1596: Reverse Mortgage Retirement Cash Flow Freedom with Kevin Guttman

Robert Plank 0:04 Retirement should not feel like a monthly cash flow crisis in that home that you worked decades to own. And Kevin Gutman is here to help us out. He is one of only 210 certified reverse mortgage professionals in the country, CRMP, and he helps seniors understand their options without pressure. We're here at the Marketer of the Day podcast with Robert Plank, brought to you by DFY podcast.com where we handle editing, publishing, and promotion of that podcast, so you can focus on the interview, and the interview that we're focusing on right now, right here is talking to seniors who might be house rich and cash poor, and they might have looked into reverse mortgages, but they have like this weird reputation problem and misconceptions. So we're here to chat from the source himself, certified reverse mortgage professional Kevin Guttman, to plan the future and figure out about our choices and what's right for us. So, Mr. Kevin, how are you?

Kevin Guttman 1:05 Hey, Robert, great to see you.

Robert Plank 1:08 Great to see you. And so, what are you all about? I know, like, reverse mortgages is the, is the focus, is the brand, but if someone says, "Hey, Kevin, I just met you, what's the 32nd elevator pitch? Who are you?

Kevin Guttman 1:20 Yeah, good question. So, I'm a husband of my wife, Sabrina. We've been married 37 years, met in college. We have five adult children and four grandchildren. Everybody's married, and more grandchildren on the way. Been in the mortgage industry 22 years. Half of that time I've been doing reverse mortgages, and it really just like serving people, helping people, educating people about mortgages and reverse mortgages, and solving problems, solving, make, bringing solutions.

Robert Plank 1:52 Yeah, that's what business ownership and parenting and grandparenting is all about, right? What's the problem in front of me? And I could make the problem worse, or I could whine about it, which in a way, like, makes it worse, or just say, like, hey, what's it, is the problem mine to solve, and if it is, then I can give solutions, and you know, see what's what can be done. And so, as far as the scariness of today's day and age, on your website, reversemortgagerevolution.com, you say that 59% of Americans say running out of money in retirement is their number one fear. Americans 62 and older have more than $6 trillion in home equity. So, you combine those two things together, and we say that more than 1 million senior Americans have obtained reverse mortgage loans, giving them the cash flow that they need. But when you hear about it, it seems scary, right? It seems like you're playing chicken with the clock, and you're like, okay, well, I'll, you know, all a lot, I'll get this process started. But what if I live to be, you know, 110 years old? Or what if I run out of money before I run out of life? But if someone says, okay, reverse mortgage, I've seen, like, Tom Selleck on TV, and I'm, but I'm not completely sure I know, like, the exact foundation, like, even, like, what is the reverse mortgage, and what do people say about it?

Kevin Guttman 3:05 Yeah, good question. So, really, Robert, the program has been around since 1961. The very first reverse mortgage was taken up by a widow who couldn't afford to make her mortgage payment anymore. She knew the local banker because the banker played football for her husband, who was the local football coach for the high school. The banker went to his bank and said, "Listen, I know this family. Let's help this lady out. Let's suspend her mortgage payments, and let's.. she has a lot of equity. Let's take a payment of interest from her equity each month. So that's what they did. The very first, first mortgage was born. It allowed her to remain at home and age in place, which most people want to do 89%, allowed her to have an optional mortgage payment. She didn't have a mandatory mortgage payment, which is a big deal when you're on a fixed income, right? That's a big deal. Third, it allowed her access to some of her equity, should she need it, and fourth, it gave her some breathing room in her budget each month. She'd end up to sweat buying groceries or buying her prescriptions, or whatever. So, really, in essence, that's what it does. It helps a senior homeowner remain in their home, retain ownership of title, gain access to their equity, entertain the lifestyle they've worked for and dreamed of, and have an optional mortgage payment, they can make a payment if they choose to, but they don't have to.

Robert Plank 4:24 Ooh, that's very cool. And I haven't even heard about that component of it, that it's the optional payments. So it's like you have the freedom and the agency that you know that you want, perhaps if you need at that point. If you feel like you're running out of options, now you get new options, and I imagine that you know, at, you know, we're all head headed towards old age, right? If we're lucky, all of us, and it can be even scary to think about, right? That, as you get older, well, you luckily, if you're, if you do things right, then you have the equity building up, but then, and, you know you can't work anymore, you've got the less income, you got the fixed income, you got the retirement, the social security, and that can feel like you know being kind of boxed into a corner, but sometimes something must be done, but then there's the the embarrassment, the fear that the shame that like holds us back, so when people come and talk to you about this. Are they ready to just jump on in with solutions, or is there a little bit of this like shyness about it?

