Inheritance Income Question

[Willienme1950]

Inheritance Income Question

All I know is that the Living Trust says I'm to receive the sum of $6,000.00 per month for 36 months. I asked the executor of the estate and he told me that the money is coming from my mother's annuities. He would not go into any more detail than that.

[Thrif-t]

I don't think you should be making any plans until your mom passes and things are settled. Then you can look at where you are and what needs to be done or should be done in your best interest.

As someone else said, now is the time to start learning about personal finance so you can be a good stewart with the money your mother is leaving you.

Good Luck!

[Gailete]

I was thinking of keeping my budget to more than $450,000.00 for a home, and I wanted to be able to pay cash for this home

Doing this will almost guarantee to wipe out all your funds within a few years. You will be looking at thousands a year in taxes and insurance, your utilities will be out of sight, and that just sounds like way too much house for one elderly woman in good health or not. How did you come to this figure? Your total inheritance is going to not be cut and dried as it might take time to sell off all those properties and if there is a time frame, you may end up with less than expected. While your original number show that your inheritance can be close to $800K, depending on sale prices, fees, etc. you may have far less. To put it all into a home that is way more expensive than you can afford is tenuous at best. Unless you get top dollar for those rental properties and they don't sound like they are worth top dollar, and you buy a house as expensive as you want, you will most likely be flat broke in 10 years other than your SS check which won't be enough to maintain a house that size.

While our property isn't worth, I don't think, $450K, I know what we are paying for utilities, taxes, insurance on a 4000sq ft home. My SS check doesn't begin to cover it. It is a constant difficulty to handle everything, plus food, medical, etc. Your SS is more than mine, but not that much to deal with a very expensive house. I just don't think it is very realistic.

[Willienme1950]

Inheritance Income Question

I guess part of my thinking was that if "for example" I purchased a "nicer" home and paid cash for it, then at some point in the future I could then possibly do a "reverse mortgage" on it and then have the income coming in from that. Please don't bash me as I know nothing about Reverse Mortgages so I would definitely need to educate myself about that.

Let me go back to my original problem that for some reason doesn't get responded to:

I have called several Mortgage Brokers in several different states and have been told that I cannot purchase a home anywhere (as it is a nationwide rule) with inheritance monthly income because I need to prove to the lenders that I have a solid 36 months of inheritance inctome. Apparently 36 months is the minimum the government will allow for inheritance income to purchase a home. [B]I was given this example: Say the first month I have the inheritance income I go out and look for a home. I find a home, make an offer, offer is accepted. I am then told it will take 60 days for everything to close. OK, so now folks all I can prove to the lenders is that I have only 34 months of inheritance income...................BACK TO WHY I POSTED THIS.........How do I get around that?????

Also, as a side note. I've been told that I would qualify as a first time home buyer. Here was my plan if I could do it. I wanted to move to where I wanted to live...........if I had to rent for a while, I guess then so be it. I don't really want to do that as where I want to go the rental market is few and far between. Ok, now that being said..I thought that when I could buy something, and no it doesn't necessarily mean a $450,000.00 home. As the money from the rentals came in, and any other monies coming in ie: Insurance policies, etc. I would slap that money on the mortgage so I could get the home paid off as soon as possible. That was my idea.

Now, some of you say what I need is a small Condo or Townhome. Folks I hate Condo/Townhome living. I would die a slow death. I am extremely active. My hobbies are Quilting, Gardening, Decorating, Cooking and I also have pets that need a yard to play in. I've been called the Energizer Bunny by a lot of people. I would die in small enclosed places!

One of my dreams is to own a LongArm Quilting Machine so I could do quilting as a home business. These machines need large areas, so I would want the room to put one of these in.

Someone else commented on "why would I want to live where it snows?" I just threw that area out as one of the places I've considered living. I'm open to almost anywhere....key here is almost.....to live. I DO NOT like Florida....lived there for nine years. I DO NOT like Flat......Florida is very flat. I don't like the landscape of Florida. I don't like the many months of heat. The only thing I do like about Florida is the Winter weather, and the real estate market is pretty inexpensive. I love mountains. I especially like the East Coast. I lived in New York for a while about an hour away from New York City in a smaller quaint town and loved it there. I also like the burbs of Philadelphia as I lived there for a while also. I also lived in North Carolina and I LOVE Asheville. Now, I'm not opposed to living in the Washington, Oregon area. I lived in California in Los Altos for 20 years. Love that area, but that area is out of my budget entirely.

I have lots and lots of things to think about. I'm told I'm a planner. I really wanted to figure out where I was going to ultimately land before the time comes to up and leave. I don't like the not knowing where I'm going to be.

