Group.  I’ll give you the telephone numbers here in a second, but first, I want to tell you Dave Wall is in the News Center keeping an eye on things.  He’s coming up in five minutes with the three big things you need to know.  I think one of them is about this serial rapist who’s on the loose in Orange County.  Also, Muhammad Ali passed away, a great boxer passed away.

Yeah, I heard about that.  Didn’t he — was that today or was that yesterday?

Yesterday.

I don’t know.

Something like midnight is when I got the alert, or around midnight, so I don’t know if he passed away yesterday or —

I thought — I expected it yesterday morning.

I heard he was on his death bed yesterday morning.

I don’t know.

He’s still dead.

Well, Dave will have all of that stuff for you coming up here in just about four minutes from now here on News 96.5 WDBO.  Here’s the numbers if you have a question about your 401k, your IRA, rollovers, stocks, bonds, mutual funds, long-term health care, real estate.  We were just talking about it’s booming again.

It is indeed.

The number is 844-220-0965.  844-220-0965.  Or text us at 21232.  21232.  Or you could use the Open Mic feature that you will find on the News 96.5 app.

I think they’ve taken the carrier pigeons down.

No, I don’t think there’s any — we don’t have any connections on the carrier pigeons.

What’s this deal, Roger, about four ways to create your own pension?

Well, you know, you think about the old days of people retiring after many years of working somewhere and they’ve got a pension.  Well, that’s somewhat long gone.  I think either it’s you’re a government working if you have a pension or maybe work for one of the big defense companies.  But — maybe, maybe if you’ve been around for awhile you’ve still got an old pension in a company that you’ve worked for, but they’ve probably changed to an 401k now.  So, thinking about guaranteed money or pretty much guaranteed income, we think of pensions, but then we also think of Social Security that you can hopefully count on.  But, how can you take assets and build over time a — basically a stream of income that you can count on? Well, of course building your own pension, the first one that comes to mind is an immediate annuity, of course.  Buying something, putting money in, and that will guarantee a stream of income for the rest of your life.  Something that’s becoming more popular these days is also what’s called a longevity annuity, where you put money in at say 60, 65 and you don’t start tapping it until 85 you live that long.  If you don’t, the cash value passes on to your heirs.  But that’s one way of insuring against the good thing of living long.  So, longevity annuities are pretty interesting and they also, if they’re done with IRA money, they don’t require a minimum distribution until age 85.

That’s true, isn’t it? Isn’t that a law that just went into effect?

Yeah, it’s relatively new, that one.  Another way to build an income stream or your own pension would be to over time purchase dividend paying stocks that pay dividends on a regular basis.  And while you’re working if you’re buying these dividend paying stocks, choose to reinvest dividends into more shares of stock.  Then at retirement time, change that to pay in cash to you, to your checking account for your income.  I would look at making sure you don’t chase returns here.  Make sure you look at stocks that are solid, got a history of increasing dividend payouts versus looking at the highest return, the 12%, and 13%, 15% there.  They’re up there for a reason.  Do not chase heels on that.  Another look would be maybe creating a reverse mortgage.  We talked about that from time to time on —

Yeah, could you hold it right there?

I can.

I’ve got some questions about that reverse mortgage.

Okay, go ahead.

Because, on the personal side and I bet you a lot of people have questions about reverse mortgages too.

<Inaudible> a lot more recently.

Okay, so hang on.  We’re going to go to Dave Wall in the News Center, and when we come back we’ll take a few questions about reverse mortgages.  We’ll also take a few of your phone calls.  Here’s the number again 844-220-0965.  It’s On the Money brought to you by the Certified Financial Group in Altamonte Springs.  We’re taking all of your questions about financial decisions going into retirement whether you’re 20 years old starting off, or whether you’re three or four years for retirement.  Now is the time.  Or, you’re in retirement, now is the time to call the experts from the Certified Financial Group at 844-220-0965, 844-220-0965.  We have a couple of texts.  We’ll get to them as well at 21232.  Let’s talk to Bob in New Smyrna Beach.  Good morning, Bob.

Hey, good morning fellas, how are you?

Very well, thanks.

What can we do for you?

Great.  Listen, listen — well, I have a step-father.  He’s in Tennessee, but this is more of a federal question.  He’s 81.  We currently have someone taking care of him at home.  His desire is to stay home as long as he possibly can and he says that hopefully he will die at home.  But, in the event that he doesn’t he has already expressed the desire to go ahead and <Inaudible> his property, which would probably amount to, I don’t know, $300,000 or $400,000.  But, I understand that if he does have to go to a nursing home, that it would be a look back period of five years.  So, he would essentially be broke by the time he got there, but they would come after me for that money.  Is there any way to protect his assets?

