To reach Kevin:

Phone:  (248)854-9233

Email: [email protected]

Online:  www.kevinweedmark.com

Twitter:  @kevinweedmark

Disclaimer: This transcript has not been edited for grammar, spelling, or punctuation.

Nicole Wipp: Smart planning 101 podcast, episode 26.

Intro: Hey, this is Ian Floyd with the Love and Sensibility podcast. It's always smart to plan for your future. And I know you're smart because you're already tuned into the smart planning 101 podcast with my friend and attorney, Nicole Wipp.

Nicole Wipp: Well, hello, smart planners. Thanks for joining me on the smart planning 101 podcast. I want to apologize. It's been a couple of weeks since I've been able to release an episode. The reason that it's been such a long time is because I actually was in Denver at the wealth council annual symposium, and I was a speaker on veterans benefits at the symposium.

And so I was there for a week and I also got a chance to spend some time up in the mountains with my husband and my son. And it was really a great trip. So, I just took some time off to do that. And it was a lot of busyness around that. And then of course you come back to the office and things are crazy. But now I'd like to introduce my Weedmarkguest for today.

Kevin, we'd mark. Kevin Weedmark is going to be talking about the five strategic reasons to consider refinancing now. Which I really think is a very interesting topic for smart planning, because of course saving money and. The right thing by your money and by yourself and your family is really what smart planning is all about.

And he's really going to be showing you some good tools and tactics and things to consider in the course of that when it comes to refinancing your home or any other residential property that you may own. So I really liked this topic. I hope you do as well. And without further ado, here's my guest, Kevin Weedmark.

Welcome from everybody to the smart planning 101 podcast, and I am very happy today to have Kevin Weedmark with me. And the difference with Kevin being here is that Kevin is actually here in my office. And so this is a very unusual experience for me because most of the time when I'm doing my interviews with the experts, they are in a different state and we're talking over a line.

And so I'm actually looking at Kevin right now and he's looking at me. And so this is a cool experience. So anyway, welcome Kevin Weedmark to the smart planning 1 0 1 podcast.

Kevin Weedmark: Alright, Thank you so much. I really appreciate you having me. I'm very excited to be here. And I think we have a lot to talk about today. That's going to be very helpful to your listeners.

Nicole Wipp: I agree.

And so we were going to talk. About some things, but before we get to those things, I just want you to tell the listeners a little bit about yourself so they know who you are and where you're coming from.

Kevin Weedmark: Absolutely. That sounds great. My background is I'm originally from upstate New York-born and raised, went to college in upstate New York. I was my mom, basically, my background is she worked three jobs to send me to an all-boys military school from seven to 12. So shine belt buckles, wear name tags, and March. Yes, sir. No, sir. So I have that very hard or I should say very polite background. I hold doors and stuff like that. I'm currently residing in Northville, Michigan.

So that's why we're face-to-face, which I think is. It's a beautiful day here in Michigan. And I have two lovely kids. I have a 14 going on 20-year-old daughter and I have a son who's 12 and I think he's digressing. I think he's going back to nine years old at times.

Nicole Wipp: And that's kids for you, right?

Kevin Weedmark: Exactly. That's a little bit about myself. I've been in my industry for about 18 years now. And I love what I do. I'm very passionate about helping other people. I just think I get a lot of gratification. Helping people understand, become educated on a certain topic, and letting them make correct decisions for their future. I think It's great, it's gratifying.

Nicole Wipp: Yeah, definitely. And that's the whole purpose of this podcast. So I think that aspect of your desire to help educate people is really important. And so today, We're going to be talking about the five strategic reasons to consider refinancing now, and here we are saying, now it's 2014.

It's August of 2014. And from your perspective, this is a great time to refinance. So you're going to be talking about that and giving some specific things. But I'd like for you to first just sort of state what the five points are and then we'll go back and go through each one of them in detail.

Kevin Weedmark: That sounds great. And I also will just discuss really quick why I thought this topic was prevalent. Like you mentioned, it's 2014. Why now? My background again is in real estate. I've been doing it now for a little bit over 18 years, and I believe now's a great time because we still remain at historic lows. We've made it over the. Perceived hump. So to speak of the devaluation of property values and everybody basically in a panic people that were able to survive that came out of that, did the refinancing believe that they got the lowest rates possible.

