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helping my mom get a home

post #1 of 39
Thread Starter 
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?
post #2 of 39
I'd probably go with option one personally, but realize that the money you give her may never come back to you. If you can live with that and make it a gift rather than a loan, and are in a position to do so, I would go with that one. Also, would it be possible to co-sign on a loan with her without paying down the debt? Just another option to explore.
post #3 of 39
If you can afford to, buy a small condo near a good college. Your mom can help pay the mortgage through her rent and by the time your kids need the condo for college, she'll have moved on to assisted living.
post #4 of 39
Option #1.
post #5 of 39
I think the choice depends on what your own financial situation is as well as the choices that she has made to land herself in her current situation.

Will it be a huge sacrifice for you to help her? Do you think she'll even be able to follow through with payments? Is she in financial trouble because she's been out gambling and drinking, or because of some sort of medical problem or just plain bad luck? If you feel fairly certain that this will not hurt your family financially and that she is responsible in her choices, then I would help her out. If not, I'd let her sell her furniture and move into an apartment. I always feel that my first responsibility is to the family that I created, not the family I came from, so I would consider that when making my decision. I would want to help her if it wasn't too hard on my family, and if I thought I wasn't enabling her in some way.
post #6 of 39
does your mom want a houses or a condo? Can she afford a condo? Some of the gov subsizided senior apartments have a lot of seniors that enjoy socializing, so it can be a fun place to live, just make sure they provide air conditioning if she goes that route.
post #7 of 39
I'm for option #2 - if you can swing it.
post #8 of 39
Option Three. You don't want to get financially entangled - your relationship with your mother sounds like a good one, keep it that way! 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.
post #9 of 39
Considering her age, I would look to see what is available as far as subsidized housing based on age. Depending on where she is located there might be some decent options available. My dad is in bad financial situation (widower, my Ma passed unexpectedly and a slew of medical bills) and I have been trying to see what will be available when he turns 62. Well there are places where you only pay 30% of your income which would be reasonable.

My concern with homeownership is that its expensive and what happens in 5-10 years. I think if she were younger I could see going the house route but I would be thinking about the day she is not working and only living on Soc Sec.
post #10 of 39
Honestly, it's not likely she will be able to do all the maintenance. On such a low income, you'll be bailing her out all the time.

She needs to rent.

Liz
post #11 of 39
Thread Starter 
Hmm, thanks everyone, lots to think about. Yes, I do think about the fact that she is not necessarily in a position to start paying on a 30-year note for a house, I mean, she'd be paying for it until she is 92! I guess I was just thinking that if she starts paying into a mortgage, she is at least gaining equity that she can then sell the house later at a point if she were to need to move to assisted living. As opposed to throwing money at rent, that she never gets ahead doing. I mean, at some point in the next ten years, she will be on social security, and she will still need to pay rent and/or the mortgage.

Option 3 makes me kind of sad though. I feel like she is still so young, and thinks of herself as someone who could still own a home. She has owned several homes in the past, two with a husband and one without, but she has no equity carried over from those. She currently rents. Actually I wish I could buy the house across the street from me for her so she could help me with child care, cleaning, cooking, etc. She has some health issues, fibromyalgia type stuff, but she manages.

To answer the question of how she got here, she is a very good person, no alcoholism or trouble of any kind, she's just not great with money, in fact she's really bad at it. She has been through many relationships since my dad, and has never really had a job that paid very much, most of her jobs have been secretarial/bookkeeping work. Not bad jobs, just has never made a ton of money.

I do also have concerns about, as a PP mentioned, once she gets to the point of needing assistance, if I would have to drive out there daily to do things for her. This house is a good 20-25 minutes from mine. I am already dealing with that with my grandmother now, and have been for almost four years, and it is HARD.
post #12 of 39
Thread Starter 
Quote:
Originally Posted by SunshineJ View Post
I'd probably go with option one personally, but realize that the money you give her may never come back to you. If you can live with that and make it a gift rather than a loan, and are in a position to do so, I would go with that one. Also, would it be possible to co-sign on a loan with her without paying down the debt? Just another option to explore.
I know I could not make it a gift. This money that I would be using to help her needs to pay in part for my children's college education.
post #13 of 39
Quote:
Originally Posted by dachshundqueen View Post
Honestly, it's not likely she will be able to do all the maintenance. On such a low income, you'll be bailing her out all the time.

She needs to rent.

Liz


Option #3, especially since that's what your dh wants. His vote matters, too (for keeping harmony in your marriage!!)
post #14 of 39
Thread Starter 
Well, he's not really asserting that, he's just saying, in his opinion, there's nothing wrong with renting, and she can get an apt for the same amount. But to me, it seems like it's throwing money away to rent, if I have the option of helping her buy.
post #15 of 39
I am not trying to be nasty or harsh, but a 62 year old person has no business getting a new mortgage, with or without help.

She is better off renting. If she pays $500/mo for a subsidized senior apartment, she is going to have to pay a phone bill and that's it. No taxes, no insurance, no heart attacks in case the furnace breaks, etc. Our mortgage payment is $316/mo (on a 15 year note at 5% interest) and it costs a heckuva lot more than that for us to live in our house. We spend $1200+ on property taxes, $430 on homeowner's insurance, and $300/mo year round on utilities. We spend $750/mo to live in our house. (More, really, since we pay more than the minimum mortgage payment, but I digress.)

There are 4 (maybe more) senior high rises in my county, and they all accept residents at age 62. I would help your mom by doing the legwork to get her into a subsidized apartment.
post #16 of 39
Quote:
Originally Posted by momofmine View Post
I know I could not make it a gift. This money that I would be using to help her needs to pay in part for my children's college education.
This would cause me to be hesitant to lend someone money that i need for my children's college education. I would go with either option 2 or 3, but I am not sure which one.
post #17 of 39
I would definitely go with option 2 if you can do it. It will give your Mom her own space and you will get equity and a good investment for the future!
post #18 of 39
Why would you want to jeopardize your children's future education such that your mother can live in a house rather than rent? There is nothing wrong with renting. Really!

Your mother got to this place in life of her own doing, it is not your place to bail her out, especially with your husband squarely saying that she needs to rent. If you had the money it would be a different matter, and if your husband was in agreement. You don't have the money. You really don't. Borrowing against your children's education funds for mom's comfort isn't the best use of that money.

Find her a great place for old people. There are a lot of thriving old people communities that aren't nursing homes. I assure you.

Liz

ETA: I want you to know that I am coming from a similar place as you. My mother is pretty severely disabled but I would never ever jeopardize my family for her interests. There was talk about her living with us at one point, which DH nixed, as she has major problems.
post #19 of 39
I would go with #2 if you could swing it comfortably.
She's not "throwing" away money, you are helping her and benefiting. However, it could get awkward if something came up and she could no longer pay rent to you. Whereas if she was renting from someone else, there is a little more accountability.
post #20 of 39
#3 as a first choice, and #2 only if you can afford to make the mortgage payments yourself (w/o your mom paying rent). Honestly, renting makes by far the most sense to me. It the not to distant future she may need to move again (e.g. if her income goes down, she needs assisted living) and such. The fact that she raised you and helped with college really doesn't figure into this. It was nice that she was able to do those things, but you can't bring financial ruin on yourself or her now because of that past decision on her part to help you.
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