help my mom

pippin65 · #1 (**permalink**) 11-30-2010, 08:05 AM

my mom has a 17k payoff on a house worth 80k and she has 43k in the bank. her part-time job and ss meet her financial obligations each month. my brothers think she should pay off the house whereas I think "cash is king"... she is 73 and in relatively good health. please let me know your thoughts. thanks a bunch!

pippin65 · #2 (**permalink**) 11-30-2010, 08:08 AM

by the way, my mom thinks it's important to let it be known that there's 17 years left on the mortgage...

littleroc02us · #3 (**permalink**) 11-30-2010, 08:11 AM

Does she have other retirement savings?

pippin65 · #4 (**permalink**) 11-30-2010, 08:17 AM

no other retirement savings. my feeling is that the payoff would half her cash and save only 500 bucks a month

bjl584 · #5 (**permalink**) 11-30-2010, 08:25 AM

Can she refinance to a 15 or a 10 year note?

cicy33 · #6 (**permalink**) 11-30-2010, 08:44 AM

Quote:

Originally Posted by pippin65

Today 10:05 AM
pippin65 my mom has a 17k payoff on a house worth 80k and she has 43k in the bank. her part-time job and ss meet her financial obligations each month. my brothers think she should pay off the house whereas I think "cash is king"... she is 73 and in relatively good health. please let me know your thoughts. thanks a bunch!

by the way, my mom thinks it's important to let it be known that there's 17 years left on the mortgage...

I am a little confused. she only owes 17,000 on the house but has 17 years left to pay on it? so that means her payments are really low. I would say leave well enough alone. why is anyone trying to change anything? her bills are paid, she has money in the bank and she is working part-time (I am assuming she chooses to) sure she could pay off the house but at her age I don't see the financial benefit here. generally if you worry about paying off a house it is because you are younger and want to save money for future retirement. sounds like she has that going very well so far. reducing her savings by almost half could be dangerous financially for her. what if she can't work anymore? then at least she has some savings to fall back on with payments that are pretty low for her house. You didn't mention how much the taxes are on her house. also, the interest that she pays on the mortgage is tax deductible. one other area of point you didn't mention is how high her interest rate is on the mortgage. If it is high then I could see a possible point to paying off the house.

disneysteve · #7 (**permalink**) 11-30-2010, 08:59 AM

Quote:

Originally Posted by pippin65

her part-time job and ss meet her financial obligations... she is 73

What happens when she is no longer able to do the part-time job? She is 73 after all. Can she meet her financial obligations, including her mortgage payment, on her SS alone? If not, how does she intend to live when working is no longer feasible?

pippin65 · #8 (**permalink**) 11-30-2010, 09:04 AM

it's a 30 year note. p and i is approx 500. total cost each month, with taxes and ins., is about 830.

aprilmjl · #9 (**permalink**) 11-30-2010, 10:03 AM

Prehaps your mom should look at refinancing at a low intrest rate. If she can cut her payments in two, paying every 2 weeks that will liqudate the mortgage faster. But paying 850 per month on a 17K balance seems like an aweful lot!

minnie1928 · #10 (**permalink**) 11-30-2010, 10:10 AM

I'm curious...what's the rate on the mortgage? Is it variable or fixed?

littleroc02us · #11 (**permalink**) 11-30-2010, 11:35 AM

I usually don't give this type of advice, but since she has no retirement and her only assets are the 50k and the equity in her current house, I would look at refinancing and getting a better rate. I would hold onto the 50k and look at longterm cd's that could draw a decent rate of return. (4-5%)

EconoMutt · #12 (**permalink**) 11-30-2010, 11:42 AM

If she has a low interest rate on her mortgage, I'd hold on to the cash.

disneysteve · #13 (**permalink**) 11-30-2010, 11:55 AM

This woman is 73 years old. She has 17 years left on her mortgage. Her only income is SS and a PT job. If she leaves things as they are, she will pay off the mortgage when she is 90. Most likely, she won't be able to continue to work until age 90. Let's say she can keep working until she turns 80 and that might be overly optimistic. She will still have 10 years left on her mortgage but no longer have any income other than SS. At that point, she'll have to start using her savings to pay the mortgage. Assuming she doesn't need to touch the 43K between now and then, she can spend $500/mo. for principal and interest for about 7.5 years before she runs out of money. That still might leave her short of funds if she lives that long.

I think there is a bigger issue here than whether or not to pay off the mortgage.

cicy33 · #14 (**permalink**) 11-30-2010, 01:50 PM

Quote:

Originally Posted by pippin65

it's a 30 year note. p and i is approx 500. total cost each month, with taxes and ins., is about 830.

I'm sorry and perhaps I am missing something. You said, she owes 17,000 on the house and has 17 years left. at a rate of 500 per month that is a lot more than that. like 5 times that. something is missing here. I think I am calculating right.

500 X 12 months = 6000

6000 x 17 years = 102,000

disneysteve · #15 (**permalink**) 11-30-2010, 02:03 PM

Quote:

Originally Posted by cicy33

I'm sorry and perhaps I am missing something. You said, she owes 17,000 on the house and has 17 years left. at a rate of 500 per month that is a lot more than that. like 5 times that. something is missing here. I think I am calculating right.

500 X 12 months = 6000

6000 x 17 years = 102,000

I agree. Either the numbers are wrong or she has been making extra principal payments along the way. In that case, the monthly statement might still say she has 17 years remaining but in reality it is a lot less than that. More like 3-4 years.

We were prepaying our previous mortgage and the remaining term on the statements never changed to reflect that.

Slug · #16 (**permalink**) 12-01-2010, 06:42 AM

Quote:

Originally Posted by disneysteve

I agree. Either the numbers are wrong or she has been making extra principal payments along the way. In that case, the monthly statement might still say she has 17 years remaining but in reality it is a lot less than that. More like 3-4 years.

We were prepaying our previous mortgage and the remaining term on the statements never changed to reflect that.

Yes, something is wrong with the math here, or this poor woman has a horrible interst rate!

pippin65 · #17 (**permalink**) 12-01-2010, 05:40 PM

Help My Mom! This is Mom. My husband and I bought this house l3 yrs ago at 65k, with a 30 yr mortgage. My husband recently died (he handled all the finances) and now its my turn. I checked with the mortgage company, I still have l7 yrs left to pay on this mortgage. With principal + escrow + tax + insurance, its about $800 monthly. I do work PT (2days weekly) as a nurse. I have $43k in savings. At 73 yrs, I may work (I love it) another year. The questions was, should I pay off the mortgage of $16k. I have 3 sons. One son advised me not to pay it off, and the other two sons thought it would be good. I appreciate all your replies, but maybe this info might help you. (my husband must have sent the mortgage company extra principle? Thank you, Mom[/b]

disneysteve · #18 (**permalink**) 12-01-2010, 07:12 PM

Quote:

Originally Posted by pippin65

I still have l7 yrs left to pay on this mortgage

mortgage of $16k

You can not have 17 years left to pay if the balance is only $16,000. You have at most 3-4 years left to pay. That is the point several of us were trying to make.

cschin4 · #19 (**permalink**) 12-02-2010, 05:20 PM

17K payoff over 17 years? So, did she get a 30 yr mortgage at age 60? What kind of loan is it and what is the interest rate?

Seeker · #20 (**permalink**) 12-05-2010, 10:04 PM

withdrawn

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