[bjl584]

I don't know national lending law, but it sounds like they want proof of income before they're going to write a mortgage note to you. There probably is no way around it. At least, not a way around it that would be beneficial to you doing so. If you're looking for ways around things, then you probably shouldn't be doing it in the first place.

The reality is, you have a SS income and 0 savings. You also have X amount of an inheritance coming your way over the course of the next 3 years, give or take. It is also fact that your mother is still alive, and no one knows when she will pass and when the inheritance will start. So, I would work within those parameters. What can you really realistically afford? What is your timeline? Can you create a budget and make your SS and your inheritance sustain you and your lifestyle for the rest of your life? How much house can you afford and in what area can it be in order for you to have enough left over to keep living your desired lifestyle? Answer those questions and stay within that reality, and you'll get a lot farther than trying to figure out how to skirt mortgage lending laws. You're putting your cart before your horse, and there are too many unknowns. The rentals will be sold, but how long will it take to sell them, and how much will they sell for? That is a huge unknown factor.

[disneysteve]

I've been busy so haven't been on much but let me weigh in.

You are inheriting:
$6,000/month for 36 months=$216,000
Homes = $515,000 minus expenses
Insurance = $50,000

So roughly $700,000 or so will be coming in.

This money can either have you set for life or you can blow it all on a house. How did you arrive at the $450,000 figure for a house?

Reverse mortgages SUCK. You don't ever want to do that unless it is an absolute last resort.

Don't blow more than half of your inheritance on a house. Buy something affordable. The inheritance is a one-shot deal. Once it's gone, it's gone. Then you're back to an income of $1,850/month plus whatever you are able to generate with your investments from the inheritance money that you don't spend on the house.

I'm not sure why you are at all concerned with qualifying for a mortgage. You'll have more than enough to pay cash for the house. Why would you need a mortgage?

[Jluke]

You are inheriting:
$6,000/month for 36 months=$216,000
Homes = $515,000 minus expenses
Insurance = $50,000

So roughly $700,000 or so will be coming in.

I think you are too focused on the $$ from the annuity. Looks like the sale of the rental properties will provide you more cash to use towards your next home.

when planning for an inheritance/windfall, first rule is "do not tell anyone". 2nd rule is to let the money sit for 6 months or so. You are really anxious to spend this money and that could potentially be your downfall.

Read this link and stay focused/grounded for now.

https://www.bogleheads.org/wiki/Managing_a_windfall

[Willienme1950]

Inheritance income Questions

Hello,
Yes, I do appear to be rushed into wanting to buy a home.

The reason why I will need a mortgage is that unless I'm an idiot I won't have ALL of the cash I will need to purchase a home in the first month I receive my first $6,000.00. So, that was my concern with not being able to get a mortgage.

I don't and didn't want to rent a home. That would mean me moving twice. I didn't want to do that. I am aware that I will need to stay here probably for about six months before I can move away. What I wanted to do was to be able to purchase a home actually before I left here where I wanted to live, and then just move into the purchased home. I hate stress, and I'm trying to plan things so there won't be much stress involved.

[disneysteve]

Yes, I do appear to be rushed into wanting to buy a home.

You should never rush into any purchase and certainly not into the largest purchase of your life - a house.

So the concern is that the house where you are living has to be sold as per the terms of the will and you'll be forced to move. I totally appreciate you not wanting to move twice but if your current home sells before you have the cash from everything else, I don't think you'll really have a choice.

One possibility is that whoever buys your current house might be willing to continue renting it to you. That would give you time to collect the other monies and be better positioned to buy a house without being rushed into it.

[snafu]

Anticipating an income increasing from $ 1,850. each month to $ 6,000. [less income tax] for 36 months sounds exciting but rushing to fulfil many of your wishes is fraught with pitfalls that will separate you from your money at a dangerous rate. The annuity extends only 3 years, picture yourself now 70 y/o. Putting on the brakes and developing a carefully thought out, long term plan has potential to take care of your needs for your lifetime.

The Reverse Mortgage plan is a huge benefit to the lender, ghastly for the home owner. It transfers your money and any appreciation in home value, to the lender...one of those un needed ways of moving money from your pocket to someone else, like legal thievery. The availability and cost of hiring help to maintain a garden in upstate NY will surely shock.

I truly don't want to step on your dreams but before you buy a house that is predicted on buying a long arm quilting machine, you would need to do a whole lot of research to make sure you could reach sufficient clientele to go from delightful hobby to viable business. [You've happened to touch on something that is part of my background and experience] You could join a group that rents both space and machine[s].

[Gailete]

I truly don't want to step on your dreams but before you buy a house that is predicted on buying a long arm quilting machine, you would need to do a whole lot of research to make sure you could reach sufficient clientele to go from delightful hobby to viable business. [You've happened to touch on something that is part of my background and experience] You could join a group that rents both space and machine[s].