Well, one of my suggestions on that, and you’re talking about being able to qualify for Medicaid going into a nursing home.  I mean, that’s what you’re talking about right?

Right.

Is he goes into a nursing home and gets picked up by medicaid, they’re going to look and say well you don’t qualify because you have assets and you have to spend down the assets.  You’re suggesting that he give it away and then a year later go into a nursing home? Well the — and try to qualify for Medicaid, they’re going to — Medicaid’s going to look back and say okay, what were his assets over the last five years.  And what you mentioned, the give-away, will — to you or to another member of the family of that 300,000 would affect him from not getting Medicaid for all those years?

Well, what do we do about that?

My suggestion would be to look into putting that money into your — well, first you can always talk to an estate planning attorney and work through that.  There’s some options there.  But, don’t forget when you have a home, it is excluded from Medicaid qualifications.  So, if he had a $300,000 home and there’s a mortgage on it now, put money into it and pay it off.  Then he home is excluded from qualifying for medicaid.  So, that’s one way to keep assets off to the side, you might say.

Okay, he has a home.  He has got mortgage, but he has a couple of investment properties and those were the ones that he wanted to deed over to me so that they — that they wouldn’t be taken.  I just — really I —

That would be a look back situation if he did that.  You are correct on that one.

Any way around that?

Buy a bigger house? I don’t know.

No, and this goes into doing some Medicaid planning they’re may be a way to do it with a trust of some sort or —

Maybe do it now?

Basically, talking to an estate planning attorney would be the best approach right now to look at the whole situation.

Does he have five years?

Well, I don’t know.  You know, he’s in pretty decent health.

Then do it now.

Well, I still like the estate planning attorney —

We have one that works out of our office.  Jody Murphy is an estate planning attorney who specializes actually in Medicaid planning for her clients.  If you’re interested, call her office on Monday and we can pass on her information.  It’s Murphy Bergland is the law firm.  You can also look them up online.

Yeah, and I apologize.  I shouldn’t be offering my advice.  I’m not a certified financial planner.

It could be that you got carried away.

Just give it away now!

We’re going to go over and run the fort, you come on over here, Kirk.  Okay, give me — what does that button do?

Sometimes, I get carried away.

But yeah, you can mess that up too.  So, you don’t — you really want to talk to an expert in Medicaid planning if you’re looking to pass on some assets and protect him if he wants to qualify for Medicaid.  Now, you may not want to use Medicaid though too.  I mean Medicaid, you don’t necessarily end up in the best facilities and you need to do a little bit of research.  Maybe you want to sell the assets and put him in a better facility too.

It is an Ask the Experts Saturday morning on News 96.5 WDBO.  My name is Kirk and this is On the Money brought to you by Orlando’s oldest and largest —

Independent.

Independent firm of certified financial planning professionals.  I can’t catch Aaron Bert off guard —

Ever.

Ever.

Ever, or Roger Johnson.

Well, you caught me off guard.  I didn’t jump in.

No no.

I’m just sleeping at the switches.

Well, I was looking at it and I was doing a little research on that last caller after we talked to him <?>.

Bob called earlier about his step-father with the home and some rental properties or commercial properties trying to protect that, or if he goes into the — the step-father goes into a nursing home.  And yeah, his home would be excluded for qualifying, but there is a potential for a look back afterwards after he passes away.  So, the best advice I think we can give you is talk to a good estate planning attorney, not a personal injury attorney.  Someone who does this for a living and Knows the ins and outs, and estate regulations for this kind of thing.

Yeah, I don’t think people realize that, that Medicaid’s estate can — after the person is deceased — there was nothing keeping you from qualifying, but after you’re deceased, the state can actually try and go back and recover the cost that they put in to put that person through the long-term care facility for that amount of time.  So, proper planning really is essential if you’re planning on using Medicaid, which is why we strongly recommend that you talk to an estate planning attorney.

And, for those folks before they get into this kind of situation, long-term care insurance makes good sense too to look into those kinds of things.  And there’s some opportunity.  Wouldn’t be for Bob’s step-father —

Because he is already getting care.  Once you are getting care, it’s too late.  You’ve got to take a little bit of planning, but it makes it worthwhile.

Where would somebody like myself go to find out more about long-term health care insurance?