Kevin Guttman 5:27 That's a great question. You know, I think historically people have been embarrassed or ashamed, like, you know, I'm a loser, I need a reverse mortgage, I'm out of money. But really, Robert, the smart people are the ones who look at it, and I always tell people, ignorance is expensive, knowledge is free, and so get educated, learn about it. It may not be for you, but learn how it works. Make it an option for you. Sooner is better than later, and here's why. You remember when we were in our 20s, the financial planners used to say, start investing now, you'll never get this decade back. Same thing is true about our 60s. The best time to get a reverse mortgage is the day you qualify. So, for most people, that's age 62. So, if somebody has substantial equity, they get a reverse mortgage, they make their monthly payment optional. Now, they can take that payment and put it into their retirement funds. Meanwhile, they have a line of credit, potentially, if they have enough equity, that's going to grow by compound interest month over month, year over year, insured, protected from any market correction, grows tax-free when they draw the money, either cash or monthly payments, that money is tax free, so sooner is better than later. Getting educated is important, and we have to tune out these quote-unquote experts like Susie Ormond and Dave Ramsey, who don't like it, but they're stuck in 2015 because in 2015 the program made significant changes to make the program safer for seniors, but anytime you read something online that's negative, it's almost always pre 2015 or it's a clip, like from Dave Ramsey, prior to 2015 He has a famous clip about this 92 year old man in Chicago that's getting foreclosed upon because he has a reverse mortgage, but when you dig into it, that isn't why he's being foreclosed on. He's being foreclosed on because he didn't make his property tax payment. Well, whether you have a regular mortgage, a reverse mortgage, or no mortgage, if you don't make your property tax payment, they're going to foreclose. So, there's there's inaccurate information out there that a lot of people, I mean, people follow these people and listen to them, and to talk about Dave Ramsey for a second, he is smart about a lot of things, like the debt snowball, that's a good thing to help people get out of that pass. What does he know about reverse mortgages? Not much, I sure wouldn't listen to him when it comes to that.

Robert Plank 7:53 Yeah, and I, and you know, I can understand how, you know, Dave Ramsey, he's got to keep his branding consistent, right? He, like, you know, if he, if he said all these bad things about reverse mortgages, and then after 2015 he reversed it, and now said they're great. Then it's like, well, hey, in this year you said this, and that year you said that, and then there's also that amount of the, like, you know, negativity helps to sell and helps to get attention, and then, and stories are powerful too, but then you know there's that story, and then I'm sure, like, you have other stories that counterbalance that, so it's like, well, we're in this age, well, I guess we've always been in an age where we have to kind of know how to learn properly, right, and it's, it's never ending, and that comes as far as the advice, but also as far as it seems like, like people that are good with money seem to just like have this this healthy appetite for always learning about it, right? Like, guys like you, you're like, "Hey, like, here's how the program changed, or there's just, if you don't, it seems like if you don't learn, you just.. your money just goes by your base or instincts, which is like not very good, right? And it's like there's all this kind of counterintuitiveness here, like you were saying, about, you know, saving money, save as much money as you can in your 20s, when maybe you don't have a lot of money, right? Your income has not increased yet, but then it's because there's this point in time, and this other point in time, when it will pay off, or like I had a friend that said, like, well, if you're, uh, like, you know, like, he was like opening lines of credit, or open a credit card when his money was good, because then, if you wait until you really need it, then they won't, you know, your risk, they won't lend to you. So, there's always just like, you know, all this like counterintuitive education that seems to, like, go into play. And then it seems like, in school, they don't teach this for sure, right? They teach you that the mitochondria is the powerhouse of the cell, but they don't teach you about, like, money stuff and budgeting, and so I understand that you know you mentioned before you have this big family, like your family, like talks money and has a good money education, correct?

Robert Plank 9:57 Are you dropped out, mr. Kevin?

