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In their condition, at this stage of their lives, one wonders if the circumstances that led them to this situation (high car/cc debt, limited home equity, danger of losing home) - are under control. Or, are they facing significant recurring medical expenses (or other) that will drain them of any excess funds and quickly leave them with even higher, unmanageable debt ... and less flexibility to respond.
The answer/s to these questions is critical to finding a lasting solution, rather than simply asking, "How can they get money quick?" - Additionally, while their desire to stay in their own home is understandable, Alzheimers invariably forces one or both into secondary housing. Along these lines, there are excellent Assisted Living facilities that have associated Alzheimer units - which would allow them to stay together. There are also some that will allow people to exchange home equity for lifetime housing.
@jghorton: I figured out a couple of years ago that my father was not handling finances well, and this had been a trend for a few years. I pried my way in to do some intervention. Dental costs and housing repairs make the bulk of their CC debt. Their savings dried up after 9/11 and some dubious alternative health care treatments they paid for.
I did the math and assuming they had zero debt from car or CC, they'd have about $800/m excess income if they lived on a tight budget in their home. They have great health insurance but it only takes one dental procedure or a home repair to put them back into debt and onto this road again.
I have tried to wrap my head around assisted living in their area but it looks more expensive than their income. My assumption was they could live in their house as long as possible until Mom required Medicaid nursing home. Nothing else looks affordable but I have not looked into the lifetime housing exchange.
People have told me to forget about keeping their house in the family, although I know if she lives in it for two years prior to needing Medicaid, it is exempt from collection. It just doesn't make sense at this point to sell it and burn up the equity on temporary assisted living.
They're actually living with me right now out of their state. I rented out their house for nine months trying to help them save money and give us quality time with my Mom who could worsen any time. Naturally half the money they would have saved has gone to dental, hearing aids, etc.
Trying my best here but feeling my best isn't good enough.
I agree with the cash out Refinance. They can refinance at any bank, but if they do it at the same bank they did it at last time it might be easier since they already have a file there. Plus, they might be able to do it with n fee's involved.
I don't have any links for cash-out loans. They are common though. (I work for a title company, primarily with refi loans.)
Any lender will do it. They will just exchange the equity for cash. You can even get the lender to pay off the installment debt so you can skip a step. This is incredibly common.
This is better than a HELOC because with a HELOC you are still making the payments on the same debt. With a refi, you are stretching their 30K out over 30 years. Even with closing costs and a higher interest rate, depending on how many years are left on their mortgage, you are likely looking at less than $100 a month increase, if there is an increase at all. With a HELOC, you are probably looking at $3-5 in daily interest, depending on the rate, plus principal. Going low, $3 per day for 30 days is $90. Add in the principal and you will see that this is going to cost more. The advantage is that it'd get paid off more quickly. But, realistically, are they going to live long enough to do that? If so, is it worth the extra expense?
They have equity. Time is running out. I'd use the equity to let them live what they have left of their life.
@jghorton: I figured out a couple of years ago that my father was not handling finances well, and this had been a trend for a few years. I pried my way in to do some intervention. Dental costs and housing repairs make the bulk of their CC debt. Their savings dried up after 9/11 and some dubious alternative health care treatments they paid for.
I did the math and assuming they had zero debt from car or CC, they'd have about $800/m excess income if they lived on a tight budget in their home. They have great health insurance but it only takes one dental procedure or a home repair to put them back into debt and onto this road again.
I have tried to wrap my head around assisted living in their area but it looks more expensive than their income. My assumption was they could live in their house as long as possible until Mom required Medicaid nursing home. Nothing else looks affordable but I have not looked into the lifetime housing exchange.
People have told me to forget about keeping their house in the family, although I know if she lives in it for two years prior to needing Medicaid, it is exempt from collection. It just doesn't make sense at this point to sell it and burn up the equity on temporary assisted living.