The problem that everybody forgets is life changes and it can change rapidly, [00:05:00] or it could be at a very slow pace, if you're somebody with kids, those kids continue to get older. They're getting closer to college. You could become closer to retirement. Your parents are getting older. There's a lot of factors that maybe five years ago, three years ago, you weren't considering when you did your refinance or purchase. And now you're like, wow, that's just the way it is. It's perceived to be the biggest asset that you'll ever have unless you have some good financial assets and you've done some good planning, but for most Americans is the biggest asset.

And I, as I like to say, and I believe that you say in your practice all the time, just be educated, talk to a professional, be educated, to understand what your options are and your options may be to do nothing. Come up with was the five reasons now would be, were you a cash buyer? A lot of the statistics out there point towards 50% of all purchases, whether they were REO, foreclosure, or previously owned home, 50% of those purchases nationwide were cash in the last three years.

Nicole Wipp: Really? In the last three years, 50% cash? That's fascinating.

Kevin Weedmark: Do you have home mortgage insurance or worse? Did you get an FHA loan? Obviously, as I like to say the depression affected a lot of people's credit. FHA became the only option for a lot of first-time home buyers. It became the only option for people that were getting back on their feet from a foreclosure, a bankruptcy, whatever the case may be.

But FHA became the only loan. One of the things about FHA is after June 3rd, 2013, you can no longer get rid of mortgage insurance for an FHA loan. So if you're in a 30 year fixed, you have it for 30 years. And I don't want to get into them too much, those are the kinds of things. Thinking about number three, we'll discuss is college.

Do you have kids in college tuition costs that you have coming up? Such as I do. Or do you have college kids that have already gone and they're done and you're sitting with half the debt wondering what to do with it? Fourth, are you retired? Are you close to retirement? I think when we first sat down, I said to you in 2012, 50 million people are between the age of 55 and 69.

That number has obviously gone up from 2012, that's over 17% of the population. How are you strategically planning for that? Do you have to take an early retirement with a lot of the restructuring of all these big companies out there and you get asked, Hey, sorry. We no longer need you, what are you doing? How are you preparing for that? What can you do to prepare for that?

And then lastly, vacation homes they've really taken off. As I said, with a lot of cash buyers and a lot of people often believe. And purchasing a vacation home. Once you have it, you don't want to touch it because the rates are higher, there's additional costs and that's absolutely false.

Of a second home, a vacation home operates from a financial standpoint and a mortgage standpoint, just like your primary. So again, you would want to take advantage of those historical low rates, and there's other things to think about that we'll discuss.

Nicole Wipp: That sounds great. All right. I love this because I, in this short few moments. I've heard things that I didn't know. And I like to consider myself somebody that stays up on things, but it's just a great example of how you really, that's why you deal with specialists. That's why you hire somebody or, align yourself with people that really specialize in any topic because they should always know more than you do. So that's why you're here today. And I love it. Okay. The cash buyers let's talk about cash buyers.

Kevin Weedmark: As I mentioned, in February on a nationwide basis, 43.3% of all purchases were cash. So then I said, what about Detroit? We live in Michigan. We're both sitting here, as you said, you talked to a lot of people out of state, but again, we're Michigan people. So let's talk Michigan and Q1 alone, 50% of all homes. And that's including the city of Detroit. That's including high-end homes where cash buyers out of the foreclosure. 95% were cash in REO, which is what the bank owns. Sorry. 3% of those purchases were cash. So if you're a cash buyer, now you've tied up that cash in that asset.

And yes, it could be generating some revenue for you from an investment standpoint, or if you're a flip kind of person, but again, it's still stagnant money. You're still sitting. You still have it tied up in an asset. And obviously, there's other things such as financial planning maybe parents becoming of age and you need to do some planning for them, with you in your office, that costs money.

You're often like I don't know. That today you put things off because of the lack of capital. And my point is that capital is readily available to you. It used to be that you would have to wait six months in order to do a refinance. If you're a cash buyer in 2011, however, Fannie may introduce what is called the delayed financing rule. And a lot of people don't even know what that is. And typically what it allows people to do is 24 hours after closing on a cash transaction, they can refinance.

Nicole Wipp: Wow. That is so amazing.

Kevin Weedmark: A lot of people don't realize that. So again, as they're trying to develop their financial future, maybe they want to be real estate holders.

They're sitting on this saying I can't tap that equity for six months to go buy my next investment property. And I'm saying, [00:10:00] no, you can do that tomorrow. So you close on a house today. You could tap assets tomorrow to go buy your next venture. And somebody could build a portfolio or a retirement portfolio in that regard.

