mortgage advice for my mom (insurance, loan, interest rate, property tax)

[Braunwyn]

Hi all,

I'm hoping someone can offer advice/information. My mom ownes a home - appraised at 270kish. She owes 71k, has 7 years left to pay it off on a 15 year mortgage. Her payments are 1200/mo. She lost her job last year and is having no luck finding another one. She's 68, receives SS. So does her husband, but not much. Between the two of them it's just over 2k/mo. Her dream is to be mortgage free. She wants to down size to a smaller and less expensive home. Obviously, that's a problem in this market. So, we're talking about her refiancing to a 30yr. She would prefer to get a second mortgage so she could avoid paying fees etc. Is this possible given their income? Her interest rate right now is 5.5 and maybe she could get a lower rate. She has good credit and pays everything on time. With banks not wanting to lend, we don't know if this can work. Thanks in advance!

[AndrewSoss]

With 2k/month income, assuming no other debt and property taxes of $100/month (total guess) and homeowners insurance of $50/mo.

$2k
x.45 DTI
=$900/mo
less $150 for PropTax+Ins
= $750/mo for P+I

15 yr fixed at 4.5% w/ 74k loan amount (3k for closing costs)
Payment would be $558.45.

If she continued to make the $1,200 payment, she would be paid off in just 69 payments (5 yrs 9 mo).

Or she could get a 30 year and cut the payment way down to $370 and wait until she can sell in a better market and downsize.

Best of luck to her whatever she does.

[Braunwyn]

Originally Posted by AndrewSoss

With 2k/month income, assuming no other debt and property taxes of $100/month (total guess) and homeowners insurance of $50/mo.

$2k
x.45 DTI
=$900/mo
less $150 for PropTax+Ins
= $750/mo for P+I

15 yr fixed at 4.5% w/ 74k loan amount (3k for closing costs)
Payment would be $558.45.

If she continued to make the $1,200 payment, she would be paid off in just 69 payments (5 yrs 9 mo).

Or she could get a 30 year and cut the payment way down to $370 and wait until she can sell in a better market and downsize.

Best of luck to her whatever she does.

Thanks for the break down. I think she should do the 30 yr and just wait for the market to improve and then sell. There are a lot of senior communities where she lives and she could get a home for a 100-130k and be mortgage free. Is there a way she could avoid closing costs? I think that's why she's talking about a second mortgage. She says she wouldn't need a lawyer but I have no idea. And, given that she does have some income via SS I'm hoping the banks won't give her a hard time about not having a job.

[marmac]

One reason banks may shy away from offering mortgages to older people on SS is the risk of one of them dying.

One of the leading causes of younger people unable to make their mortgage payments ( years back) was divorce simply because one income can't pay what it took 2 incomes to do.

[bls8195]

I have always heard that when you refinance yuo can roll your closing cost into the loan, if this holds true it would help her out, so techincally she would not have to come out of pocket any extra.

[oneasterisk]

Originally Posted by bls8195

I have always heard that when you refinance yuo can roll your closing cost into the loan, if this holds true it would help her out, so techincally she would not have to come out of pocket any extra.

She'll probably have to take a slightly higher interest rate, depends on the bank though.

[TimtheGuy]

Originally Posted by marmac

One reason banks may shy away from offering mortgages to older people on SS is the risk of one of them dying.

One of the leading causes of younger people unable to make their mortgage payments ( years back) was divorce simply because one income can't pay what it took 2 incomes to do.

Mortgage lenders do not 'shy away' from people on SS period. Nor do they discriminate on age. A 90 year old person can take out a new 30yr. mortgage.

[TimtheGuy]

Originally Posted by oneasterisk

She'll probably have to take a slightly higher interest rate, depends on the bank though.

Why would they have to take on a higher rate?? Rolling in her costs will not affect her interest rate in anyway.

[TimtheGuy]

Originally Posted by Braunwyn

Hi all,

I'm hoping someone can offer advice/information. My mom ownes a home - appraised at 270kish. She owes 71k, has 7 years left to pay it off on a 15 year mortgage. Her payments are 1200/mo. She lost her job last year and is having no luck finding another one. She's 68, receives SS. So does her husband, but not much. Between the two of them it's just over 2k/mo. Her dream is to be mortgage free. She wants to down size to a smaller and less expensive home. Obviously, that's a problem in this market. So, we're talking about her refiancing to a 30yr. She would prefer to get a second mortgage so she could avoid paying fees etc. Is this possible given their income? Her interest rate right now is 5.5 and maybe she could get a lower rate. She has good credit and pays everything on time. With banks not wanting to lend, we don't know if this can work. Thanks in advance!

I would say she should do a new 30yr. fixed to free up cash flow. Since the plan is to downsize once the market recovers it would probably make sense to accept a slightly higher interest rate with reduced closing costs.

[HomeHuntress]

Have her contact her current lender to see what kind of refi programs they offer for current customers. I recently did that and my lender gave me rate slighly higher than their best rate in exchange for no closing costs. The difference between my payment with the higher rate with CC rolled in vs the lower rate w/o CC was about $25. Might be worth a shot for her - especially if she's uncertain as to when she'll be selling and has a goal of paying off her mortgage faster.