Give us a call.  We do this all the time.  We will shop the market out there and look for what’s available.  And there’s several different options for long-term care.  There’s not just pay as you go where it’s the one we kind of — I like personally and I even own is the type of life insurance that you can use the death benefit for <Inaudible>.

Hm, interesting.

And if I don’t use it and I pass away down the road and the death benefit comes to my kids.

What’s the best way to get a hold of you, Roger?

Give us a call — go to the website, financialgroup.com.  Click on complimentary consultation and give us a — or give us a call.  Use the old dial up <Inaudible> kind of thing and give us a call <Background Noise> we’re there during the week at 407-869-9800.

Alright, let’s talk to Major from Orlando.  Good morning, Major.

Good morning, how are you all this morning?

Great.

<Background Noise> go ahead.

My question would be I’m 60 years old right now and I have a 401k, which I’m still working.  But I also have a Roth IRA that’s just sitting there.  I don’t want to invest it in anything because I want it to be there just in case the economy drops again or something goes bad, I have something to fall back on.  Would that be a good choice?

You basically — what you’re saying is your Roth — you’re using your Roth, or kind of in the back of your mind, using a Roth as your emergency fund.  I don’t see anything majorly wrong with that.  Hopefully you never have to use it and it could grow tax free and withdrawal free when you do take money out of it down the road.  Actually that’s one of the strategies that you could say you could use to create an emergency fund is to put money into a Roth IRA and count it as your emergency fund money in case you ever have to take money out really at any age.  You can take your principal back out.  You just have to leave the growth.

I would say though that you’re losing one of the big advantages of having a retirement account, which is the tax deferred growth.  So, you know, the assets that you have in there are not earning anything and so you’re not getting the advantage of the tax deferred growth.  So, if you were earning interest and dividends and capital gains, that would be tax free to you, and it would be growing tax free for you, and compounding tax free for you within that Roth account.  So, you’re losing the potential for growth there.

You may want to go and be a bit more aggressive and invest that into a very moderately conservative fund of some type.

Or get a savings fund if you can, start accumulating a little bit of savings outside of the Roth so that you can get that growing for you and really take advantage of one of the big advantages of even having a Roth account and that’s the tax deferred growth.

Again, and underlining the word growth.  That would be our approach for you, Major.  I think getting that thing invested in some type and then — but not be aggressive with it.  I know you want to use that for emergency money, but a short-term bond fund for example might be a good method of getting some — we’ll call it growth — but we’ll call it some dividends return to you in —

<Inaudible> income within <Background Noise>

Yeah, so all that income would be tax free to you within that Roth and you can still have access to your principal for — and in your case over 59 and a half, you’re basically — it’s all available to you.

Okay, okay.  Thanks, I appreciate that.

Alright, thank you for the call.  We appreciate it.

And you can join us as well.  The number is 844-220-0965.  844-220-0965.  You know, I’m glad you guys are around to explain this.

Hey, we’re glad we’re around too.  I mean, this would be a lot of dead air space if we weren’t here.  Sure.

What is this about — wait a minute here, we’ve got this text here.  If I retire at 62, can I keep working at — part-time so I can contribute to my company’s 401k?

Yes.  Well, no.  So, I’m assuming by retiring he means start Social Security?  Most people assume —

Yeah, that’s what I would think he means by that.  Retiring, starting Social Security.

Well I’d say yes.

<Background Noise>

So, Social Security has an earnings limitation for people that retire early and start Social Security before their full retirement age.  Full retirement age for most people nowadays is 66 for the younger crowd.  It actually now is 67, and any earnings earned before your full retirement age is subject to the earnings limitation.  So, what Social Security is saying is that if you’re going to start pulling Social Security, you can’t then go turn around and work and earn over 15,000 — was it 15.4?

15,720.

Sure, okay, so if you earn over $15,720, every dollar that — or every $2 that you earn above that number, you’re going to get a $1 reduction in your Social Security benefit.

That — including Social Security? Or on top of Social Security?

That is on top of Social Security.

<Background Noise>

So just earnings?

Earnings.

Okay, not including his Social Security.

Not including pensions, not including dividends, but everything is going to work.

Yeah, so if you’re earning money — now you don’t — so, they’ll reduce your Social Security benefit, which means you’ll bring less money home, but they will eventually re-compensate you so you’ll get that money back when you actually turn full retirement age or you stop working.  But, if you’re just turning around and putting that money in your 401k, then you’re still going to have the Social Security reduction.  So, in this instance, that doesn’t really work.

Well, it works if he’s going to stay under the 15.

Well, yeah, if you’re going to stay under the 15 number, that’s true.

