I’m just learning about all of the different loans. I need advise. My mom is 67; her only income is social security. The payoff on her house is 60k, and the appraisal should be between 105k to 110k. She lives in a small town. She wants to stay in her house, but is barely surviving.
Please give me your advice, as to what would be in her best interest. I just heard about these types of loans yesterday, and do not yet know how they work.
I buy the house for her with an “interest only” loan.
You suggest a loan :-*
I want to give her as much cash as possible, which of these loans (or other loans) would be most profitable?
To be honest, I have never done a reverse mortgage, but my understanding of it is that instead of you making payments to the mortgage company, you get a monthly payment from them for a certain term, and then after the term is up, the bank takes ownership of the property.
If you want maximum cash now, you would have to buy the property from her, and could obtain 100% financing.
If she were to refinance, it may be difficult with a fixed income, and you will be limited to a maximum LTV based on the appraised value, perhaps 90%.
Depending on your credit situation, the safest route would be for you to to refinance her property with you added to the mortgage. If your credit score is pretty decent and you have income, then you would be the primary wage earner and make it easier for her income to help you both qualify. If you have a large debt load. Then that can chage everything
Refinancing with you on the mortgage will bypass the issue of you having to purchase the property.
How do I not purchase theproperty, if I’m applying for the mortgage?
You have an attorney prepare a new deed with you on it too, file it at the county courhouse,and then you’re part owner.
Is there a reason you don’t just pay the existing mortgage for her?
My brother and I send her money every month.
Unless doing a refi will save you money, I wouldn’t waste your time or money with it. Just continue to help your mother. You should make sure that all of the legal items necessary have been taken care of though.
A will is a GUARANTEE that the property will go through probate. So talk to an attorney or other trusted advisor that can tell you the best way to ensure the property is passed (hopefully well into the future) on as your mother would like it to be. In my opinion, you should not add yourself or others to the title. While this can allow you to refinance and/or avoid probate, it can have major legal and tax implications. Again, talk to a compentant advisor for how it may specifically apply to you. I would also suggest that you read up on these issues so you are at least aware of what options you have.
Some items you may want to read up on is living trusts, wills, probate, stepped-up basis. Do a google search on those terms and you should get a pretty good idea of what the basics are. There are also plenty of materials that cover some or all of these topics on this site.