I would have loved to have something like that except I am not creative enough and currently don't have the room, but I do know that buying a larger double wide mobile home (less than $100K) would have plenty of room for a quilting machine. I've seen a townhouse that I really liked, but couldn't afford at the time, that had more than enough space in the finished lower level for a quilting machine as well as a fanatsic sewing room (gigger than my current one) as well as run around area in the back for pets. At the time I was looking at it, it was $1,10K. There are all sorts of options for homes that would accomdate a quilting frame and pets. You really don't need a $450K house to do so. I think though the OP has what she wants in her head and her main reason for writing here is to figure out how to accomplish that dream whether a good dream or not.

[scfr]

Let me make sure I've got this right:

- You live in a home that you rent from your mother?
- Your mother's will stipulates that, after she passes, all of the rental homes she owns (including the one you live in now) must be sold?
- You are the sole beneficiary? The proceeds from the sale of the homes is all going to go to you? Not shared with anyone else?
- You want to move out of the area where you are currently living, but want to move only once and want to buy a house rather than rent or buy a house/condo?
- You admit that you could benefit from having some time to learn about handling finances?
- Mortgage companies are hesitant to give you a mortgage because you cannot prove inheritance income?

Is this all correct?
If so, then when the time comes, why not just buy the house that you are currently living in from the estate? You'd just be buying it from yourself since the proceeds are going to go to you. Wait a few years, collect the $6K per month, stick it in the bank and earn some interest, patiently bide your time, begin a rigorous journey of financial education, figure out where you'd like to move to and how much you can really and truly afford, then sell the house you are living in now and pay cash for the next home where you start the next phase of your life's journey? Yes, it would mean continuing to live for a couple year's some place that isn't your "dream location" ... but you could be setting yourself up for a very comfortable and rewarding life down the road, and in the meantime you and the pets would not have to endure any upheaval.

[disneysteve]

when the time comes, why not just buy the house that you are currently living in from the estate? You'd just be buying it from yourself since the proceeds are going to go to you.

That's a brilliant idea!

Along the same thought process, I'm guessing that your mother wrote her will before you moved into that house. Might she consider updating the will and rather than requiring that house to be sold upon her death and you to get the proceeds, just leave you the house? That way you wouldn't have to move until you were ready. You could stay there until the rest of the estate was settled and you had all of your inheritance which you could then use to buy a house.

[Gailete]

That's a brilliant idea!

Along the same thought process, I'm guessing that your mother wrote her will before you moved into that house. Might she consider updating the will and rather than requiring that house to be sold upon her death and you to get the proceeds, just leave you the house? That way you wouldn't have to move until you were ready. You could stay there until the rest of the estate was settled and you had all of your inheritance which you could then use to buy a house.

She mentioned earlier that besides the poor health that her mom also had some mental issues, so wonder if she could even change her will at this point.

[Willienme1950]

Inheritance Income Question

I have actually thought about the last two posts. This is a good idea.

With my mother's current mental health her attorney would not let her change her will at this time.

Some have asked me where I came up with the $450,000.00 for a home. I have researched realtor.com in the area's I'm interested in living and the $450,000.00 was appearing to be an average price for a home in those areas. The areas I've been looking at are: Nevada City, CA, within an hours train ride of New York City. I do like NorthEastern New York. I've researched the burbs of Washington, DC, and the burbs of Philadelphia. I also have entertained Asheville, NC, Atlanta, GA, Charleston, SC, Portland, OR, and Seattle, WA. I will not move to FL, AZ, TX, or NM. I do not like the heat that much. I do not care for Rural America AT ALL. I want to live near a Trader Joes, a COSTCO, a Home Goods and other decent shopping areas. I also like to be near places that have a lot of cultural events going on. Places that have a lot of Street Fairs, Flea Markets, lots of different ethnic restaurants. I lived in the San Francisco Bay area for 20 years and yes I was spoiled by all that area had to offer. It's important to me that I live where there is a lot of diversity. So, now that being said, I've come to think that where these kinds of areas are the real estate will be probably higher.

It does appear that when I do leave here I WILL NOT be able to buy a home given this whole 36-month inheritance income mortgage thing with the government and that is too bad as I didn't want to wind up moving twice, but I guess I will have no choice. Another concern I've had is that some of these areas I've considered moving to........their rental market is really bad, in that there isn't much to rent. I certainly don't like that.

It also appears that the executor of my mother's estate is going to be able to sell the home I'm in now right under my feet, so I will be forced to move as soon as it sells. What I didn't want to do was find myself in a position where I was forced to make a snap, last minute decision as to where I am going to move to. I wanted this decision already set in place.


I really appreciate all of your input. Thanks for listening to me.