And welcome back everyone to Answers for Elders Radio Network. And we are here with Emily Schwarz. And Emily is the Vice President of Sales and Marketing of ElderLife Financial, and courtesy of MorningStar Senior Living, Emily is here on their behalf and talking. We’re talking about how families if you’re house-rich and cash-poor, which is probably a lot our seniors out there, and they’re trying to figure out, “how do I downsize? How do I get my house sold?” And now, there’s a lot of fear out there with the real estate world of how do we get things happening when things are going slower. And so. Emily, welcome back to the show. I’m really glad we’re having this conversation. So Emily, we’re hearing in the news all the time, we’re heading into a recession where the interest rates are going up, home sales are not moving as fast as they once were in several parts of the country. Here in Seattle they’re still doing pretty well, but that’s not necessarily for the rest of the U.S. So tell me a little bit about what’s going on right now in that whole world.
– Things are changing, absolutely. The last two years, we’ve been seeing homes fly off the market, so it was very easy for someone to decide they’re moving into senior living, put their house on the market and 30 days later they have the money. What we’re seeing now is that, this year, it has been the lowest new mortgage applications in 22 years. We all know interest rates are going up, so people that were trying to buy a home or thinking of buying their home have less buying power. So many of them are afraid to move out of that rental into a home purchase, and therefore seniors that are selling that home aren’t able to sell it as quickly as they thought. And so we’re trying to help families through that process, because when they need the care, they really need to be moving into the community.
– Sure, sure, and so obviously a house isn’t going to sell right away. What happens if somebody’s house isn’t selling.
– ElderLife has the perfect solution for that, and we’ve been doing this since 2000. We’ve been helping families understand how to get funding to pay for their care. But it’s even more important than for a long time in the recent past. So what we do is we offer a family an ElderLife Bridge loan, and what that Bridge loan will do is provide them funding to move into their community while their home is listed for sale. In fact, we can even provide the funds before it’s listed. We know that, many times the children need to move mom and dad out of the home in order to get it ready for sale. We want them to get that top dollar, getting $10- or $50- or $100,000 more, because it’s an empty home. Maybe a staged home, a re-painted, new-carpet home.
– That person has lived there for 50 years and there’s so many things that need to be repaired before it will even pass a home inspection. There’s a lot of things that go on in that area.
– So we provide money to the community of their choosing so they can move in while that asset that they have, that very large asset, is listed on the market and waiting for that good offer that the family wants. So we’re able to bridge that gap between the listing and the move-in, or actually we could say it the other way to move-in and listing, because we help them move in first.
– Just so I understand the whole process, let’s just say I have a house that’s appraised at $750,000. When you provide that bridge loan, what happens if the value of the house goes down?
– Well, really, what we’re looking at is what is the equity. Most of the time, people aren’t needing $750,000, they probably need $50,000 just to get through the next couple of months. So we’re looking at what equity they have. So, yes, in theory, the house could go from $750,000 or it’s listed for $750,000 and they sell it for $700,000, but usually those homes are all equity. So what we’re trying to make sure is that they have enough equity for the line of credit that they need.
– What if they have a reverse mortgage on that house?
– Well, that can be difficult, if they have a reverse mortgage, because they already have a debt with somebody else. So that can actually be complicated, and I would suggest that, if that’s your situation, you work through that with a financial concierge. But yes, that could be obviously more complex. You don’t see that all that often. Usually it’s a home that’s probably owned free and clear by the seniors, or a very nominal mortgage.
– It really depends. Sometimes there’s a small reverse mortgage on a house, as long as there’s enough equity to be able to afford – I’m sure you’re looking at enough of an equity margin that even if you give them a bridge loan, it would be enough. They would have to have the equity and then some to cover it. Is that correct?
– We’re always looking at what their exit strategy is, and that usually is selling the home and what the home is worth. Sometimes homes don’t have enough equity again that they do. Other times we look at VA Benefits, which we’ll talk about in the next segment, as a way to exit from a bridge loan. So we’re always looking at how they’re going to repay the loan. We don’t want to put the family in a situation that they can’t repay, that’s not good for them, or for us, or for the senior living community. So we’re always trying to make sure it’s the right sized loan for the family. It can be as little as $5,000.
