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Old 06-29-2018, 07:32 AM
 
1,945 posts, read 1,170,163 times
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I left home when I was 18, was independent for my young adult life, could very well be independent now. I've been living with my mother for over 15 years because we like doing so. She pays for half the groceries and I pay for everything else, and it's been that way for a decade or more. That's why she has a large amount of savings.

I understand that there are plenty of people out there taking advantage of their parents, but I'm not one of them. I also understand that people here don't have to believe me.

She makes enough with her pension and SS to live perfectly comfortably as she is now, but that's not the issue because I'm paying all the bills and will continue to do so. We actually like living together, and I do not intend to date or remarry or anything like that. I am independent... just not alone. She is independent, too, or could be if I left, which I see no reason to do. We just live in the same house and enjoy each other's company.

In the fullness of time, if she needs extra care, I will provide it (I work from home and know what caregiving entails) or will pay for additional care that isn't covered otherwise. From what I know about extra care in this area (for my father), which is more expensive than where we plan to move, she can afford the bulk of that with current income, too.

I'm not sure what the point of a reverse mortgage would be? Isn't that for people who need more money to live on? I don't quite understand the benefit of having more debt. Elder law attorneys answer real estate questions and give mortgage information?

I'm trying to think of her first, which is why I was asking questions about what would be the best way for her to buy a different house... which is what she wants to do... in another state with much lower property taxes.

Anyway, I'll weed out the suggestions from the other stuff and do more research.
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Old 06-29-2018, 07:58 AM
 
Location: Bloomington IN
5,888 posts, read 7,141,075 times
Reputation: 14149
She really needs to speak to an attorney that understands inheritance laws AND the ramifications related to Social Security and Medicare should she every need to go into a nursing home.
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Old 06-29-2018, 08:44 AM
 
4,583 posts, read 6,168,276 times
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Long term care can be an issue at any day. Have you considered the best way to transfer the house to you at her passing? I would think buy the home outright especially if at this point you can't get a mortgage. Whatever works for you and your mom but definitely seek out an attorney for guidance.
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Old 06-29-2018, 09:34 AM
 
10,292 posts, read 6,570,645 times
Reputation: 10861
Quote:
Originally Posted by Murk View Post
Trying to figure out the smartest way to handle an upcoming move with my family.

My mother (72) is retiring in the next few months - she's finally decided it's more bother than enjoyment. We all live together in the house she owns completely.

After she retires, we plan to move to a new house that she pays for 100%. Not talking about an expensive house here -- maybe up to $175k tops. She has enough to pay this with her savings at present. Her current house is not in great shape and will probably get sold to a flipper for maybe... $80-100k. Her credit is great. She's in great health if that matters. My credit stinks and I do not have a huge chunk of savings or investments.

Questions:

Is it better to just buy a house outright with cash and have basically nothing left other than her SS and small pension income? Or should she get a mortgage (before or after retirement?) and put 50% or some other huge amount down?

Obviously, I have an income that can cover all living expenses for all of us, including whatever a mortgage would be on that value of house.

In my uneducated-about-real-estate head, it makes sense to get a mortgage before retirement, buy a house, move, then sell this house asap, pay off the mortgage asap, and enjoy life. Mostly to have some financial cushion in case something expensive happens.

Am I wrong? Any recommendations?
You can get a mortgage at any age as long as the person qualifies. Maybe pay half down and finance the difference. If you are in a low tax and property insurance state the mortgage will not be too high. You can always make extra payments at any time to pay off the mortgage quicker when you can't and just pay the regular amount. Try to get a mortgage that you can take over is she passes away. Fix your credit too. If you buy in a cold area one of the biggest costs will be heating the home in the winter.

If she is the only one buying she will have to qualify on her income alone. If she ever needs to go to a nursing home the state may take away the home after she passes to pay for Medicaid or if it's determined she can never leave the nursing home.
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Old 06-29-2018, 09:51 AM
 
Location: San Diego / NWA
980 posts, read 568,707 times
Reputation: 1199
I'd like to know who is "We all" and "All of us" seems like there is more to the story.
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Old 06-29-2018, 10:51 AM
 
12,407 posts, read 9,251,495 times
Reputation: 8869
Quote:
Originally Posted by Murk View Post
Trying to figure out the smartest way to handle an upcoming move with my family.

My mother (72) is retiring in the next few months - she's finally decided it's more bother than enjoyment. We all live together in the house she owns completely.

After she retires, we plan to move to a new house that she pays for 100%. Not talking about an expensive house here -- maybe up to $175k tops. She has enough to pay this with her savings at present. Her current house is not in great shape and will probably get sold to a flipper for maybe... $80-100k. Her credit is great. She's in great health if that matters. My credit stinks and I do not have a huge chunk of savings or investments.

