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retirement mortgage advice


lcuervos
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My mother recently sold her house and has 115K to work with, and is looking to buy a new home. She has 11K in credit card debt (that I was told should not be paid off until a mortgage is put into place), and 14K in unsecured debt that was her late husband's (which I am still not sure whether or not she should pay off before or after getting a mortgage). Even if all debt is paid, and with a good credit score (720), and 90K left, what kind of mortgage would you recommend if she were to get a house for 160K in a low-tax area? She is 65, and has a 30K/year retirement pension that barely increases over the years. If anyone has an opinion on strategies: 15yr-fixed w/ 20% down to pay off as much as possible and have less in savings, 30-year w/ less down and have more saved up, reverse mortgage (though I have a feeling its a bad idea)? Anything would be greatly appreciated! :)

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We were advised to pay off remaining unsecured debts under her husband's name since claims could be made against her, but to not start paying off credit cards until a new mortgage is in place.

 

Hopefully the debt issue is resolved, now am seeking advice as to what type of mortgage makes the most sense financially for her.

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On the very limited information shared in your post, my recommendation would be to finance 80% of the purchase price over 30 years (20% down to avoid PMI).

 

Her income resources are limited, and there appears to be no reason to accelerate repayment of the mortgage.  Thus, a 30-year mortgage seems appropriate.  A down payment of 20% is a sound move; avoidance of PMI offers a good return on the additional down payment and, if needed, she can potentially tap the money sunk into a down payment through a home equity loan at a later time.

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9 hours ago, hdporter said:

Thus, a 30-year mortgage seems appropriate.  A down payment of 20% is a sound move; avoidance of PMI offers a good return on the additional down payment

Thank you very much for the advice

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On 3/19/2022 at 10:59 PM, lcuervos said:

We were advised to pay off remaining unsecured debts under her husband's name since claims could be made against her, but to not start paying off credit cards until a new mortgage is in place.

 

Hopefully the debt issue is resolved, now am seeking advice as to what type of mortgage makes the most sense financially for her.

I concur with @hdporter

 

a 30 year mortgage with enough down to avoid garbage insurance makes sense.

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  • 5 weeks later...
On 3/21/2022 at 3:53 PM, hegemony said:

I concur with @hdporter

 

a 30 year mortgage with enough down to avoid garbage insurance makes sense.

 

Mortgage insurance is annoying, but it's not nearly as expensive as it used to be, especially with higher credit scores.  Someone with a 740 score buying a primary residence would have their PMI rates at .29% (5% down), .21% (10% down), and .13% (15% down), which on a $400k loan amount would translate to $96.67/mo, $70/mo, and $43.33/mo respectively. 

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1 hour ago, liverichly said:

 

Mortgage insurance is annoying, but it's not nearly as expensive as it used to be, especially with higher credit scores.  Someone with a 740 score buying a primary residence would have their PMI rates at .29% (5% down), .21% (10% down), and .13% (15% down), which on a $400k loan amount would translate to $96.67/mo, $70/mo, and $43.33/mo respectively. 

sure it isn't as expensive as in the past, but >$1,100 going toward insuring investors' interests and not your own is frustrating at best and silly if it can be avoided.

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