Nicole Wipp: And I just want to actually make a comment about that because yeah. Yeah, it is get another example, which I deal with frequently, but of how a change in the law, which a majority of the American public is not really aware of can have a significant difference in the day to day operation or the decision-making that they may make if they understood what the law change was. But if you don't know, and if you're operating on the basis of what the old laws are old information, then you really aren't operating and using. To invest purpose.

Kevin Weedmark: Absolutely. Because, as often, action is timely and I'm sure that you tell a lot of people that in your business, you, while you waited six months or, all know now mom or dad got sick and now I need to react. It may be, may pigeonhole you into a certain way to go that where the world was your oyster prior to those six months ago. So that's what it is here, that when the market's hot and you fall apart, Properties. You want to be able to move fast. Plus maybe you just want the cash to, to sit on, to feel warm and fuzzy.

I got a lot of people that feel very stressed when there's very low capital, especially let's take the situation where it was your son or daughter borrowed that money, mom or dad. And you're wondering when you can get your money out. You can get it now. So the other thing about it is the cash needs to be used from the original purchase has to be documented.

There's things like clean title, but the fact of the matter is. To you, and it's something that you should definitely consider. You can go up to 70% loan to value of the original purchase price. I don't know if you know what I mean. Value means a lot of people don't.

Nicole Wipp: Go ahead and explain it.

Kevin Weedmark: Loan-to-value is if the house you bought was a hundred thousand dollars, the bank would allow you to go up to 70% of that, which would be $70,000, pretty simple math, but it pertains for one to 40, a one to four-unit homes, which is residential, anything above four units in case anybody does. It's a commercial transaction and it pertains to second vacation rental or primary homes.

It's all of them. So there are no regulations as far as, oh, I thought it was a rental. I can't do it. Whatever the case may be. So that's something right now why these rates are low. You're still talking 30 or fixer anywhere from four to four and a half percent on any given day. It's a great way to go get your cash at a very low-interest rate.

You're borrowing from yourself at four and a half percent thing. You obviously. That interest off, which typically equates to maybe a half or a full percent reduction from a tax perspective. So you're borrowing money at three to three and a half percent. It's very cheap and that's for 30 years.

So that would be one reason why I believe it would be a real good idea to, look at all your options. If you were a cash buyer or you're sitting with a lot of properties out there or even one property and all your money's tied up. All right. We can move on.

Nicole Wipp: Yes, I love it.

Kevin Weedmark: Number two is we're going to talk about mortgage insurance.

So a lot of people, especially first time home buyers, everyone understands, or at least they perceive to understand what mortgage insurance is, but to make it really simple when you purchase or refinance a home, if you do not have 20% equity into that transaction, the bank will require you to pay what's called private mortgage insurance.

There's three to four companies out there that now provided across the entire United States. And it's basically dictated on a few factors. But mainly it's based on the loan to value your credit, the size of the loan, your transaction type, or your loan type, you can put down and it goes and fragments of five.

So if you put down 5%, you're doing a 95% loan to value. Obviously, your PMI will be higher. You put down 10%, it goes down to 90. You put down 15%, it goes down to 5%. As far as PMI goes. Now you can put down 12%, you can put down 11, but the way PMI is going to look at it, they're going to tear it in clumps of five.

So if you're at 11, they're going to go up to that you've only put down 5%. Okay. So it's going to be dictated that way with the appreciation that we've recently had. If you look at the numbers in the last three years, year over year across the board, the country now, obviously like Detroit, a lot of people have seen a very significant increase when I traveled quite a bit.

A lot of people will say wow, The good things about Detroit. And I say it's misinterpreted, right? Because the reality is, yeah, we had a big reduction in values, but you could go down to Detroit and you could buy a beautiful brick home for $2,000. The fact that today three years later, it was worth 10. Doesn't really pertain to the rest of the state. So I looked at the numbers from a year over year, with basically suburbia. And you're looking at about a three to 5% increase in each of the last three years, which is fairly significant. A hundred thousand dollar home, you just gained 10% in your home.

So it might be a good time for a [00:15:00] lot of people that got private mortgage insurance with their regular mortgage to take a look at, Hey, what is, what is my home currently worth today? And I know there's a lot of websites out there and I'm not going to state the ones that are obvious that you can go out and you can look at yourself what you really need to do.