I have a friend of mine who does home repairs and works around.  He hit 62 and he’s going to — he’s taken his Social Security, but he’s limiting what he does to get paid under the total of 15,700.

Now, I would rather see you wait on Social Security and live off the earnings versus — because your Social Security benefit is going to continue to grow for you.  You’re taking a 25% <Inaudible> by starting before full retirement age.

8% a year.

<Background Noise> so I would rather see him do it the other way.  Delay Social Security, and live, and work part-time to meet his living need.

9:45, quarter until 10:00 on News 96.5 WDBO.  Dave Wall is in the News Center and he’s coming up in five minutes with the big things you need to know about.  One of the big cultural icons, people called him, is dead.  We’ll have that story for you.  And also Orange County Sheriff’s department is looking for your help.  They’re in search of a serial rapist.  They just caught one and now they’re looking for another one.  Hm, man.  And, oh, hey, what’s this?  I’m looking down here and there’s a workshop going on today.

There is.  Gary Adeline is doing another one of his financial basics for life at the office trade.  It’s going to start at 10:00.  It’s going to start in about 12 minutes or so and he’s going to be doing that in, oh, a couple of hours.  Financial basics for life and that will start at 10:00, but we also have some other ones coming up.

Any seats left in there for today?

He does, he does.  I don’t know how fast you can get there, but if you’re <Background Noise>

If you’re driving by 1111 Douglas Avenue —

If you’re driving by —

What does he talk about in these things? People may be interested.  Financial basics for life, strategies for success.  These are things that they don’t talk about in schools that Joe Bert talks about.

Well, we like to say — or we don’t like to say the educational system has done our —

I’ll say it for you.

A great disservice.  Because they don’t really teach you this stuff in school about compound interest and about diversification, and about mutual funds, or stocks.  They don’t each you this stuff in school and so we have to go out there.  And we try to educate the general public with workshops like this just to give you a general idea of how investing works or how retirement planning works, about just how compounding works and how, if you just start saving at a young age or even at an old age, how that compounding — money can compound and grow for you.  So, that’s kind of what we’re doing here with Gary’s workshop.  It’s an opportunity for you to be introduced to our firm.  There’s no cost, so leave your checkbook at home.  Gary will actually give you a little bit of — he’s got some —

<Inaudible> some light refreshments.

Yes.

And how do we know if there’s room? Will you show us?

There was room when we talked to him before the show started, so if you’re driving by, go ahead and pull in our parking lot at 1111 Douglas Avenue and go attend Gary’s workshop.  It’s two hours and you’ll probably come away with more than you learned through your entire <Inaudible>

Wow, well that’s pretty cool.

<Inaudible> financial.

You guys do all kinds of workshops, Roger.  Certified Financial Group has a when can you retire workshop coming up as well.

It’s coming up in June 25th.  That’s another Saturday.  Gary’s going to host that one as well.  When can you retire, know your numbers is the title to that.

I’m scratching my head on that one.

Yeah.

I’ve figured out November 11, 2020.

Okay.

9:00am.

That’s it.

Actually, a couple minutes after 9:00am.

Yeah, it’s good to clean out your desk.  And then July — Saturday, July 23rd, Countdown to retirement will be — Gary or I will be doing that and then Social Security boot camp will be coming up July 28th.  That’s a Thursday, Thursday evening at 6:00 hosted by Nancy Hecht and Denise Kobach.

And if you’re interested in signing up for any of these workshops, go to our website, financialgroup.com, and we’ve got a link up top where it shows you all the workshops, gives you an explanation, date, time.  And you can click right there and put your name down, and we will contact you with more information about that workshop.

I like what you said earlier about leave your checkbook at home.

Leave your checkbook at home.  There’s no cost for any of our workshops.  Like I said, we’re just trying to provide general information to the public and if, for some reason down the road, you need help with retirement planning you’ll keep us in mind and hopefully use our services.  That’s all we’re trying to do.

That’s pretty cool.  It’s not like one of these —

We’re not giving you a filet and trying to sell an annuity to you.

Taking your small reading glasses away from you when you sign a piece of paper that you don’t know about.

Not the point of the workshop.

Alright, we’ve got in the studio for — well, until the top of the hour, Aaron Bert and Roger Johnson from the Certified Financial Group.  And you can speak to them at 844-220-0965.  Or text them at 21232.  Alright, it’s an Ask the Expert Saturday morning on 96.5 WDBO.  My name is Kirk and I am with Aaron Bert and Roger Johnson.

Indeed.

From the Certified Financial Group.  That’s the nick name they give him around the office because he’s an old guy.

