What about those different types of mortgages? Obviously,
you know, we've seen mortgage rates really start to
change a lot of people think they're high. But
if you put it in the context of like 1981
or whatever, it's, it's wildly not. Yeah
, I mean, look, you got variable mortgages
and, and you have fixed mortgages, uh variable
mortgages, everybody looks at favorably because it's, it's
usually at a lower rate than what the fixed mortgage
is. But the is it, it adjusts as
interest rates go up. So you could ultimately wind
up paying a variable mortgage that was larger than the
fixed mortgage at the time that you purchased. And
that, and that creates, you know, obviously
the economic problem for your household sometimes it's better to
get a fixed mortgage. So you know what you're
gonna pay every month and then when the mortgages come
down, you refinance to a lower mortgage rate and
, and has a good impact during your household budget
. And I think that's one of the things too
is like figuring out when is a good time to
actually refinance. And then for, you know,
for some seniors maybe having this idea of a reverse
mortgage and trying to take some of that money out
of their home without losing the house they're in.
Well, uh most seniors if they need money to
live, uh uh obviously with costs going up and
inflation going up, uh Social Security did go up
, but it depends upon your payments. Uh then
you, you know, you need money to live
and, and a reverse mortgage means the uh the
bank will give you cash to live up live now
. But ultimately, when you pass away, the
bank can take over your house. So your heirs
don't get it. If the heirs want the house
, they have to pay off the, the reverse
mortgage to the bank. But it's a good way
for seniors. If they live alone, they don't
have heirs to get their money out now. So
they can afford to live. Let's talk a little
bit about the downsides. I know that reverse mortgages
also though can come with a lot of fees.
Well, yeah. Yeah, I mean, it's
, it's almost, uh, the same kind of
fees, uh, that you'd experience when you buy
a house. There are closing costs, there are
title searches, uh, bank fees, lawyers fees
. So the fees are gonna be pretty much the
same, uh, because you're going through a real
estate closing in a, in a sense. Uh
, so, uh, you're always gonna have those
but you can always fold those in, uh,
uh, to the mortgage. So you'll get the
reverse mortgage. So you get less money, the
bank, uh, to pay off the fees.
Uh, the other thing is that, uh,
you won't get 100% to your house because the banks
want, want you to have some skin in the
game. Uh, so, and, and to
limit the banks, uh, downside because remember,
uh, you today, uh, you'll have to
put 20% down because this way it protects the bank
, uh, from any decline in the housing markets
. So the bank wants the same protection, uh
, as if you bought your house in, in
terms of reverse mortgage as well to protect their interest
and their equity, right? Because what, I
guess what would be the impetus to decide? Ok
, I wanna take the reverse mortgage instead of taking
out like a home equity loan. Well, a
home equity loan, you have to pay off every
month, a reverse mortgage. You don't have to
pay off, they give you the money you don't
, uh, and the bank builds in, you
know, whatever costs are there. So if you
don't have money and you're not working, you're retired
and your income is not going up. Uh,
the reverse mortgage may be good for you because this
way you're getting extra cash to live on. Uh
, the other thing is, uh, it depends
upon how old you are and how long you're going
to live, you know, the life expectancy,
uh, you know, the money doesn't last forever
. Uh, so, uh, you know,
those are all the facts is that you would have
to consider how old you are the fees, uh
, how much money you need to live? What
are your budgetary shortfalls? Will this cover it?
Uh, you know, and then you can make
a decision? Ok. It is time for Marty's
mailbox. We asked you to write in your financial
questions and we have an expert here to answer them
. So today we have a question from Kim who
says increased interest rates hurt those who need money the
most and help those who have plenty of money.
Well, that's true. And it's really all a
matter of if you have money to invest that you're
not gonna need uh in the short term, then
you'll get a higher rate. Uh if you don't
have enough money to invest that or money that you
really need uh to meet your household financial budgets,
then uh you're not gonna get the higher interest rates
and a lot of middle class people and, and
the, and the lower income people don't have that
kind of money, excess money. Uh they have
to pay for their food and their energy and their
home mortgages and their rents and, and their household
budgets partly break even. So there's really no money
to invest. So in times like this, uh
those the richer people, the wealthier people, the
excess money will get richer and will get wealthier and
those who don't have the money will not and they'll
, they'll remain where they are. But then what's
the feds thinking in doing that? Well, the
feds thinking and doing that is inflation is really a
tax on, on those people who can least afford
it. So by the Fed, trying to,
by increasing interest rates, trying to take money out
of the economy to slow it down. So prices
don't go up and price and there's price stability then
that benefits the middle class and the lower income people
. The downside is uh even if the fed does
uh achieve their 2% inflation growth, prices are not
gonna come down. I think we have a price
reset uh right now and the prices we see now
are they gonna be the prices that are gonna be
going forward? So what the FED is doing is
to prevent prices from going any higher.