If you're curious on the value of your home at the end of the day, it's going to come down to the appraised value and what the bank hires that appraiser to go do. But what you would want. Call your local real estate professional, maybe somebody that you trust having access to the MLS. I'm also a licensed real estate broker.

We can put in any type of parameters, what is sold in the last 30 days what's pending, what's active right within your wheelhouse of how many bedrooms, how many baths. And it's going to give you a really good idea on what that approximate value is going to be. So you could consider refinancing at that.

Nicole Wipp: And so the point here, I just want to make sure that this is really clear is that if you're. I may think that your house has an appreciated. And I know that actually because I deal with people with their home values a lot. I know that people very frequently don't believe that their house has appreciated and they are shocked when I explained to them how much the market has gained over the last six months because we know.

And so the point you're saying is your house may have appreciated. It might appreciate it such that private mortgage insurance is no longer necessary, or you can get it at a much lower rate.

Kevin Weedmark: Absolutely, you can get rid of it. You could eliminate it altogether. Private mortgage insurance is not tax-deductible. If you make more than a hundred thousand dollars a year, so you're just giving money away. So if you're a household income, you're a husband and wife and you both work. Odds are, you may make, a little bit over six figures, let's call it 101,000. Unfortunately that $200 a month PMI payment, you're just giving it away.

There's no tax deduction for it. You're just giving it away for insurance to the bank that if you were to default they are covered. That's really all it is. And then even worse, we haven't even touched on FHA. So FHA is the federal housing authority. It's a government-run program. And as I mentioned, my believer when we first started, a lot of people have fallen in FHA due to credit due to, Hey, I only have three and a half percent.

There's no a hundred percent financing out there anymore. The problem with FHA is AF if you've gotten an FHA loan since June 3rd, 2013, they call it mortgage insurance premium. It doesn't go away. It remains for the life of that loan.

Nicole Wipp: That's crazy.

Kevin Weedmark: It's insane. And it's expensive. It's 1.3, 5% where PMI ranges from 0.5 to 2.95. It's a significant cost.

Nicole Wipp: So I will just say this, Kevin, that if you are a person that has an FHA loan. This is what I was saying to you. You need to figure out how to get rid of it. It's really that simple. There is no question and there's, and I, this is another thing that you are involved in.

We're not going to talk about it today, but credit repair, there are things that you can do. To fix the reason that you had to get an FHA loan, a loan to begin with, but what you just said to this audience, and to me, my whole uptake on that is if you have an FHA loan, you need to do whatever you can to get rid of it and get a conventional loan period.

Kevin Weedmark: Absolutely. I think that's number one, number two, if you're in the market to buy and you're considering FHA, you need to get with your mortgage professional and really understand how to come up with that extra one and a half. And do a 5% down conventional. It makes so much more sense. It's not even close, I've done the numbers, I've done them a thousand different ways possible.

And the end result you always come out on top on conventional. There's a reason for FHA. But to me, the only reason is if you're really limited on cash, you need your parents to co-sign or you have credit issues. And again, there's always a way like you just mentioned. Yeah. I work with people who have poor credit as well.

If somebody is willing to help themselves, I have a solution, I have a path to help them. And that's what 18 years in an industry will do you develop relationships with other business professionals, much like why I'm sitting here with you and you establish ways to help people that are in any given situation to get to their end goals, whatever they may be.

Nicole Wipp: And that's a good example to this issue about credit repair and getting a house when you have bad credit. I think that it's one of those things that there's a ton of what I call conventional wisdom. That conventional wisdom to me is like the death of real knowledge. Because I believe that if you work with somebody and you talk about you're very into, out-of-the-box strategies and that's something that we are very into in this office as well.

I really feel like, yes, there are times that there's nothing that can be done, but I also feel like just as many times somebody might have told somebody no 20 times, but you can get to a yes because you're willing to think outside of the box and that's just something. For the audience to consider that just because, you've been told no, really it doesn't necessarily mean that it's not.

Kevin Weedmark: Well and every professional is different. They may be proficient in a certain type of mortgage, or they may be proficient with the banks that [00:20:00] they deal with. There's so many banks out there. There's so many different programs. Again, get multiple opinions. One professional's knowledge may be very much in a different field or much more vast due to experience than another.

I think case in point. Thinking outside the box, always trying to come up with creative solutions, much like I know you do here at your office is you put yourself in your client's position. That's what I try and do. Okay. If I had my knowledge and I was in your shoes, what would I do? And that's exactly what we try to do to help people.

