Quote:
Originally Posted by Cathie
I am a 53 year old, about to be divorced woman, working full time with a yearly salary of $40,000, needing to refinance the $110,000 balance left on my 10 year old home (now valued at $550,000). After a 25 year marriage, I will receive no alimony or other income and my current employment situation will end in a year, so I will need to switch jobs or careers, but do not foresee any major change in my income level. I am currently seeking a part-time job to supplement my current salary, but the economy is making it difficult to find something that fits into my schedule.
I have $60,000 in savings and $50,000 in an employer ESOP plan. Because of the current housing market, I plan to stay put for the next few years until the value returns back to the $650,000 range it was at 3 years ago and then use the profit for my retirement. I plan to work another 12 years and do whatever I can to downsize and save so I can sustain my living expenses in the future.
My property taxes are $4,000/year and home insurance is $1,000/year. I have excellent credit and no other debt and have been overly frugal knowing the impact this divorce would place on my lifestyle. When I start paying this mortgage, I will not have much extra each month to place into savings, unless I continue to follow a tight budget that eliminates discretionary items like travel, entertainment, dining out, home improvements, etc.
What’s my best financial move? Go for a 30 yr. conventional mortgage at 5.5% (hopefully) with a monthly payment of $700 or deplete some savings to place towards the reduction of the mortgage balance? I am only beginning to educate myself about financial health and appreciate suggestions from any of you who might be in the same situation.
Thanks much!
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I'm sorry about the divorce, hopefully it was the right move though.
I don't think the problem is you making $40,000/year as a single person. That is a decent income! I know it may be very difficult, but I would sell the home as soon as you could legally, and then buy another home outright. This would also help you move on from the relationship, as you wouldn't be thinking, "oh that's where we _______ " all the time. This would be your own new place, and you wouldn't have to worry about the mortgage. Plus, I'm pretty concerned with the amount of savings you have, are you saying you only have $60,000 towards retirement??? If this is the case, then I think you absolutely need to move from this home and start using your extra money to save towards retirement. When do you plan to retire?
I understand loving this home, but it probably has a lot of pain too. I think you could easily hand a $110,000 mortgage without getting another PT job. But that's just me. I still think you need to try to move on and get a new place.
Good luck, I'll look forward to seeing what you decide to do.
