To Sell or Refinance Help

[Anonymous]

Okay so you have one side but if the 800.00 is including taxes and insurance then that is a good deal. Maintainance is important but can be deferred for a while. 60 years old and no mortgage deduction maybe hurt them at tax time, may not. Abcd got lucky but in my area mortgages are way less expensive than renting and housing is stable so not seeing crashes or even large price drops....they should give everything else up before their home. My opinion. Unless it is rotting around them.

[VALoanMaster]

I don't think selling is in their best interest.

One thing they can look into it to take a loan out against their retirement account. I want make sure I'm clear here: Take out a loan against the retirement account. This way they aren't pulling money out that will be penalized/taxed on & they keep that money working/earning for them.

One question. You said all of the bills have been paid on time for 3 years, is that for both of them or just her?

If they've paid everything on time for the last 3 years, they should be eligible for an FHA loan. They just need a lender that can work with his scores.

Given their age I would also explore bankruptcy.

Good luck.

[Shawndoe79]

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@Anonymous wrote:

Why do retired people need 1900 square feet?  Maybe it's because they bought too much stuff that led to them being in credit hell?

Downsize.  I went from 5000 square feet in the 90s to 4000 square feet in the late 90s down to 2500, 2000 and now 900 square feet.  And I'm in my 40s and it's AMAZING.  My electric + gas bills are nothing.  Insurance is practically nothing.  Maintenance is close to nothing.  It's amazing.

1900 square feet for retired people doesn't make a lot of sense if they're in credit hell.  Something isn't adding up.  They should downsize for 2 years into something that costs less than their mortgage.

Also, saying "mortgage is $800 but rent is $1400" is a bit shortsighted.  Taxes?  Insurance?  Maintenance/upkeep?  Yardwork?  Cleaning gutters?

My main rental property rents for $1600 a month.  The mortgage buying it today would be $1100 but taxes + insurance + maintenance make it $1600 a month.  Yes there's depreciation and equity building but not by much.  I bought the place when it was half the current price so I profit from the rent, but if I was buying today at the current valuation, I would rent instead.  Fewer headaches.

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They are not retired yet, but nearing it I ASSUME.....they have lived in the house 15+ years and downsizing is on the table given their situation.  Mortgage is 830 and that includes taxes and insurance..HOA fees are 225 every quarter.  That's all i know without prying too much.

[Shawndoe79]

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@Anonymous wrote:
Okay so you have one side but if the 800.00 is including taxes and insurance then that is a good deal. Maintainance is important but can be deferred for a while. 60 years old and no mortgage deduction maybe hurt them at tax time, may not. Abcd got lucky but in my area mortgages are way less expensive than renting and housing is stable so not seeing crashes or even large price drops....they should give everything else up before their home. My opinion. Unless it is rotting around them.

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We are in North Florida and rent is way more than mortgages here.  In her neighborhood, the same townhouse rents for 1400 compared to her 830 mortgage

[Shawndoe79]

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@VALoanMaster wrote:

I don't think selling is in their best interest.

One thing they can look into it to take a loan out against their retirement account. I want make sure I'm clear here: Take out a loan against the retirement account. This way they aren't pulling money out that will be penalized/taxed on & they keep that money working/earning for them.

One question. You said all of the bills have been paid on time for 3 years, is that for both of them or just her?

If they've paid everything on time for the last 3 years, they should be eligible for an FHA loan. They just need a lender that can work with his scores.

Given their age I would also explore bankruptcy.

Good luck.

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I'm assuming just her because she said that EVERYTHING is in her name, probably why his scores are so low, with nothing reporting to his credit report.

[Anonymous]

She might be able to add him as an AU on her positive credit cards. He could also open a credit card and perhaps bring his scores up pretty quickly to at least the key 620 point. Then more refi options open up.

[Shawndoe79]

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@Anonymous wrote:
She might be able to add him as an AU on her positive credit cards. He could also open a credit card and perhaps bring his scores up pretty quickly to at least the key 620 point. Then more refi options open up.

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Will this bring his mortgage scores up?

[Anonymous]

It shouldn't hurt. It may not be immediate, but if he has no recent negatives, yet no positive trade lines reporting, his credit is not going to go up. Adding positive lines is good.
Considering that the major impediment to a refinance or HELOC is his credit score, this may be the route to go.

However, if they have the ability to borrow from a retirement account, that may be the best option still. It avoids the whole credit hurdle, it will probably have the best interest rate available, and it pays you back. Not to mention no closing costs and other fee's.

[Shawndoe79]

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@Anonymous wrote:

It shouldn't hurt. It may not be immediate, but if he has no recent negatives, yet no positive trade lines reporting, his credit is not going to go up. Adding positive lines is good.
Considering that the major impediment to a refinance or HELOC is his credit score, this may be the route to go.

However, if they have the ability to borrow from a retirement account, that may be the best option still. It avoids the whole credit hurdle, it will probably have the best interest rate available, and it pays you back. Not to mention no closing costs and other fee's.

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I will mention the retirement option to her but the thought of touching her retirement may freak her out.  Seems to be pretty adamant about not touching it, plus she doubt the hubby will agree to it.

[VALoanMaster]

Please make sure they understand that it's a loan against their 401k not a liquidation of it. The 401K is just the collateral like a car or house against the loan. So reiterate that it's a loan not an early withdrawal.