Questions:

Is it better to just buy a house outright with cash and have basically nothing left other than her SS and small pension income? Or should she get a mortgage (before or after retirement?) and put 50% or some other huge amount down?

Obviously, I have an income that can cover all living expenses for all of us, including whatever a mortgage would be on that value of house.

In my uneducated-about-real-estate head, it makes sense to get a mortgage before retirement, buy a house, move, then sell this house asap, pay off the mortgage asap, and enjoy life. Mostly to have some financial cushion in case something expensive happens.

Am I wrong? Any recommendations?
How much SS and pension income will there be? It might make sense to buy the house in cash and then take out a HELOC and draw $20k or $30k, if she can qualify. The fees and interest that way will be much lower than with a reverse mortgage.
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Old 06-29-2018, 01:01 PM
 
98 posts, read 40,858 times
Reputation: 248
She needs her own financial advisor and attorney to advise her on securing her future. You can have all the goodwill in the world but there are just things it takes a professional to recognize and work around. This is not to imply you have or would do anything wrong - if you asked the same question for yourself I would also recommend a financial advisor!
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Old 06-29-2018, 03:09 PM
 
Location: Boise
571 posts, read 531,827 times
Reputation: 1252
Quote:
Originally Posted by Murk View Post

I'm not sure what the point of a reverse mortgage would be? Isn't that for people who need more money to live on? I don't quite understand the benefit of having more debt. Elder law attorneys answer real estate questions and give mortgage information?
.
Yes and no. Most of what people "know" about reverse mortgages is not true in 2018.

The Reverse Mortgage was sold as a "loan of last resort" for many years and that was a huge mistake in my opinion. It can be a valuable financial planning tool for those who take the time to learn about reverse mortgages. Yes, it can benefit the widow on social security client who is house rich but cash poor by eliminating a forward mortgage payment or even give monthly cash payments if there is sufficient equity.

It can really benefit the mass affluent senior crowd by making their retirement portfolios last longer and reduce sequence of returns risks. Long term care needs, legacy needs, or multi generational wealth transfer can be met with the proper application of a reverse mortgage.

I spend a lot of time educating attorneys, realtors, and financial planners about the facts of reverse mortgages. Just because they are an attorney or whatever, they are not necessarily experts in all things.
Some are starting to see the light, but sadly most are still misinformed, I find.

In the OP's situation, instead of putting 50 percent down and getting a forward mortgage, you could probably get a Reverse Mortgage for purchase, put a similar large down payment and not have a monthly mortgage payment. Yearly property taxes and homeowners insurance are still required, but you would have that anyway with a mortgage free property. You could end up with payment free housing and still have some cash in the bank for emergencies.

After a borrower with a Reverse Mortgage passes or leave the house permanently, the borrower or estate has up to 12 months to settle the outstanding loan balance. This allows time for the estate to be settled, the property to readied for sale, or an heir to refinance the home into their names. Any remaining equity after the sale is the borrower's or the estate's.

Look for a local expert in Reverse Mortgages, and ask them how it applies to your Mom's situation. It could be a solution to your dilemma.

Good luck with the move and best wishes.
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Old 06-29-2018, 03:35 PM
 
Location: Myrtle Creek, Oregon
11,122 posts, read 11,535,257 times
Reputation: 17314
Quote:
Originally Posted by Pfhtex View Post
If she puts a big chunk down on a new mortgage, have her look into a Reverse mortgage as it will eliminate a monthly payment and keep her cashflow available for other needs.
Reverse mortgages are a ripoff that preys on the elderly with inadequate savings. If she sells and buys she will end up paying $6,000 for the selling realtor and $10,000 for the buying realtor, plus closing costs. Call it $20,000. She should spend the $20,000 on home repairs and save the other $55,000 for living expenses. If worst comes to worst, she can flip her own home for a big profit, if she just fixes it up.
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Old 06-29-2018, 03:47 PM
 
3,325 posts, read 7,287,541 times
Reputation: 4110
Quote:
Originally Posted by Larry Caldwell View Post
Reverse mortgages are a ripoff that preys prey on the elderly with inadequate savings incorrect. If she sells and buys she will end up paying $6,000 for the selling realtor and $10,000 for the buying realtor, plus closing costs you seem certain of these exact numbers. Call it $20,000. She should spend the $20,000 on home repairs and save the other $55,000 for living expenses this is an opinion, right?. If worst comes to worst not a phrase, she can flip her own home for a big profit how are you certain of this?, if she just fixes it up.
.
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