Kevin Guttman 10:00 There we go, you're back. Oh, yeah. Sorry, I don't know what happened. Yeah, early on, we taught our kids about saving, about giving, about debt, you know, not going into debt. I think there is strategic debt. I would say real estate is strategic investment of strategic debt, you know. You've probably seen that study by the National Association of Realtors last year, where they found that people who own real estate have a 40 times higher net worth than people who rent, 40 times higher. So, real estate's a wealth builder. So, we taught our kids about real estate, about leverage. Before I got into the mortgage industry, my wife and I were flipping houses, so they would understand, you know, you buy low, you fix it up, make it nicer, you can sell it for a higher price, but you're right, it's not taught in schools, and I think the onus is on parents to teach our kids, not necessarily the school system, I think these things are best taught at home.

Robert Plank 11:01 Yeah, I agree, and, and it took me a while to come to that realization, because it's, it may be like a Ramsey thing, oh, the schools are so terrible, they're so evil, yeah, but you wouldn't like it if schools taught a certain path or a certain way to make money, if it, if you then had to kind of adjust it for your own, your own, you know, your own values, and what you want to teach your kids. So, I guess, in hindsight, it makes sense that school kind of leaves it to you, but, but it's also, they don't tell us that, well, if you don't have that education, you kind of have to seek it out, and if not to your detriment, and then you might be too old, and have to correct some things, and so, as far as, like, there's there's there's what you see and what you know versus people that maybe have made the money mistakes, and you already mentioned things like, well, you know, at 62 like get it, get approved, or look into the reverse mortgage, like get to things early, but what would you say as you're like a number one or number two mistake as far as like people that make poor money moves, is there a top one? Was it the not owning property, or like, where do people go wrong with money?

Kevin Guttman 12:09 Yeah, I'll tell you one. I had a couple I met with a few years ago, and they said, yeah, we're going to sell our house and rent, and I grew up in a real estate home. My dad was a realtor and an investor in Southern California, so my dad drilled into my brother and I buy a house as soon as you can, you're paying somebody else's mortgage, you're paying your landlord's mortgage. So I said, you know, I think that's a bad idea, but I will run the numbers for you and get back with you. So what I did is I looked at their home and average appreciation, they were like 62, 63, I said, let's say you live 30 years, which is not unreasonable in retirement, so you're going to live 30 years. So they're forfeiting that appreciation, they're paying rent, they're getting no return on, and the bottom line, Robert, is it was a $1.5 million mistake. In other words, they got rid of all of the, they forfeited all the appreciation they were going to get, they paid rent that they never got any return on, it added up to 1.5 million. So it's important for people to evaluate all their options, like when I meet with people, I'll ask them, How long do you plan to stay in your home, if it's less than two years. We don't want them to do a reverse mortgage. They're not going to get the benefit from it. Are you willing to take in a border if they're tight on money? Most people don't want to do that. Can your kids help you? Do you, can you go live with your kids? Most people don't want to do that. Okay. Well, you can sell your house and pay the realtors the 6% three and three.

Kevin Guttman 13:42 Well, they don't want to do that. They want to stay in their home. Well, we can do a cash out refinance or a home equity line of credit, but then you have a mandatory payment. Usually, they don't want that. Well, that leaves one option: reverse mortgage, where you can make your payment optional. You can access equity if you need it, kind of like a standby emergency fund, if you will, a standby rainy day fund, and they do like that, so that's why I say don't rule it out just because you hear reverse mortgage. I mean, people hear that and the wall goes up, like I don't need that, I won't get that because they're going off of inaccurate or outdated information, so it's important to get the current stuff, not from online, not from Dave Ramsey or Susie Ormond, or whoever. Rick Adelman is another one, but you want to work with somebody who knows what they're doing, who does these every day, who can shoot straight with you, and has your best interests in mind.

Robert Plank 14:38 Yeah, and hearing that, hearing your thought process makes me think, like, well, you know, maybe you know we can't help getting information from social media, right? We're all on it, we're all, we're all learning things, but that shouldn't be like the start and the finish, right? Like, even, even if you happen to see the Dave Ramsey or Susie Orman, like, get educated and then go to, actual financial planner or your actual person who will, who will make the final decision, because Susie Orman, Dave Ramsey, they're sure not doing that for you, and so it's like that's like the first layer, and I like kind of hearing how your brain works, right? You say, well, here's the problem in front of us, right, plan to live till this age, need this amount of money, and you're just like going through the options, right? You're saying, and they're like maybe in an emotional state, saying I can't do any of this, and you're like, here's option one, option two, and if we're exhausting the options, then cool, reverse mortgages is like the least worst option, but then as you unpack it, it seems like there's a lot of upside, a lot of benefit, and that leads us to, you have this book called A Reverse Mortgage Changed My Life, and my understanding is that there's a lot of like realized stories in here, right, that if we're trying to get ourselves educated and say, hey, it's, it's not that bad, I need to unlearn the pre 2015 baggage and hear how it's worked, like what are some of the stories that we might find in this book?

