Posted on: 15th Jun, 2011 01:51 pm
hi,
i'm posting my question for my sister. she owns a home that is worth approximately $750,000 and her mortgage is $320,000. her current interest rate is 6.25% and her payment is over $2,000 a month. she is 61 years old, was self employed for many years, but hasn't worked in about 5 years. she is down to about $19,000 of savings.
she has been trying to sell her house for about 6 months with no luck, and is reluctant to reduce the asking price (she is asking $799,000 and there is the exact same model asking $950 a block away). if she takes it off the market, is there anyway she can get a refinance with no income and only $19,000 of savings? i've tried to get her interested in a reverse mortgage as an alternative, but don't know much about them myself. does anyone have an opinion as to whether a rm would be a good option for her?
tia
i'm posting my question for my sister. she owns a home that is worth approximately $750,000 and her mortgage is $320,000. her current interest rate is 6.25% and her payment is over $2,000 a month. she is 61 years old, was self employed for many years, but hasn't worked in about 5 years. she is down to about $19,000 of savings.
she has been trying to sell her house for about 6 months with no luck, and is reluctant to reduce the asking price (she is asking $799,000 and there is the exact same model asking $950 a block away). if she takes it off the market, is there anyway she can get a refinance with no income and only $19,000 of savings? i've tried to get her interested in a reverse mortgage as an alternative, but don't know much about them myself. does anyone have an opinion as to whether a rm would be a good option for her?
tia
You need to be atleast 620 for a reverse. Also she would not be eligible for a refi since there is no income. She should reduce the listing price on the home, before the savings are depleted and she is out of options. If the value of the home is only 750k, then no one would purchase the home at 799k. Its called principle of substitution. A ready and able buyer would just purchase the similar home down the street for 750k. Also, unless the purchaser has an all cash offer, no bank will lend on a property if the value is not supported. So if the value is 750k, a lender will only lend for the 750k. Walking away at 60 with 400k in equity is a good thing. Dont fret over 49k, as she could wind up losing more than that.
Thanks Chris. House down the street is listed for 950, not 750, and it seems fairly priced compared to others listed, so she feels her price is more than reasonable. But, if it's not selling, she may have no choice but to lower. So, it sounds like her best option may be to lower the price immediately, or try and hold out until she is 62 for a reverse mortgage.
Yeah, you or your sister should contact a reverse mortgage lender, such as metlife or I believe Wells Fargo offers them. You must be 62, but full benefits are for persons 67 or older. It does seem like she has enough equity that she would qualify at age 62. With the reverse, she would either get a lump sum payment, or the bank will make payments monthly to her similar to a line of credit. When she passes, her heirs will have a right to refinance the property out of the reverse. So if it was me, contact the reverse companies, and go from there. If there is not much benefit, then she might have to lower price. I thought you said the value was about 750k, and there is a listing for 950k. Take a look at some comps of the neighborhood to see what has actually closed. An appraiser or lender will use closed sales, and use a pending or listing as backup to value. Please let me know if you have any other questions, I would be happy to help!
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I'm glad you reduced the minimum age notation, Chris...I'm not sure Methuselah would have qualified if the age were 620.
KM, one thing that you may need to consider in comparing this property with "the exact same model" is what kind of curb appeal each one has, what kind of specific interior amenities each one has (granite here and there, for example)...in other words, things you may not realize exist in that other home because they're not evident from the street.
There's no question that reducing the price might just be the impetus she needs to sell the home. Six months is a long time to be sitting on the market unsold in any marketplace...what do the realtors have to say about the situation? Their expertise is essential, after all.
In the meantime, if staying in the home is a viable alternative, checking out qualifications (when she's 62) for a reverse mortgage is a fine thing to do.
KM, one thing that you may need to consider in comparing this property with "the exact same model" is what kind of curb appeal each one has, what kind of specific interior amenities each one has (granite here and there, for example)...in other words, things you may not realize exist in that other home because they're not evident from the street.
There's no question that reducing the price might just be the impetus she needs to sell the home. Six months is a long time to be sitting on the market unsold in any marketplace...what do the realtors have to say about the situation? Their expertise is essential, after all.
In the meantime, if staying in the home is a viable alternative, checking out qualifications (when she's 62) for a reverse mortgage is a fine thing to do.
