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Old 10-25-2013, 01:53 PM
 
18 posts, read 18,108 times
Reputation: 14

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Hi, I'm trying to help my aging parents keep their house in California, but I know very little about real estate and don't have any money to help them out. One of them was forced to retire due to illness which leaves a $1,000 hole per month we need to patch up so they can afford their mortgage. I hope to get some basic ideas here so that I'm better equipped to work with--and trust--a financial consultant.

They refinanced in 2011 for a 30-year fixed rate 4.375% loan of $248k. Their current balance is $240k and they pay about $1,570 a month (almost $300 of which is some sort of tax). According to Zillow their 3BR townhouse is worth around $340k, but that could be +/- $20k because Orange County real estate jumps around.

I was hoping maybe they could refinance at a lower rate (maybe a 15-year loan?) and drop their payment.

Are there any other options available to them besides a refinance to drop the payments? Renting out a room is not an option due to the nature of their illness.

Thanks!
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Old 10-25-2013, 03:32 PM
 
Location: Southern California
4,350 posts, read 4,942,333 times
Reputation: 2129
Quote:
Originally Posted by rebooted View Post
Hi, I'm trying to help my aging parents keep their house in California, but I know very little about real estate and don't have any money to help them out. One of them was forced to retire due to illness which leaves a $1,000 hole per month we need to patch up so they can afford their mortgage. I hope to get some basic ideas here so that I'm better equipped to work with--and trust--a financial consultant.

They refinanced in 2011 for a 30-year fixed rate 4.375% loan of $248k. Their current balance is $240k and they pay about $1,570 a month (almost $300 of which is some sort of tax). According to Zillow their 3BR townhouse is worth around $340k, but that could be +/- $20k because Orange County real estate jumps around.

I was hoping maybe they could refinance at a lower rate (maybe a 15-year loan?) and drop their payment.

Are there any other options available to them besides a refinance to drop the payments? Renting out a room is not an option due to the nature of their illness.

Thanks!
To get a loan , they need sufficient income, by the sound of it, they don't. Although you said you have no money, would you be willing to use your income to help them qualify?

Forget what Zillows says for value.

Depending on their age there is something called a reverse mortgage, but they still need to have enough money each year for the property taxes.

Another option is to sell, buy all cash if you they can't qualify for a loan.
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Old 10-25-2013, 03:39 PM
 
3,322 posts, read 7,264,972 times
Reputation: 4105
Quote:
Originally Posted by rebooted View Post
Hi, I'm trying to help my aging parents keep their house in California, but I know very little about real estate and don't have any money to help them out. One of them was forced to retire due to illness which leaves a $1,000 hole per month we need to patch up so they can afford their mortgage. I hope to get some basic ideas here so that I'm better equipped to work with--and trust--a financial consultant.

They refinanced in 2011 for a 30-year fixed rate 4.375% loan of $248k. Their current balance is $240k and they pay about $1,570 a month (almost $300 of which is some sort of tax). According to Zillow their 3BR townhouse is worth around $340k, but that could be +/- $20k because Orange County real estate jumps around.

I was hoping maybe they could refinance at a lower rate (maybe a 15-year loan?) and drop their payment.

Are there any other options available to them besides a refinance to drop the payments? Renting out a room is not an option due to the nature of their illness.

Thanks!
They are not going to refi into a lower payment, and you do not want to compress the payments, and raise them, by looking at a 15-year.

Investigate Property Tax Exemption/Rebate(S) based upon their age and disability. This means GO TO THE TAX OFFICE YOURSELF WITH THEM.

Bottom line, if things get down and dirty: they should stop paying credit cards before they miss house payments. Not sure of the nuts and bolts of the situation, but at their age, they likely need that asset more than a bunch of high-interest credit cards.

Investigate low-income help, even if temporary.

They must keep paying the HOA no matter what, also, they can foreclose if not paid.

DM me for more aggressive options.
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Old 10-25-2013, 09:19 PM
 
78 posts, read 86,105 times
Reputation: 128
based on a 340k home value and a mtg bal of $240k- they wouldn't qualify for a reverse mortgage.
however if they are both over 62 and willing to downsize into less expensive home, a reverse mortgage for purchase may be an option.
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Old 10-25-2013, 10:58 PM
 
5,048 posts, read 6,410,677 times
Reputation: 4121
I was just going to suggest the same thing...reverse mortgage. What are you considering aging?

Look at all the aspects. Could be a good thing. I know a few people who have done it and they are very very happy with it.
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Old 10-26-2013, 11:46 PM
 
18 posts, read 18,108 times
Reputation: 14
Thank you for the responses. Tax breaks and possible reverse mortgage are good leads.

I hope to explore every option before the nuclear option, which is for my parents and my family to move out of state to cheaper pasture and rent the California house. My mother's illness is likely terminal within 10 years and we need to be near them.

That would give them financial security and allow them to keep the house, which I would eventually inherit.
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Old 10-27-2013, 10:44 AM
 
3,442 posts, read 4,478,298 times
Reputation: 5387
Not to sound cruel, but the " old fashioned" belief of having no mortgage as you near retirement age doesn't seem so stupid after all.

Signing a 30 year mortgage with steep payments as they enter retirement should be a lesson to others, also.
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Old 10-28-2013, 11:36 AM
 
Location: Southern California
4,350 posts, read 4,942,333 times
Reputation: 2129
Quote:
Originally Posted by Teddy52 View Post
Not to sound cruel, but the " old fashioned" belief of having no mortgage as you near retirement age doesn't seem so stupid after all.

Signing a 30 year mortgage with steep payments as they enter retirement should be a lesson to others, also.
Is the lesson do whatever you can to keep the house, because between 2011 and 2013, prices have probably increased and they might have made and additional $30,000 in appreciation by not selling in 2011. For some people , buying just like like renting with the option to sell, they'll never pay off the mortgage themselves.
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