Old man.

And yet he never ages.  He still looks like 35.

I know, he looks younger than I do.

I don’t know how he does it.  But listen, here’s a —

I have a face for radio.

Is there a reason why I’m being solicited a lot more? Maybe it’s my age, I don’t know.  But for reverse mortgages.  It seems as though — a lot of banks are after me, hoping that they can get me for a reverse mortgage.  Maybe we should start by explaining what is a reverse mortgage and who qualifies for one?

Well, a reverse mortgage is nothing more than a loan that you take out to buy a house.  You can buy a house with a reverse mortgage, or you can refinance your existing home with a reverse mortgage and basically pull equity out and never have to pay it back during your lifetime.  Of course, the loan balance will increase over time and then when you pass away, the house gets sold and the loan gets satisfied, including the additional interest that was accrued during the years you were alive.  And you have to be at least 62.

Which is probably why you’re getting all those <Inaudible>

Both owners, there’s a husband and wife.  Both need to be over age 62.

Well, I think there may be a change now.

Yeah, there’s a twist there.  You don’t actually both have to be 62, but there’s — to have your name on the reverse mortgage, you have to be 62.  But there is a — if the other spouse is under the age of 62, they can stay in the home as long as they’re living.  There’s always a worry there if one was on the mortgage and the other one wasn’t, that if the one that was passed away, that it would take the house from the spouse, but that’s not the case anymore, so.

Oh.

Yeah.  So, reverse mortgages got a lot of bad press probably about 10 years ago.

Yeah, back in the original years.

When they started happening, and what was happening was there was a lot of horror stories coming out about old ladies losing their homes because they took out a reverse mortgage and then the big, bad bank came and took their home from them.

Or didn’t pay the taxes.

Well, that’s the big issue.  So, if you take a reverse mortgage, you know you’re not responsible for the debt on the home, but you must continue to maintain the home and you must pay the property taxes and the insurance on the home.  If you don’t pay those things, then yes, you could lose your home.  But they redid the program several years ago, that they changed the requirements for a reverse mortgage and so now you can’t borrow as much against the home and so I think you can borrow up to 60% or 75% of the equity that you have in the home, which allows you to get a nice line of credit.  So that if you needed access to funds that you could get into it.  But, like Roger said, that you’re never responsible to pay that mortgage back.

Let me give you a for instance.

Now, if —

Can I give you a for instance?

Yeah.  Go ahead.

For instance, you’re sick or — you’re elderly and you’re sick and you don’t want to go into a nursing home or an assisted care.  If you have plenty of equity in your home, maybe your home is even paid off, but you want to use that equity to stay in your home and you want to use that equity to provide yourself with somebody to come in and take care of you in your own home.

Yup, you can do that.

Can you do that with a reverse mortgage?

Yeah, of course.  It provides, like I said, a line of credit to you or — there’s several ways to do it.  You can either do a line of credit, you can do a lump sum, you can get payments for the rest of your life.  It really depends on what you want to do.  What we’ve been seeing a lot more with lines of credit because there are some guarantees as far as a line of credit continuing to grow every year and there’s an interest rate set by the government that actually will grow that line of credit for you.  But they’re expensive to set up, so you’ve got to be aware of that.

And that’s my plan I wanted to add, too, Aaron is that if you’re doing this as a short-term thing and you want to use some money for a couple of years and then you’re going to sell the house.

Yeah, you don’t want to <Background Noise>

<Inaudible> not so good because —

<Background Noise> want to stay there.

Right, so do you folks have somebody down at the Certified Financial Group who could help us with a reverse mortgage?

Well, we do not within the house have that, but we do have plenty of folks that we’ve met over the years that do reverse mortgages and we have a list in house of a select fewer folks that we would refer clients to.

And probably before we go — I mean reverse mortgage may be one of the last resorts we go through, so we’d want to see what else — what other options you have available, but just because of the cost associated with them.  But like Roger said, if you’re not going to be in the house for very long, the reverse mortgage is not the thing for you.  But if this was the place you planned on staying for the rest of your life, then it’s a very, very good option.

Maybe a perfect fit, it may be a terrible fit.  It really depends on you.

What’s the best way to reach out to you and talk to you folks at the Certified Financial Group?

Well, go to our website at financialgroup.com, click on complimentary consultation or give us a call at the office and we will — or give us a call now and leave a message.  We’ll call you back come Monday at 407-869-9800.

Information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.  Discussions and answers to questions do not involve the rendering of personalized investment advice, but is limited to the dissemination of general information.  Our professional advisors

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