helping my mom get a home - Page 2

[hopefulfaith]

Leta has a good point -- it costs a lot more than the mortgage payment to own a house.

Given her age/health issues, your own financial direction (kids in college, etc.), and your dh's wishes, I am leaning toward helping her into a nice rental that you/she don't have to maintain/insure, etc.

[SunshineJ]

Originally Posted by Leta

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.

I think this is so ridiculous. Some people that age aren't in a good position to get a new mortgage, but I certainly don't think that you can apply it across the board, nor should you. My own mother is 62 and will be buying a different house within the next couple of months. She and my stepdad finally moved in together and need more room. She easily qualified for a loan while still carrying the note on her current house, is working at a good paying job AND getting retirement that will more than cover her expenses once she stops working. When she can no longer take care of the maintenance she'll have enough to hire people to mow the lawn, etc. While it may not be the best idea for someone who is not financially secure and that age, there's no reason someone should expect to spend the next 25 years as an able bodied person in a rental if they choose not to.

[shayinme]

Originally Posted by momofmine

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.

Based off what you just said, I think the rental makes sense. 62 is not old but lets me honest its not real young and anything can happen in the next few years. I think she would be in a better position renting than she would be if she were in a house. I have seen the housing for folks 62 and up in several states and some of it is really nice. Heck, I have sold my Dad on the idea since he learned he could stay in his current neighborhood. The thing is if your Mom was only paying 30% of her income on housing and a phone bill, she could stash away a lot more cash for enjoying life than she could as a home owner.

Maybe I am biased but home ownership when you are older with little in terms of resources is a bad idea. My Grannt who died a few years ago was stubborn and refused to sell her house and the last 10 years of her life on that house was a mess in part because of money. The house was paid off but with a fixed income she just could not handles taxes, sewer, water, upkeep,etc. Especially once she hit her 70's and stopped working and only had Soc Sec benefits she could not do it. So thinking of how things were for ny Granny and from what you are saying, your Mom really has nothing as far as resources, I think you have to think long and hard about it.

[Caneel]

I have some experience in this area in our families. DH and I already talked about it and know what we will do when the time comes.

Originally Posted by Leta

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.

Leta's point about the other costs of ownership after the mortgage payments is very valid.

Originally Posted by annekevdbroek

#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.

Agree. If you do #2, go into the decision based never seeing rental payments. She could lose her job, get a lower paying one, have the best of intentions to pay you but the reality is a lifetime of poor financial choices will likely continue. Can you, would you and your DH let her live there free if worst comes to worst?

OP - you mention a string of many relationships. If you do option #2, I would absolutely not allow and new "relationships" to live in the house without paying their fair share of rent.

#3 would be my first choice.

"Throwing away money on rent" is not throwing money away. It costs money to live, whether you own or rent.

People say renting is throwing money because they are hoping their homes will significantly appreciate over the years.

Sadly, that is proving not to be true in current times. Also, long mortgage terms mean very little money is going towards principle and people are not gaining equity.

Saving the difference between renting and owning costs can be as financially prudent as owning. (This assumes a reasonable cost of living area where renting versus owning is in line.)

Leta's example of how much more it costs to own over renting is worth evaluating in the OPs area.

Futher, so many people are in the position now with mortgages they can't afford. The reality is, all they are doing is renting their house from the bank because they borrowed too much money, took out the loan for too long of a term, didn't put any money down, paid too much and never had any equity or got hit by dropping home prices, etc. They have no equity, no ownership position and the added burden of maintenance, real estate taxes and insurance costs.

From my post, I bet you can figure out which option DH have already decided upon for any relative that will need help....

[SuzyLee]

Yah, her buying a house sounds like a really bad idea.

If she can't qualify for a mortgage on her own, and also have an emergency fund saved up, then she isn't ready to be a homeowner.

What would she do if the furnace broke or the A/C went out?

[jeminijad]

Originally Posted by SuzyLee

Yah, her buying a house sounds like a really bad idea.

If she can't qualify for a mortgage on her own, and also have an emergency fund saved up, then she isn't ready to be a homeowner.

What would she do if the furnace broke or the A/C went out?

Yep.

Family obligation includes helping someone to keep a roof over their head. It does not extend to enabling someone's poor financial choices when they want a specific, expensive type of roof over their head.

[PJJ]

hmmm.

If you think she is doing better and making better choices, I think #2.

Personally, I will help pay for my DD's college, but also would help my mother with HER comfort. I think paying forward is good, but backwards is important too.

Seems like there is a lot of dissent with my opinion, though.

Good luck deciding mama!

[momofmine]

Okay, she does have a fair amount of debt right now, which is why she doesn't qualify on her own for a home. She has about 11,000 on a credit card. She has two car loans. One is for the main car she drives, which she still owes $7,900 on (I actually think this seems like a lot of money for that car, and wonder if she could even sell it for that much). The other car is a minivan that she and her partner used to use to transport things, but is not really in use now. She still owes $3,000 on that, and thinks she can probably only sell it for about $2,000.

If she can get rid of both car payments, she would qualify for a mortgage. Because the car payments are higher, and the credit card's minimum payment is, of course, lower. Although yes of course she knows that she is paying an exorbitant amount of interest by only paying the minimum.

She also has expenses like a cell phone, and she is paying on a life insurance policy for me that she has had since I was a kid! I said, what are you still paying on that for? She said she kept it because I don't have any life insurance yet, which I do have a small policy through my husband's work now, and I know I should get some term on my own. I think she has been paying something like 20 or 30 bucks a month for me on that for years and years. That seems crazy.