Nicole Wipp: Yeah. This repair, but this whole thing about FHA, I hope it's crazy. So I, we can't stress that enough. Just listening to this,

Kevin Weedmark: Simple phone calls. And here's a nice thing. It's nothing out of pocket until you've done. You've talked to your real estate professional. You have an idea of what it's going to w what your house could potentially be. You've talked with your mortgage professional and understand, okay. From an X to, X to Y what's it going to cost me what, what's the lowering in my payment. What's my new payment going to be. There's several things that you can do.

There's no cost refinancing. You might be able to move from FHA to a conventional loan with a slightly lower payment and have it cost you nothing. And now you don't have it. Over your head that you're going to have mortgage insurance because inevitably rates are going to go higher and five years from now when you have that 20% plus equity due to appreciation, and you're making your payments, you're now going to have to refinance at rates may be in the five to 8% range because you didn't do it now. So that's why we're talking.

Nicole Wipp:  That's right. That's why it's now. That's why refinance now.

Kevin Weedmark:  The third one on the list I came up with was tuition and college expenses. And this is, I've been doing this, as I mentioned for 18 years. I've been here in Michigan for 15 and I've watched families grow.

I remember going into people's homes and saying, oh my Lord, look at the cute little baby. And now the cute little baby is calling me and asking me, Hey, I'm trying to maybe buy my first home or they're going to college or whatever the case may be. So I said, you know what?

Tuition costs are a big problem today. You see it all over the headlines, especially in the media. And it gets pushed behind a lot of these. Buttons, but the student loan problem in America is a growing one. It's becoming over the last 30 years, the average tuition costs have increased about 4% per year for a college education every year.

It seems to go up. You never hear a college. It's far and few between say, oh, we're going to reduce our tuition by 10% for this next coming. It just doesn't happen. So a lot of these families are trying to figure out, okay what are my options? And I always say okay, Get your biggest asset again, because typically people don't, I don't want to touch any type of retirement they're doing, it's being matched by their employer, or, there's strategically over here.

It costs money to tap it or whatever the case may be. A lot of things that people don't understand is, federal student loans are fixed, but they actually change once per year. So it's fixed for that year. It changes every year. And it's according to the 10-year Treasury note, which right now is slightly favorable, but it's been going up.

So again, that's something they consider in the government-mandated cap is anywhere, depending on the loan, you get eight and a half to 10 and a half percent.

Nicole Wipp: Wow. Wow. That's high.

Kevin Weedmark: Unless again, the government is going to step in and say, no, okay, we're going subsidize this, which, if you're a firm believer and you look at the escalating debt of the nation, there's only so much money to go around.

Student loans are a problem but are they going to continue to be an issue that they're not going to be able to fix. So now your kid, who's 10 and now he's in college and the years, 10 years. And you're paying student loans. Unfortunately, the government doesn't have the money to pay down that rate from eight and a half to four. Now you're paying eight and a half.

So what I just tell people is let's look at it strategically. Do you have equity in your home? And what's the cost to go get that equity? Would it behoove you today to, take cash out, to pay for current student loans that you're sitting on? What is that interest rate? What are the terms of that student loan? Is it a ten-year payback? Is it a five-year payback? How is it against your other financial goals in your household? Is it making you debt poor, you cash poor? Do you have other needs and necessities? You have aging family members. You have a sick family member.

What are your other things that are really going on? So again, we're not just, I'm not just a mortgage professional and you're not just a family agent law attorney in practice. You got to think outside. Box and ask these difficult questions. And the other thing about these is you don't know where rates are going to be.

You really, from a student loan perspective, have no idea where from a mortgage perspective, you can lock that term in. You can lock in something for 10, you can lock in the rates for 15. And a lot of people don't know, you can get a 10, 15, 20, 25 or 30 year fixed, so you can tear it in fives. Once you lock that in and it's fixed and you're paying it back over that term, You know exactly what that cost is, according to your budget, your financial goals, and where you're going.

So if you have kids that, you're 10 years out, you might say, [00:25:00] okay, I want to be done with my house payment. So you might want to consider refinancing for that reason, just simply I need to get into a 10 year fixed let's bite the bullet now so that when they hit college, we're debt-free from a mortgage perspective. And my mortgage payment could go to my kids.

The other thing you may consider doing is looking at a MET. I'm sure you talk about that with a lot of your clients. Is the Michigan education trust, basically buying a college education? No matter what your child's age is, age is today at today's rates

Nicole Wipp: and many states have similar programs Michigan's not alone.

