What will happen with my moms credit card debit and home loan when she signs over POD?
Mom has Alzheimers in the middle stages and it hurts to watch her slowly drift away day by day but I am trying to keep a clear head in thinking about her finances . I have POA for several years now and pay her bills etc...... we built our garage( we own our home) into an apartment for her ( bathroom, bedroom living area) where she has lived for the past almost two years and I am her caregiver. Every one on the outside ( in home caregivers, PT, nurses etc...) say it is a wonderful set up from all they have seen and tell us we did a good job. We paid what we could on our own for it and we used her credit card ( my name is on the account as well) for materials as well. It racked it up there so there is an outstanding cc debt I pay monthly. We since have borrowed on her home loan to make repairs on her house to rent it out ( cant sell due to market and area possibly going commercial) as she had not kept it up for over twenty years. It has rotting wood, leak in roof, floor torn up etc. We went cost affective as possible and doing the labor ourselves with the exception of the roof. Before she was AD she signed the house over to me on Point of Death wanting me to have her money as I have always taken care of her even before her AD and hip replacment etc... so she suggested it as I didn't even know you could do that until she pursued it. . I assume I will continue to pay back the home loan to the bank ( hopefully at same interest rate etc) once she passes as the house will then be in my name at POD, so my question is would be it wiser to borrow more on the home loan now to pay off the high cc debt now since it has a higher interest rate and when she passes I just continue to make payments on home loan? Any suggestions short of hiring a finnancial advisor because I tried once and I was charged $100 for finnancial advice that I already knew.
4 Answers
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It seems that it would be difficult to borrow on the home's equity with the prices down unless you already have a line of credit.
Remember a home loan is secured debt and the CC is not. If something happens and you are unable to repay the CC no ones going to come and take your 'repairs' away. Worse case there is the CC interest rate can go up and late fees charged. Miss a home loan payment and all heck breaks loose.
Have you been successful in renting out the house? Perhaps you can dedicate a percentage of that income to repaying the card. Even a modest additional amount paid monthly can erase this debt much faster.
There is a certified financial planner that is an 'expert on this site. Hopefully he will chime in with some expert advice. Good luck!