Mortgage payoff offer--good deal?

[frugal saver]

First, I have to say, I am sadly no longer young. Within 5 years I expect--if I'm still here--to probably be having to move to assisted living or something. So far, I have things somewhat doled out and planned to leave my raggely house to a very good friend, who will probably sell it to a flipper.

Today I was talking to her about a huge mistake my mortgage company had made with my homeowner's insurance and was talking about just paying off the house in full and being done with dealing with them. But--I'd have to pull some of the money from IRAs and pay taxes on it, so was wavering.

She offered me this deal: She would pay off the house in full. In return, if I passed, she would get the house (which she was already going to and would have had to finish paying off the mortgage then.) If I needed to sell it to afford assisted living, she would have to be paid back what she'd paid, and I'd get the rest to help with the rent.

On the plus side, I could use the monthly mortgage payment to fund my eventual move and maybe be in a better position.

Is there a downside? It kind of seems like a reverse mortgage, where they pay it off and wait for you to pass on. Should I seriously consider this?

[LivingAlmostLarge]

How much is left? Why wouldn't you just get a 0% CC if it's small enough and I assume it is to just roll it?

[frugal saver]

How much is left? Why wouldn't you just get a 0% CC if it's small enough and I assume it is to just roll it?

It's slightly less than $100,000. The house is currently worth about $300,000.

[Jluke]

What did the mortgage company mess up in the house insurance- did they forget to pay it?

are you in a state where you are not allowed to waive escrow and manage the insurance and property taxes yourself?

[kork13]

Seems like a highly emotional, short-sighted, and illogical response to a fairly minor problem.

Promising the entirety of your home for paying off ⅓ of it's value makes no sense. I'd strongly discourage it.

[frugal saver]

Seems like a highly emotional, short-sighted, and illogical response to a fairly minor problem.

Promising the entirety of your home for paying off ⅓ of it's value makes no sense. I'd strongly discourage it.

I'm not sure what you mean by that. I can't take the house with me--obviously it's going to have to go to somebody, and she was going to get it. This was just a variation of what was already going to happen.

[frugal saver]

What did the mortgage company mess up in the house insurance- did they forget to pay it?

are you in a state where you are not allowed to waive escrow and manage the insurance and property taxes yourself?

I refinanced my house last year to take out equity for repairs, and lower the interest rate and the payment. Right after it closed, my homeowner's insurance doubled my premium as a response to California wildfire claims. But the mortgage company had a policy of not raising the payment within the first year, so they just let the escrow go negative and now, a few months before it needs to be paid, they're doubling my house payment to make up the shortfall.

Yes I can afford to pay the homeowner's insurance--I'm mailing a check on Monday for the entire shortfall. It just irritated me that the mortgage company would make that kind of decision without telling me and then shrugging it off that there was "nothing they could do about it." What if I couldn't afford the double house payment? Poor business on their part.

[ua_guy]

I'm all about creative solutions and banding together with others in old age to watch out for one another. But I can't help but wonder....

If you're reaching that age where assisted living is on the horizon -- what are you still doing in a house worth $300k? Surely there are cheaper/smaller options that would allow you to downsize and maybe pay off your home without pulling any additional money out of your IRA. What am I missing?

[frugal saver]

I'm all about creative solutions and banding together with others in old age to watch out for one another. But I can't help but wonder....

If you're reaching that age where assisted living is on the horizon -- what are you still doing in a house worth $300k? Surely there are cheaper/smaller options that would allow you to downsize and maybe pay off your home without pulling any additional money out of your IRA. What am I missing?

Four dogs. Two of the dogs are seniors with a lot of health issues, and the places I've talked to will accept the two smallest, youngest dogs. I can't rehome or just put down my two older dogs for the sake of convenience, so here I will stay.

And honestly, no, there is no where cheaper. I'm paying a $400 mortgage--renting a room in someone's house here is generally $1000 a month, a one bedroom apartment can be $1600. Even the more basic assisted living places run at least $3500 a month, up to $5500 a month for a slightly larger more comfortable place. I don't know what other seniors are doing here, but affordable options are just not there.

[LivingAlmostLarge]

Well this is the plan. Do not give to your friend.

1. Balance $100k
2. How much were you thinking of pulling out? I would pull out the money from the IRA a little over every year. What is your income? We can calculate how much extra. I Would also consider a 0% credit card.

What are you living on? What is your budget? How are you living now? Are you touching your IRA? Are you only living on SS? Are you living on a pension. There are super smart and thoughtful people here on the board who can plan and help you for free. Take it.

Be open and tell us all the details and we'll break down what you should do monthly, annually, and even 5 years. It's easier to tell us than to tell others. We can really help.

Age, assets, income, expenses. let's do this!