My mother (70) had her furnace go last year just before winter. She hasn't had debt (loan, CC, mortgage, etc) in over a decade so she had no credit score. Even with me co-signing (800+ CS, good income, low debt) she couldn't get financing for the new HVAC system. So I just paid for it in cash knowing full well I'd never see the money again, and I was okay with that. Well, she is of that old "you pay your debts" mindset and insists on paying me back from her SS, but that's all she has to live on. As of now she's paid $125 back on $11000 and she will not let it go.
She wants to get a HELOC or something to pay me back. She owns her house outright, owns a 2020 Nissan Rogue (very low miles as she never drives) outright, and has no debt…but also no credit score. I've asked her how she was going to pay back a HELOC if she is struggling to pay me normally and she said it's because she knows I won't expect it but the Bank will (fair enough).
My question is, is there something she can do without a credit score that just uses the collateral of her home? I've looked at Reverse Mortgages, which would honestly be perfect because it gives her more money to enjoy being retired. However, everyone seems to think they're scams. To be clear, neither my sister or I expect an inheritance and neither of us wants her house. We would rather she have extra money now rather than new debt and from my understanding a reverse mortgage is just someone slowly paying you for your house after you're gone?
Thanks in advance for any advice you can give!
Need advice for my Mom.
byu/MI_BornNRaised inpersonalfinance
Posted by MI_BornNRaised
6 Comments
A reverse mortgage is not a scam. It’s just a bit more complicated than a regular loan and people tend not to read the fine print.
I would research a couple of different offers, make sure you all understand the fine print and the total cost.
https://consumer.ftc.gov/articles/reverse-mortgages
https://www.investopedia.com/mortgage/reverse-mortgage/
If you don’t want to go down that route, your mom can always increase your inheritance by the cost of the HVAC (that’s more for her to feel better rather than you recouping the money).
If this was my parents, I would just “buy” my parent’s house.
Mom’s furnace debt goes towards offsetting what I’m “buying” the home for.
Parents would list me as beneficiary on the deed (or not, I don’t actually care about the house).
I would pay parents a pre-negotiated amount (perhaps whatever fits into my budget that I know I will never see again).
Three goals are achieved:
* Parents get the satisfaction of not owing me anything and having a “fair” exchange occur.
* I get the satisfaction of providing extra income to my parents who presumably choose to live very humble lives.
* Parents stay in the same house for their remaining lives (which is likely an implied goal).
how big is this house? is she living alone? would it make any sense to sell the house and downsize to a condo in a senior living retirement community type place?
A reverse mortgage comes with costs like origination fees, closing costs, and interest. I question if all those costs are worth paying for a reverse mortgage to settle the $10,875 debt.
At a certain point, no means no. “You do not owe me any money, and I will not be accepting any money from you. If you take on debt to repay me, I will just turn around and repay that debt. No means no.”
I get it. She’s determined to repay. Too bad! She can’t! We can’t always do what we want.
She should not be inventing a complicated and expensive solution to a financial problem that doesn’t actually exist. Save those last ditch resources in case an even bigger problem in the future actually does require a solution.
Her car is worth more than her debt to you. Why not suggest something like co-ownership of the car? She can still drive it. No debt is actually incurred. Or you could buy it for the amount of debt + something (like monthly payments). Then put her on your car insurance as an authorized driver.