Kevin Guttman 16:02 Yeah, the very first lady I helped in 2015 was referred to me by her daughter, who was a client. She was 84 years old, five foot nothing, full of fire. Her name was Carmen, and I said, 'Hey, Carmen, why are you looking into this? He goes, 'Well, my budget's tight. Like, yeah, I understand that a lot of people on fixed income say that. Tell me more about that. She goes, well, to be honest, I have to use credit cards to buy groceries. 84 years old, living on credit cards to eat the closing table. I'm doing the math. We're freeing up just shy of 1200 bucks, no more mortgage payment and pay off her credit cards, so I say to her, I say, "Hey, Carm, I know the math, you know you're free enough close to 1200 bucks, that's amazing, but what is this going to do for you? She kisses me on the cheek, I have to go home and tell my wife, "I got kissed at closing by an 84 year old plan, and she says, "I won't, I can sleep at night, I won't have to worry about money anymore, and I'm like, man, that's amazing. And so, over the years, I've just helped all these people in hearing their stories, like another couple, Alex and Angela, he got sick and couldn't work anymore, and they almost had their house paid off, so there was a small balance. We paid that off, that freedom, 1200 then they could get money each month to live on, that was another 1200 Remember, all that money is not taxed, so that's the equivalent of like $3,000 they just replaced from income that they lost from her husband being able to work. So, you know, stories like this; another one, a couple had moved back to Colorado. I live in Colorado from Arkansas, and of course we're at elevation here, and sometimes people have a hard time breathing. You have to have oxygen to breathe, and he's his wife left the room for a minute, and he said, "You know, I got to tell you that I'm not long for the earth, and I want to be sure my wife's going to be okay. He said, "Well, tell me what that will look like for you, because well, we need to move into a home that is maintenance free, and we'll make a large down payment, get a reverse mortgage, finance it with a reverse mortgage, and then she'll have no, no payment. Five months later, I get a phone call from Sherry, and she says, "Hi, Kevin, it's Sherry, I want you to know, Bob passed away, and you told us that if we live in this home as our primary home, we pay the taxes and insurance and HOA dues on time, and we maintain it. The term of the loan is 150 years, we can't outlive it, and there's no payment required. Is that right? I said, " That's right."

Kevin Guttman 18:37 Sigh of relief. She goes, oh, good, that's the only way I can afford to stay in my home, and these are the three ways people use a reverse mortgage: monthly payment becomes optional, access equity to live on, finance a home with a reverse mortgage. That's how people use it. And when people learn about it, it's a game changer. People say to me all the time, "This sounds too good to be true. What's the catch? Well, the catch is it's a deferred interest loan. If you don't pay any interest, the interest is going to grow. Truth be told, Robert, people are borrowing so little - 35 to 45% of the value of the home, depending upon their age. They're borrowing so little, there's always equity at the end, so it's just math. The appreciation is happening on 100% of the property, they're only paying interest on a small percent of the loan balance, so there's always equity at the end.

Robert Plank 19:29 Very cool, amazing. What can be accomplished with running the numbers and doing some kind of scenarios and reconfigurations? It's good that we have guys like you who can think like you, who can solve these problems for people, and so you've given us a great education so far about different aspects of money and reverse mortgage. But in these final few minutes of our conversation, Mr. Kevin, do you think there might be a missing question that I should be asking you? I just don't know to ask you.