Kevin Weedmark: Absolutely. I think almost every state that's I can't even imagine one state that wouldn't have it. I'm sure there are, but I don't know it.

Nicole Wipp: So that's our version in Michigan, but definitely those are prevalent across the whole country. And so just so you're saying utilize the money from your house refinance to get that money out, to buy the education now so you can hedge against the future inflationary costs of that education.

Kevin Weedmark: Think about it. Do some simple math and I'll look at it this way. A college education is 20,000. I just said that the average tuition costs have increased 4%. Let's call it five. So that's a thousand dollars a year. You're five years away. That's an extra $5,000. You can save yourself and then that's not after five years. So that 5,000 when your kid hits in five years from now, then you're talking like 5,500. So you're talking almost another whole year of a college education. You can say by purchasing that MET today, as opposed to 10 years down the line when your kid hits in five and then graduates, you're saving yourself a year of college tuition.

It's insane. So definitely something to consider again, if you have that asset in your house and you have money sitting there, it's something that you would least want to analyze the numbers and become educated on and take a look at it. You can make the best financial decision for you and your family because again, your kids are going to go to college. At least I know mine are, as I told them, it's not an option. They're going, it's just the way it works.

Nicole Wipp: And now the whole title of this podcast is smart planning. And that's just a great way to engage in smart planning is saying, how can I save myself a year of college tuition? That's a pretty smart planning topic, but if you don't plan, it's not going to happen.

Kevin Weedmark: Absolutely. The next topic and I know this is going to be near and dear to your heart, Nicole is you have retirees and what are their living costs and lowering those living costs. As we age and we're an aging population, I believe when we first started, we'd discuss it really quick. But in 2012, we had 51 million people in the us between 55 and 69.

We all know that numbers increased that's over 17% of the population and their biggest expenses are. Bills and their mortgage. So how do you help those retirees, where they become pigeonholed, so to speak and they become very stressed. They got asked too early retirement, they thought they'd have another 10 years to work.

They find themselves going back to work because they have a mortgage to pay. When an essence, they may be sitting on a ton of equity in their home and they don't really know their options on what to do. As I say again, planning is the solution. So just understanding what the programs are that are out there that might be able to help these people.

So the number one that's always talked about it's gotten a bad reputation a little bit over the few years and really that's the result of just people that are unprofessional in our industry taking advantage of elderly which is unfortunate, but Hey, there's a crook where there's money.

There's always crooks is the way I always tell my kids, but reverse mortgages. And it's exactly what it says. So to make it really simple as opposed to paying on your mortgage, you actually receive income every month. So in essence, they're going to say, okay, you have this asset, you have a hundred thousand dollars.

We'll let you borrow. We'll amortize that over 10 years, and we will give you back minus, some interest involved in that. And we'll pay you out a thousand dollars hypothetically a month for the next 10 years. And you'll basically tap that a hundred thousand dollars. Alternatively, somebody might say go refinance, take a hundred thousand dollars sticking into an investment account, but then you're paying your mortgage amount.

And what if your investment strategy doesn't work? So for a lot of people, it's, it's good to have money coming in. It feels like they're still working. They can balance a budget. It gives them some  structure, should something come up. They have some money coming in that they have some cash flow to pay for things. It's not for everybody. I don't believe, but it's an obvious option.

Nicole Wipp: And really in the elder law context and what I do a reverse mortgage, one of the things that we see and I hear every single day is I want to stay in my house because of course, a lot of the things I deal with, have to do with people moving into an assisted living is independent living or unfortunately, nursing home situation, which everybody says, I'm not went to the nursing home, but that's just not. It's unfortunate, not reality. [00:30:00] Statistically, many of us will go into the nursing home, no matter how much we don't want to. That being said, one of the reasons people go into a nursing home is because they run out of options to stay home due to lack of income. And they can't afford to pay for health and care at home when they need it.

And so that's home is not a safe place for somebody that can't take care of themselves. And so using a reverse mortgage for somebody that really they don't need medical care per se. It's more what we call in my industry, custodial care. So how bathing, how eating help getting dressed and walking and standing those kinds of things that are not necessarily medical, but are called custodial care issues.

And maybe we have adult working children. They cannot afford to quit their jobs and go live with mom and dad and take care of them 24/7, or even if they could afford it. Maybe it's not a good idea from an emotional and mental standpoint for them as well, because being a caregiver is extremely stressful and it's one of the most stressful things, period.

