Posted on: 14th Aug, 2008 07:42 pm
My mother (age 63) lives in Gary, Indiana and has been in the same house for decades. She now lives alone in this nearly 100 year old house in a deprecated neighborhood. She owes approximately $60K on the house, but houses are selling in that neighborhood for $20-$40K because of foreclosures. We believe that the house is worth more than $20-$40K, but with the poor economy, the upcoming winter (when her heating costs sky rocket to over $500/month and the house is still very cold), and the fact that she is getting older, she is struggling to make ends meet. She would like to sell, but getting a buyer interested in moving to Gary, into an old house that needs work, is not easy. The house needs approximately at least $10K worth of work to get it up to par for Section 8. We've done some work already, but it's not enough according to her realtor. She's considering a short sale, but we're concerned that any "potential" equity in the house will be lost (and thus a large majority of her retirement). We don't know what to tell her....wait out the market.....dump money into this house (from her 401K) and get it ready to sell in the current market....dump money into the house and get it ready for Section 8 (who wants a rental property in Gary???). Any recommendations?
hi guest.
welcome to the forum. if you mother is staying in the house for decades then she should have enough equity. how much does she owe? does she still owe 60 k? i think your mother should talk with the lender and if she cannot sell the property the request the lender to accept the deed in lieu of foreclosure. but it has a negative affect on her credit but the deed in lieu of foreclosure will save her for the deficiency judgment. feel free to ask if you have any further questions.
best of luck,
larry
welcome to the forum. if you mother is staying in the house for decades then she should have enough equity. how much does she owe? does she still owe 60 k? i think your mother should talk with the lender and if she cannot sell the property the request the lender to accept the deed in lieu of foreclosure. but it has a negative affect on her credit but the deed in lieu of foreclosure will save her for the deficiency judgment. feel free to ask if you have any further questions.
best of luck,
larry
Larry is right we first need to know how much your mother owes on her mortgage. In addition, you need to obtain an independent appraisal to determine the “true value†of the home given the current market conditions. It is possible you are in a market that has been decimated by foreclosures and if that is the case it could take 10-20years to get back to the market values you had before the bottom fell out of your market.
I would not advise using 401k money to fix up the house. Based on the information you have provided it is evident you are in a bad and/or falling real estate sub-market. Basically you would be taking money from a performing asset and dumping it into a non-performing asset and that would be a very poor investment decision.
Please provide us with the information Larry requested so that we can better help you.
Remember we are here to help.
:D
I would not advise using 401k money to fix up the house. Based on the information you have provided it is evident you are in a bad and/or falling real estate sub-market. Basically you would be taking money from a performing asset and dumping it into a non-performing asset and that would be a very poor investment decision.
Please provide us with the information Larry requested so that we can better help you.
Remember we are here to help.
:D