– As low as $5,000, you could you could go up to $50,000 if that’s what they needed, especially if there’s a community fee or something like that, that has to happen. And so when you you do this assessment with families, you take into consideration what their moving expenses are going to be as part of that?
– Yep. So we look at their moving expenses. Home repairs, we can add that into the bridge loan. We look at the initial community fee, and then, most importantly, we’re looking at how much they need every month between their current income and the cost of care, and how long they’re going to need that extra supplement. So if maybe they have the house on the market already and they think they’re in your market and hopefully it’s gonna be sold within three months, maybe they only need three months of money. If you’re in a very slow housing market, maybe they need a 12-month bridge loan. If they’re applying for VA, maybe they need a 6-month bridge loan. So we’re always trying to right size the loan.
– And this concierge that works with them, those are the questions that you’re going to ask, making sure that you have that. So here’s another question I’m going to throw at you. There’s a lot of families that may have an adult child that lived with them, as a caregiver, and they need time as well. How does that work in that kind of a situation? I mean, do they have to immediately move out? And I mean, what what is the process with that? Can they get a bridge loan if they have enough equity to say, give my daughter six months to find a new place? I mean, I guess that’s my question.
– Well, they’re really taking out a bridge loan based on their situation. So if their estimate is that they’re not going to have that home sold and vacated for six months, that’s the bridge loan that they should have.
– Okay, as long as they have the equity, but my question was, maybe they can’t get it on the market for six months.
-There are situations. I have had these where the child doesn’t want to move out at all. That’s not really gonna work for a home sale exit. But yes, if the child doesn’t want to vacate the home, that’s going to be a difficult situation. I understand that does happen. If there’s a game plan that that child is moving into another home or an apartment in six months, even bridge loans can go as long as a year, then that might be a solution for them. And that financial concierge is going to work that through. They are speaking with that individual family every time they call in. They know their situation.
– I think one of the things that’s really great about your services, we keep telling people, it would be really easy in our industry if everybody was the same and they had the same needs and the same financials and everything like that. But it’s not like that. I mean, every scenario, your family, to our listeners, is as unique as your next door neighbor. Everybody’s situation is different, your care plan is different, that your physical needs are different, your financials are different, your history is different, if you’ve served in the military, what does that look like? All of these different factors, and specifically your care needs, because if you meet certain criteria, then you’re able to qualify for certain services based on your own physical needs. And I think that’s one of the things that you guys really have customized a program for families that they can know that you’re going to take a look at their entire picture uniquely. So Emily, tell me a little bit about how specifically, if somebody’s in a situation, what are some of the scenarios that you can help families with?
– So we help families with all types of ways to pay for care. So, again, we’ve talked a lot about the bridge loan, but we will talk with veterans and surviving spouses of veterans and their children to find out about benefits we will talk about people. We will talk with people about long-term-care insurance. Many people have a policy like my mom did. It was a great policy, $500,000, but she had no idea how to trigger it, how to get paid by it. So we’ll help families understand their policy. We talk about reverse mortgages, you mentioned. We can help people understand what that is and make referrals. We’ll also educate about the tax adaptability of assisted living. Many families don’t realize that they’re taxed for cost of care. I think lastly, we also talk about monetizing your life insurance policy. If you have a life insurance policy that you’re gonna let lapse, you might actually be able to sell it, and receive funds to pay for your senior living. So we go over anything, any rabbit we can pull out of the hat to pay for care.
– Perfect. So Emily, how do we reach you?
– So the best way to reach us is by calling our financial concierge line at 888-228-4500, or check us out on the web at https://www.elderlifefinancial.com/.
– And we’re so excited to have Emily with us. Next segment, we’re going to dive into Aid and Attendance benefits, veterans benefits. If your loved one served one day in the military in wartime and they meet certain criteria of what we call activities of daily living, two of the seven activities of daily living, they would likely qualify for Aid and Attendance benefits. So Emily and I will be right back, right after this.