So, where the reverse mortgage really, in my opinion, comes in as an elder law attorney is for those people that we're talking custodial care, we need to have additional assistance at home. We need to pay for that, where are we going to get the money to pay for it? And yes, because it's, sometimes parents are really also really hesitant to do anything that's going to affect the kid's inheritance.

Okay, and I just encourage parents, or if you are the child listening to this you need to address this with your parent because what parents need to hear is that your kids don't care about your money as much as you think they do. They really are more afraid of you not getting the care that you need or that they're going to feel like they have to quit their job, or, they're going to feel morally obligated to do those things. Or they're not going to be sure how you're going to afford the nursing home or are they, whatever those issues are. Okay. So those are things that children are much more concerned about than you mom and dad leaving them money. And this is a way for you to use your asset, that you worked your life for to provide for you in a way that is not burdensome to your family members so that the reverse mortgage definitely has its place in the context of what I do for a living and it, and for me, that's the most obvious place for it.

Kevin Weedmark: Yeah. I would agree with everything you just said. Again, I don't think it's the best solution for everybody, but it is available and it's a great product when utilized correctly in the right situation.

The other thing is people are coming towards retirement. I, I look at it both ways. Let's say you had to take an early retirement and you were paying on a 15 or 10 year. And that was your goal. It's two years into that three, four, or five. And now all of a sudden you've been asked to take an early retirement.

Prior to that date, you probably want to take a look at that mortgage. You might want to restructure now to a 30-year fix. You want to lower those living expenses. As you just discussed. Everyone wants to leave the biggest asset to their kids, but at the end of the day, you need to take care of yourself.

You need to take care of you and your wife, your immediate needs, whatever the case may be. And if moving to a 30 year fixed. And paying down that asset as fast as possible, but allows you to breathe and move that payment from maybe 2000 to 1200 bucks a month. And now you feel a little bit better with that retirement package you got, that goes a long way.

There's a lot to be said for that. And on the other side, you're 50, you believe you want to retire by 55. You're sitting in a 30 year fixed with 25 years ago that probably doesn't match your retirement goals now would be a great time to look at a 1500. Fixed, depending on your income situation and your ability to, maybe forego some travel on a yearly basis or whatever the case may be.

So that at retirement age, you don't have a mortgage hanging over your head because I'm sure it's something you deal with all the time. Like I have this mortgage payment and I'm sure everyone comes in the office and says, I would love to get this medical care, but here's all my payments on a monthly basis.

And inevitably mortgage is one of them. So that was another alternative. And then something that everybody always looks over is if you are in a fortunate situation where maybe you're going to get a big buy out from your company you made some good money on the sale of the company, or you made some good stock investments and some things have turned in your favor and you plan on paying off that home within the next five years or so.

Why would you sit in a 30 year fixed paying four and a half percent rates when you could go to a five-year and pay three. It just, again, makes sense. It's all about every dollar that you can put into your pocket as opposed to giving it to interest. Cause you're just giving it away. There's really nothing that value to you.

So again, strategically thinking, okay, you're thinking about all that. That's all great. Take the next step and say, all right, is the mortgage that I have in this house, the best thing to match that [00:35:00] goal. So again, that would be something else that as they're coming to retirement and depending on their financial situation, Maybe moving to some type of adjustable radar might be beneficial to them to get the lowest possible payment than everything additional is going towards principal for the next five years.

And that payout that they perceived was going to be a hundred now is only maybe 90 cause they've been making extra principal payments. So that would be something else. And again, it's about talking with a professional, having a plan, and evaluating your situation. Every situation is different.

Nicole Wipp:  Right? Cause it's not one size fits all. There's no cookie-cutter to this.

Kevin Weedmark: Absolutely. The last thing I thought of, is vacation homes. I think I, as I said in the beginning, a vacation home is treated from a mortgage perspective, just like your primary. So what happens often is a lot of people, vacation homes became about, I want to say 15% of the purchases in the last three years, a lot of people started saying, Hey, we can get out.

We can afford this. We survive the scare and real estate's low, but they don't have the equity. They're not putting down 20%. They're not putting down those type of numbers. So they are paying PMI. And there do is in those sorts of things. And we've already discussed that PMI is wasting money. Okay. It's really something that it's not beneficial to you.

So what I say, a lot of people with vacation homes is okay, you're sitting at 90% or 95% loan to value over here, but you're at 50 on your current home. Why would you not pull some of that asset out of that current home, maybe go up to 70% loan to value, and drop that vacation home down to 80% as well?

