Mortgage and HELOC - combine?

[alpinegroove]

I am trying to help my mother make some financial decisions.
She currently owes about 150k on her mortgage and 50k additionally on her variable rate HELOC. The property is valued at about 500k.
She is nearing retirement, and does not have any savings.
She plans to rely on social security and income from her business.

What is the best thing to do with the loans?
Combine the mortgage and HELOC to be included in one monthly payment?
Convert the HELOC to a fixed-rate loan?
Is this a good time to be doing this in terms of rates?
Both the mortgage and the HELOC are from WAMU. I suspect that there are better products out there. Any suggestions?

Thanks

[Brokemofo]

Need more info. No one can give advice on just the info provided. It would help to know..

1. What state is property in?
2. Type of property ie. condo, single family, multi family, coop, etc?
3. What are the rates/margins/terms on her current first and second, and how much longer to pay on each of them?
4. Is she going to stay in the home long term?
5. Does she want to or can she put a down payment and pay closing costs?

These are some of the things needed to know to give advice on this subject.

[alpinegroove]

Thank you for answering quickly.
I am very new to this, so please forgive the uninformed question.
1. CA
2. Condo
3. I do not have the most important information. I will post again later.
4. She would like to stay at the apartment until she dies. She is 65.
5. What would that involve? How high should we expect that to be?
Thanks

[alpinegroove]

Here is additional information:
Mortgage
Loan Type: Conventional Residential without MI
Principle Balance: $150,398
Maturity Date: 7/1/2029
Current Interest Rate 6.326 %
ARM Margin: 2.00 %
ARM Index Rate: 4.33 %
ARM Index Name: MONTHLY AVG OF 1 YR US TREASUR

Home Equity Line of Credit:
Account Type: Home Equity Loan
Principle Balance: $44,361.46
Maturity Date: 1/1/2099
Interest Rate: 7.09 %

[MaksimFA]

Here is hte bigger question... is her income from social security and business income enough to retire on?

If not, then what is your strategy, or her strategy to generate extra income. Right now...she will get a rate of about the same. Her Heloc should be adjusting down wit hteh fed cuts. if not contact the bank find out whats going on.

As far as refi... i doubt she will get a lower rate on a 30 year mtg.... can she swing a 15 year payment? Also keep in mind, the cost of hte refinance itself.

My biggest question as a planner is will she have enough to retire on and pay it off? And if not... may be time to start thinking of using that equity to fund her retirement plan.

[Seeker]

Originally Posted by alpinegroove

I am trying to help my mother make some financial decisions.
She currently owes about 150k on her mortgage and 50k additionally on her variable rate HELOC. The property is valued at about 500k.
She is nearing retirement, and does not have any savings.
She plans to rely on social security and income from her business.

What is the best thing to do with the loans?
Combine the mortgage and HELOC to be included in one monthly payment?
Convert the HELOC to a fixed-rate loan?
Is this a good time to be doing this in terms of rates?
Both the mortgage and the HELOC are from WAMU. I suspect that there are better products out there. Any suggestions?

Thanks

The real question in my mind.... "she plans to rely on SS and income from her business" --- are these sustainable? What's her cash-flow situation?

Assuming nothing else changes, can she meet expenses and survive with these two pieces of income? Without savings, she might not be able to. Especially if the ARM adjusts upward.

Other things to consider:

1) Income from her business is probably variable as well... she probably makes more some months and less others.

2) She bought her condo in 1999; she may lose some equity since California house values are still going down (and may be for a long while).

3) What's her health like? Does she plan to work until she cannot? Do you know the ages of her blood relatives upon death? What happens if she HAS to stop working?

4) Don't ignore the costs of changing these loans.

[jIM_Ohio]

More information needed. I would create the retirement plan FIRST. The budget, the expenses, the income and look at withdraw rate.

Then compare budgets of paying down the debt vs keeping it, and compare the withdraw rates of all budgets. This will probably suggest which option is better.

Withdraw rates between 3.5%-4.5% are sustainable.
Anything higher than 5.5% is playing with fire.