Kevin Guttman 19:56 You know, you had mentioned about people consulting with their financial professionals, and I'm all for that, by the way. But I would say this: if I've got a heart problem, I don't go to the podiatrist, right? The foot doctor's not going to help my heart. He's a doctor, but he can't help my heart. Same thing with a reverse mortgage. You want to work with somebody who knows this product, not a financial planner, not a CPA, not even a regular mortgage broker. By the way, only 5% of people do reverse mortgages in the country. Seeing people looking at this, they got to work with somebody who works in reverse mortgages, not just mortgages, because it's a different animal. I can't tell you how many people I helped last year. It's probably half a dozen people who called me and said I started with another company. I started with another loan officer. They didn't know what they were doing, and I found you. Can you help me? And if a loan is taking more than 30 or even 45 days, they don't know what they're doing. It shouldn't take that long. The national average is 45 days from application of closing. I'm at 22 days, because we do a lot of work up front, educate people, get all the docs up front, make sure there's going to be no issues in underwriting, so we just sail through underwriting, have a nice smooth process. So I would say it's great to talk to your professionals, but understand they're not trained in this product.

Robert Plank 21:19 Okay, fair enough. And you are, you're a specialist, and so that, that acronym, what is it again, like the reverse mortgage, like specialty, you have?

Kevin Guttman 21:28 Certified Reverse Mortgage Professional. So, there's a little over 200 of us in the country, and what it means is the designation is put out by the National Reverse Mortgage Lenders Association, NERMLA. We have to have enough experience to sit for the test. You have to pass the test, which only 25% of people pass the first time. You have to commit to their code of ethics, and we have to commit to continuing education. We have to stay current with the program. So here's 160,000 loan officers in the country, 210 RC; RCRMPs.

Robert Plank 22:05 Very nice, so, if you're getting a reverse mortgage, get a CRMP to handle it. And, ideally, Mr. Kevin Guttman. And so, if someone says, 'Okay, was really impressed by what you said, Mr. Kevin, I wanted to check out your book and your website, and they might also be curious, like, do they have to be in the Colorado Springs area, or what's like that? How does that all work, as far as speaking with you about a reverse mortgage, possibly?

Kevin Guttman 22:29 Yeah, our company's in 40 states, I'm in 20, so it's likely we can help most people, whether I can help them or I can refer them to one of my colleagues, they can find my book at reversemortgagebook.info, reversemortgagebook.info, and then if they want to just explore and learn more, I've got a website has a lot of good resources, videos, and a free consumer guide, which is very comprehensive, they can download, and that is reversemortgagerevolution.com; reversemortgagerevolution.com. Always happy to talk with people. I've got a toll-free number: 8772519709 / 8772519709. And you know, I'm a no-pressure guy. I just like to educate people, help hear their story, hear what they're trying to do, and see if this is a good fit for them, and we don't, we don't try to force anybody to do anything, just, just want to hear it, hoping to do, and, and if we can help,

Robert Plank 23:32 Yeah, it makes more sense that way, right? You present some options and say, " Hey, if you want to proceed, then you can," and so that phone number you mentioned, that's 8772519709, and reversemortgagebook.info and reversemortgagerevolution.com. So that we have those resources and you can get educated if you're thinking about downsizing, relocating, buying your dream retirement home. A reverse mortgage for purchase makes it easy to buy a new home without adding a monthly mortgage payment, or in some of these scenarios you mentioned, it might get you out of that financial jam. The only way to be sure is to get educated and have this conversation with Mr. Kevin Guttman, CRMP, whose website is reversemortgagerevolution.com. And whose book is called A Reverse Mortgage Changed My Life, real. stories of hope, courage, and inspiration. And speaking of courage and inspiration, Mr. Kevin, I like to end these conversations with a fun quote or lesson, that way you kind of send us on our way with something to think about. So, as people are checking out your book, A Reverse Mortgage Changed My Life by Kevin Guttman, CRMP. Do you have a one last fun quote or lesson that has served you that you can share with us?

Kevin Guttman 24:46 Yeah, I had this quote on my desk for several years, that's by Henry Ford, it says, whether you think you can or you think you can't, either way, you're right.

Robert Plank 24:54 Yes, I love that one, that's one of the originals, right? Like, there's there's nothing more simpler than that, and so yeah, you have to believe in yourself, and otherwise you'll end up exactly where you expect it to. So, let's think about that as we get our money situation figured out. You take control of your financial future today by checking out this book, A Reverse Mortgage Changed My Life, reversemortgagerevolution.com. 877-251-9709. Thank you, Mr. Kevin, for showing up, stopping by, being a blast, and a very effective educator to chat with. Thank you very much.

Kevin Guttman 25:28 Thanks, Robert. Really appreciate it.