Desperately Need Help Finding A Creative Solution

[Anonymous]

I am a 64 yr old in TN. I am living soley on social security benefits only. My monthly expenses exceed my income. I have about $6K left in savings from my lump sump retirement payout. I am trying to figure out a way to stay in my home. I have been here over 30 years. I don't think I could afford to rent anywhere cheaper than what I pay now. I tried to refinance through my local bank to consolidate but was denied due to DTI. Here is my situation:

Income: 1541/mo

1st Mtg - 457/mo  (Balance of 19500 with a 5.25% rate)

HELOC - 125/mo (paying interest only with a balance of $38500)

Credit Card Debt - 350/month (3 open accounts/2 closed for a total of ~15K)

Cosigned on private student loans = $15K. All in deferrment except 1 with payment of $90 made by grandchild.

Credit Score - 759

My home is apprasied at 154K on my property assessors notice. However, it was built in 1982 and has fallen into disrepair. It needs some major work which I cannot afford. Even if I could qualify for a refinance, I am assuming these repairs would have to be made before a loan could close.

I'd like to stay in my home if I can. I'm trying to figure out a way out of this. I read the Making Homes Affordable website but it seems like I may not qualify for assistance as my first mortgage is already within 31% of my income. And, it doesn't seem as though anything can be done about my HELOC. There is a list of lenders that participate in the 2MP program but mine is not on that list. I will be completely out of my savings in the next 3-4 months. To top that off, I will turn 65 in November and my income will be reduced by another $100 to pay the Part B premium for Medicare. Apparently $1541 is over the income guidelines to qualify for any government assistance like SLMB or Food Stamps.

My daughter has offered to try and buy my property and keep me in it but she is limited in her availability for down payment. Plus, I do not have the funds to make the necessary repairs in order for the home to qualify for FHA financing.  She checked into getting an FHA 203K streamline rehab loan but was told that this program excludes you from purchasing a home from a relative - even if the relative is going to stay in the home.

I just don't know what to do. I know there are people with expertise and creative minds in this forum. Any suggestions would be greatly appreciated.

[Gunnar419]

Is there any possibility of you getting a part-time job or doing some type of freelance work to increase your income, even by a few hundred dollars a month?

No doubt about it; you are heavily in debt for a person of your age and income. It seems as if simply earning more money would be a more straightforward solution (and in the long term, a more productive solution) than seeking new ways to juggle/consolidate/get creative with debt.

[Sknyrd1977]

This really isn't a "solution", but if your'e nearing 65 and don't forsee applying for anything huge in the future, filing chapter 7 would eliminate that crefit card debt you have-which is a big chunk of your monthly payments.  Not suggesting this by any means, just throwing it out there. Best of luck.

[Anonymous]

Thanks for the responses. I am not able to work. I had a massive heart attack/open heart surgery 5 years ago which has left me disable for all intents and purposes. Part of the reason I have so much credit card debt is I used them to pay for medical expenses not covered by insurance. 20% of 250k is a lot of co-pay. I spoke with a bankruptcy attorney about filing Chapter 7. In doing this, he said the trustee would sell my home because I have about 12k in equity. Selling my home is an option but I don't think I could find anywhere to live any cheaper than I am now. I am an old woman with very little to look forward to - the thoughts of moving 30 years of accumulation not to mention the cost of moving, is overwhelming. It seems like there has to be a solution. I have worked hard all my life and have always paid my bills on time and had a stellar credit rating. I don't care about my credit rating anymore. I just want to live out what is left of my life in my own home. I feel hopeless.

[Sknyrd1977]

Interesting. In Florida and I'm sure alot of states, you can file chapter 7 but keep your home as long as you are living in it (not rental property  or additional land)  My best friend did exactly this back in 2007.

[JM-AM]

You can look into a streamline refinance, most will not require you to have an appraisal. But other things would have to be looked at such as your DTI.

[rebroker212]

Have you looked into a reverse mortgage

[MovingForward_2012]

+1, Reverse Mortgage. Your equity in the home pays for your living expenses and the note isn't due until you permanently leave the home. You have a ton of equity in your home. The downside to this is it is likely the home will never be paid off, which means it won't be passed down in your estate unless your living family purchases it for the balance due by the lender at time of permanent departure.

If you are that close to losing your home, then I would definitely consider this option. Chapter 7 BK won't help unless you can continue making the current payments on your home. Through a reverse mortgage, you get a monthly check each month, which can be used for repairs on the home and other living expenses.

You sound like such a sweet lady. If I had the extra money, I would send it to you.

So please contact someone about a reverse mortgage. You've worked hard to keep your home for over 30 years...it is time to make the house work for you. :-)

[JM-AM]

A Reverse Mortgage is an option, but may not be doable.

Poster stated equity of 12K, isnt very much. The home needs major renovations which means it may not appraise high enough.

While it is an option, I am not sure it will be approvable.

[MovingForward_2012]

I'm not seeing the 12% in equity. I see 5 digit balances with an appraisal value in the 6 digits. That seems like a lot more in equity than 12%. What am I missing?