They're actually living with me right now out of their state. I rented out their house for nine months trying to help them save money and give us quality time with my Mom who could worsen any time. Naturally half the money they would have saved has gone to dental, hearing aids, etc.
Trying my best here but feeling my best isn't good enough.
It sounds like a very difficult, but not unusual situation. The thing you and your father will inevitably have to deal with, as your mother's Alzheimer's progresses, is your inability to care for her at home over an extended period. As you probably already know, Medicare doesn't cover expensive Assisted Living or Nursing Home care.
IF you can protect/shield the home equity AND your mother can qualify for Medicaid, AND if you can locate a suitable facility to take her on Medicaid, that may be a solution. However, this will not cover your Father's expenses, even if you can come-up with the funds to handle hers.
This is a good time to contact an Eldercare attorney/worker and check-out your options - making sure their joint assets are protected as much as possible. You may also be able to get her on the waiting list for different extended care facilities.
I would try to consolidate the debt into a low or no interest cc. If they have good credit and can get limits high enough to transfer the balance for 18 months them you can pay down quicker. Don't get a heloc bc you're paying unsecured debt with the house. That's not a good idea.
I would try to consolidate the debt into a low or no interest cc. If they have good credit and can get limits high enough to transfer the balance for 18 months them you can pay down quicker. Don't get a heloc bc you're paying unsecured debt with the house. That's not a good idea.
Scrimping, they would only be able to pay about 1/3 of the debt in a year.
I will say I'm typically very against paying off credit cards with your equity. Why pay for them for 30 years
However, it sounds like the OP's parents will likely have less than 10 quality years. I'm guessing I'm pretty safe in assuming they do not have 30 years left, quality or not. They have approximately $200K in equity. In that situation, for peace of mind, I would erase the $30K at little or no out of pocket cost by doing a cash out refi. They'd still have $160K+ in equity. They need to enjoy life while they still can
(Now if you are 35 and doing a cash-out refi because you have 22 credit cards, you are an idiot. Getting your shopping habits in control. I shake my head when I see closing disclosures that need an addendum because they could fit all of the payoffs on the FIFTEEN lines provided. One, two, three regular/non-store credit cards, even with large balances, and I will not judge. I had to put my spring semester classes on a credit card for four years. I owed a good chunk. Other things happen. I get it. But when you have a wallet full of store credit cards, you have issues. You have more issues if you decide to pay for it for 30 years with your mortgage.)
@jghorton: I figured out a couple of years ago that my father was not handling finances well, and this had been a trend for a few years. I pried my way in to do some intervention. Dental costs and housing repairs make the bulk of their CC debt. Their savings dried up after 9/11 and some dubious alternative health care treatments they paid for.
I did the math and assuming they had zero debt from car or CC, they'd have about $800/m excess income if they lived on a tight budget in their home. They have great health insurance but it only takes one dental procedure or a home repair to put them back into debt and onto this road again.
I have tried to wrap my head around assisted living in their area but it looks more expensive than their income. My assumption was they could live in their house as long as possible until Mom required Medicaid nursing home. Nothing else looks affordable but I have not looked into the lifetime housing exchange.
People have told me to forget about keeping their house in the family, although I know if she lives in it for two years prior to needing Medicaid, it is exempt from collection. It just doesn't make sense at this point to sell it and burn up the equity on temporary assisted living.
They're actually living with me right now out of their state. I rented out their house for nine months trying to help them save money and give us quality time with my Mom who could worsen any time. Naturally half the money they would have saved has gone to dental, hearing aids, etc.
Trying my best here but feeling my best isn't good enough.
What does the bolded above mean? What is exempt from collection, their home?
While dental bills can be expensive, don't overlook asking the billing for the dental practice if they have a payment plan option available. At least, this way for cash flow purposes this might be helpful.
I think it is honorable that you are going all out to take care of your parents like this and look after them.
Is a refinance like a reverse mortgage? If the OP is expecting to inherit the house would she lose a lot of value bc of the fees/interest?
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