You've now eliminated PMI. You've increased your cash flow because again, rates are still very low. It's probably going to be just in line with what you're currently paying on an overall basis. If not less, now that you've gotten rid of PMI and now it's gone. That's not hanging over your head. It's not something you need to deal with in the future.

And that was another way to, to potentially look at refinancing. Now, if you're somebody that's fortunate enough to have a couple of homes, are you in the best situation financially with both of those homes, have you thought of everything in regards to those mortgages? You're getting the best bang for your buck, so to speak.

Are you making sure that you're not giving money away? Cause I'm sure there's other ways to spend a hundred to $200 a month. That would be more beneficial to your future and your families that, whether that be your kids or your parents, whatever the case may be.

Nicole Wipp: I, this is been such an interesting conversation with Kevin. I actually have learned a lot myself too in this hour that we've just spent and, but I will. That I know from experience, from what I do that one of the problems that I see is the overwhelm, the information overwhelmed because we just gave a lot of really great information. Okay. But the problem is people I'm listening to, this are probably thinking, yeah, that's a great idea.

That's a great idea. That's a great idea, but then they're not going to do anything about it. And so let me just say this to those of you. Maybe going to be like that. And, Hey, I'm just as guilty of that as the next person, there's a lot of things I know I should do in my life. And that, I know that this is going to make my life better.

I know. I know I should exercise more. I know, whatever those things are. I know I should do them and we know we should do things, but listen, one of the biggest fears that I see every day is that this fear of outliving our money because, and this is a real fear. If no that isn't something that sort of is a scaremonger thing or that people shouldn't take seriously because the fear of outliving your money.

We have longevity that is in a whole different ball of wax, as I like to say than it was 20, 30 years ago. Longevity increased by 10 years in the 1990s alone. You retire at 65, but you live till you're a hundred, that's a long time. Without making money. And so if you really sit and think about this, and if you really do take this, any of this into consideration of this thing about love living your money, and what is the quality of your life going to be in those years, that you are not working every dollar that you save can become essential and to have a quality of life and not be in a situation where you outlive your money.

So to engage in. These tactics that are going to save you money, because really everything that you've talked about today is about saving people, money period. And think about, is it worse to spend some time on this today or is it worse to outlive your money? And it's literally as simple as that. And so can you afford to spend a half an hour or an hour on the phone or talking to somebody? I think you can.

Kevin Weedmark: And that's all it is time. My time is free. I don't bill people. I'm happy to talk about any situation. And again, it's really just setting your goals, as you said.

The worst-case scenario is outliving your money. As long as you're you have a good idea of where you want to be in some goals, and you're interested in saving [00:40:00] money at the end of the day. Hey, I'm a great person to talk to.

Nicole Wipp: Yes. I definitely agree that. I do want to let everybody know that I will put information on how to reach Kevin in the show notes at the bottom of the blog post for this episode, and also put all of his social media links in there as well.

So you'll have multiple ways to get ahold of him. At some point, I will also post a transcript of this episode for download so that you can read about these five different strategies that Kevin's just talked about. So that it's, I think so for some people that's a little easier to digest when you can actually sit and read it.

So those all will be available in the show notes. And I really wanted, thank you so much, Kevin, for coming on smart planning, 1 0 1 podcast.

Kevin Weedmark: I want to thank you. And you, your audience should thank you for doing this. I may not, as I think when we first sat down and you mentioned you had 25 episodes, whether I'm 26, 20, whatever I am, but the fact that you're having professionals come in and just talk, they're offering their time.

You do whatever you want with it as well. And you can go from there, but I commend you for being the initiative and taking that, the charge to do this for all your listeners out there. I think it's great.

Nicole Wipp: Thank you very much.

Kevin Weedmark: And it was good. I'm glad I got to come into the office.

Nicole Wipp: Yes. Thank you for coming into my office. It makes my life easier as well. Yeah. Take care.

 Thank you very much for listening to episode 26 of the smart planning 101 podcast. And if you'd like to read the show notes, please visit smartplanning101.com/26. And you will be able to read the show notes, get Kevin's information, how to contact him, his Twitter and other social media contacts, and things of that nature also,  please. Let me know if you have an expert that you think would be good for the smart planning 101 podcast, or if there's a topic that you really like to hear about, I'm always open to suggestions and really do want to know what it is that you feel would benefit you. Thanks a lot for listening.