I need some advice about helping my mom. She is 62, works at a job making maybe $10-12/hour, and is not likely to ever get a job making more than that now at this point in her working life. She has no retirement, no savings, no 401K, etc, and she has debt. Not too bad, but not good either. She is getting out of a relationship and wants to buy a small house. Houses here are not cheap. Even out of the city, the cheapest house one could possibly buy is around $75-80,000. She does not qualify for a mortgage because she has too much debt.
I want to help her, but I don't want to just throw money into a bad situation. She is not good at managing finances and budgeting, and has been in this situation many times. I am not great at it either, but am learning and am in a much better place because I'm in a stable marriage, job, etc.
Two options that I thought of are:
1) Loan her money to get her debt ratio down so she qualifies for the house, then she pays me back. Her mortgage would only be about $395 for the house she is currently looking at if I gave her 3% down. She has paid student loans etc for me in the past, and obviously, raised me as a child.
2) Buy a house myself and rent it out to her. Then that way the house is still in my name, and can be an asset for my own kids later down the road. Though she would probably still be living in it by the time they need to go to college, because she is only 62 and they will be in college in 10-12 years.
3) Encourage her to forget home ownership and look for government subsidized housing in the form of an apartment. This is what DH thinks. But to be honest, I don't think government subsidized housing would be any less than $395/month for an apartment. So, it seems to me it makes more sense to buy and start gaining equity in something. She also says she can't do an apartment because she had too much furniture. I'm like
. Get rid of it.
What is your vote? Advice?
I want to help her, but I don't want to just throw money into a bad situation. She is not good at managing finances and budgeting, and has been in this situation many times. I am not great at it either, but am learning and am in a much better place because I'm in a stable marriage, job, etc.
Two options that I thought of are:
1) Loan her money to get her debt ratio down so she qualifies for the house, then she pays me back. Her mortgage would only be about $395 for the house she is currently looking at if I gave her 3% down. She has paid student loans etc for me in the past, and obviously, raised me as a child.
2) Buy a house myself and rent it out to her. Then that way the house is still in my name, and can be an asset for my own kids later down the road. Though she would probably still be living in it by the time they need to go to college, because she is only 62 and they will be in college in 10-12 years.
3) Encourage her to forget home ownership and look for government subsidized housing in the form of an apartment. This is what DH thinks. But to be honest, I don't think government subsidized housing would be any less than $395/month for an apartment. So, it seems to me it makes more sense to buy and start gaining equity in something. She also says she can't do an apartment because she had too much furniture. I'm like
. Get rid of it.What is your vote? Advice?
Also, you want her to get in a situation NOW that is sustainable as she slows down - not a situation where she's going to need yardwork, etc. done for her, or a daily visit because she is socially isolated, or whatever. Above all, tying up money in an asset that you might not be able to sell when you wanted to sell it is a luxury for folks who have a lot of cash on hand, not a sound choice for a family thinking about how to help pay for college in 10 years.
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