I think if I am going to help her at all, she needs to seriously revamp her budget. Here are some ideas I can think of:

--sell the more expensive car for whatever you can get for it and drive the minivan?
--cancel any non-essentials like cell phone or cable? (I honestly don't think she will go for this)
--quit smoking???

I don't know, what else?

[momofmine]

I actually have some money that I could help her with, but I was considering buying a car with it. (And hopefully investing some for college, but it's not what I was saving solely for their college funds, just to clarify). My car is 16 years old and pretty close to being done, but it's still running. So part of me thinks, well, why not invest it in way that can both help her, and she also helps us, because she helps put the equity into it that is growing that can eventually be an asset in our own retirement, or even for my kids in college. If I bought it as an investment property, I would have to put at least 20% down, so I don't feel like I'd be in a situation where I would owe more than the house is worth off the bat, as someone above mentioned is the case with many current mortgages.

[RiverSky]

Why don't you give her a gift of a couple-few meetings with a financial advisor, someone who can help her figure out the best way for her to manage her assets, debts and income, as well as budgeting?

[Ola_]

Honestly, I wouldn't recommend that someone with two car loans, credit card debt, and no down payment buy a house. Certainly not when that person is nearing retirement age and has no retirement savings. I know that she wants to have a house, but I think it would be a lot more stressful for her to be stressing about the mortgage debt/payments/taxes/maintenance when she can't really afford it.

[zebra15]

Honestly I would love a house for DS (9) and myself but I CANT AFFORD IT. I dont have CC debt, I dont have a car loan, etc but I still cant afford a mtg, or all the upkeep that goes with home ownership.

What I do have is savings for DS college.

[SugarGlider]

I don't think anyone mentioned this...

If she was in an apartment that was based on her income and something comes up in the future where her income is cut (injury, illness, whatever) she should be able to have her rent lowered to be based on her new smaller income. So in the event of an emergency situation there would be a lot less stress when her home isn't at risk... and you'd still have your savings to help her a month or two if needed till she got the rent lowered.

[magster]

I'd absolutely go for option #3.

It sounds like your mom has little grasp of administrating her money wisely and barely scrapes by. It's expensive to own a house.

Ideally, she should get rid of her debt, rent an apartment and be looking into paying towards retirement funds. However, the fact that you reckon she won't go for cutting unnecessary expenses, won't hear of getting rid of her big furniture to be able to fit into an apartment, etc. makes me think that she won't go for the rented apartment.

Maybe she could find herself a new rich husband?

[lolar2]

If I were in your mother's position, I would rent.

[dancebaraka]

I'd lean towards 3... especially in our current economy.

you can "gift" her some money, too.. this seems the best choice for your family & you can invest/save or cut your own bills to ensure that you are never in a situation like your mom.

good luck

[butterfly1976]

I go with #3 all the way. I've done the ol' helping the folks out thing. I started working at 14 and was helping them pay their bills at 16 and for a VERY long time after that. It got me nowhere doing that. I remember being in my 20s and still helping them financially, but it didn't do anything for me. You can love your family, but sometimes people burden you too much. Or they get used to it as my folks did.

I think she should rent. She's older now. And it's not your job to save her. She's a grown woman. My father died in July 08, and the last year and a half, I have been there so much to help my mom out. It is draining me beyond belief. I have myself and 2 kids that are suppose to be my priority.....my mom is grown. I am starting to tell my mom no now, and it feels real good. If I get overwhelmed and stressed about bailing my mom out, it's not good for the kids or me. Sometimes we have to let people make their own mistakes and decisions. That's how they learn. No one ever saved me.

I hope I didn't offend you. Maybe your story hit a nerve or something. I do think #3 is the best choice for everyone. Please listen to what your spouse has to say. His opinion matters too. Please do what's best for the family you helped to create. Best of luck!

[RunAround]

I hope this post isn't too harsh or offensive, either. Frankly, before making the commitment to a mortgage, I think you and your mom might benefit from increasing your financial education. I'm not necessarily a Dave Ramsey groupie, but his advice does seem to be very straightforward for people dealing with general money mismanagement/debt. I think before you start diverting resources from your family, it might be worth the investment in education. Maybe you could start by requesting "My Total Money Makeover" from the library or even jumping into Ramsey's course, Financial Peace University. I have no idea what that experience is like, but most people find it radically improves their relationship with money.

Personally, I wouldn't provide this kind of assistance to either my parents or my children. I'm a "teach to learn how to fish" kind of gal, frankly. There is not a thing wrong with renting and, for people with debt, it's the best option.

[Poddi]

I agree with the advice of a money management course. I think in the long term it'd be more useful than a gift of down payment. I really don't think you should have much financial involvement with anybody if you value the relationship. I heard so many stories of how people lend money to friends or relatives and then the relationship went bad.

*And are you really sure she can get a mortgage with her current income and debt load? Banks are pretty tight with their lending rules now.

My dad bought a house in his 60s. DH and I were very against it but he wouldn't listen. He was making 200k a year and the house wasn't much burden at all. Then he got cancer two years later. Luckily he survived chemo and recovered, but he really couldn't work his old (stressful) job any more, so he retired. Now he's desperately trying to sell this house. It's draining his retirement savings and there's really no need for him to live in a 6 bedroom house. What I'm saying is when people get old you really can't count on their health and income level as much as say, someone who's 30. And selling a house is such pain. I'd nix the idea of owning a house at her age and focus on something she can comfortably manage with her income and energy level.