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Live on SS and asking should I sell house or refinance, my current rate is 6 percent.

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Are you a new widow? do I hear an element of panic in your question? Do you want to stay in your home? Does your SS cover your expenses? An appraisal is just that an opinion of the value. Why not contact every real estate office in your area and invite them to look at your home and advise on selling price. These visits will be free and you don't need to list your home. Just say you are considering your options and you will be in touch when you have made up your mind. Do you have family who could pay off the mortgage for you, they will eventually inherit anyway. If your income is low enough you may be eligible for things like food stamps and food banks and maybe help with utilities. have you considered a part time job if you are well enough. Can you take in a room mate? Make yourself a tiny apartment and rent the rest of the house. can you rent out the house for enough money to cover expenses and then rent something small for yourself. The cost of refinancing may not be worth it and extreme care is needed negotiating a reverse mortgage, they can be a real minefield. if you have an elder care advice center in your area they may have plenty of free advice for you. do you have or really need a car. Could you pay a neighbor to take you shopping or use a taxi once a month. Some areas have dial a bus services and you may be eligible for a free bus pass. Don't be too proud or be intimidated to apply for anything available. Churches have free meals and senior centers have cheap lunches and good companionship. Sit down and look carefully at the finances and see what is essential and what you can cut. If you can walk to the library for example you can spend many hours there enjoying free heat and reading magazines and daily papers. Good luck it can be done
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A home equity loan is different than a mortgage. The spokeman for AIG is former Senator Fred Thompson. A reverse mortgage is not a good idea because the bank will take ownership when you die.
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Jinx4740: It is called a Loan Modification and they will usually lower the interest rate. I had an 11% interest rate when I divorced and could not afford to keep my home, but homes were not selling at the time and there was a surplus of homes so I called my mortgage company and told them that I needed them to either lower my interest rate or come and pick up the keys. It was a chance I took but it worked, they lowered the interest from 11% to 6% (20 yrs ago) and allowed me to keep our home for several more years.

I would not suggest saying what I did because the market is different today but I would ask for a reduction in the interest rate. It is called Loan Modification.
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Sometimes the lender will agree to lower the interest rate. Does anyone know how that works? It happened on my home equity loan. Maybe talk to the lender, and then call your congressman!!!
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I may be wrong or perhaps things have changed but when I was in Real Estate you could not refinance your house if you owed more on it than it appraised for. There was some rule that you had to have so much equity in the house before they would even consider a refi. About the only thing you can do is maybe a short sale if you need to get out from under the house, you will walk out with nothing but you will not have the payment. Another thing to consider is where are you going to live and if you have to pay rent is it less than your current house payment? In California under the right circumstances you may be paying more in rent that if you bought a house. It is crazy what they are asking for rentals anymore. Someone or a company has come into our area and purchased all the homes for sale and have rented them all out. It is weird to see and makes you wonder if it is a foreign entity and will we one day not be able to afford housing period!
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Refinance. You can get a lower rate than what you have now.
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If you owe more than your house is worth you are not eligible for a reverse mortgage. If your house was worth $100,000 and you owed $50,000 you could get a reverse mortgage for around $90,000. They would incorporate your exsisting $50,000 mortgage into that and you would have $40,000 for your expenses payable in a lump sum or monthly payments. If in 5 or 10 years the value of your house dropped to say $75,000 and you wanted to sell and move out or you passed away (your children would have 1 yr to sell). You or they would only have to sell for $75,000. even though you got $90,000. They bank can't ask for more than the appraised value at that time and they can't make you pay the difference. At this point there would be no benefit to refinancing, they won't give you a new mortgage for more than the house is worth. And I see no benefit to selling unless you can't afford the mortgage. If it sells for less than you owe you may have to pay the difference at settlement unless your bank agrees to take less (a short sale). If you don't have to move, I'd say stay put. House prices are finally starting to go up again. In a couple of years with your payments and inflation your house should be worth more than you owe.
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Talk to the reverse mortgage people. We are in a similar position and were told that we can't get one because we really have no equity in the house. We have chosen to "sit tight" and pray that the market improves. We are a little older than you and our mortgage is really a home improvement loan which we are trying to pay down.
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I don't know much about the reverse mortgage other than you can borrow on the amount of what your house is worth.....so if house is worth $100,000 you can borrow against the house up to that point, but once you reach that........you are going to have to pay it back. (its like taking a loan out on your house but you still have to pay it back, whether it be your parents or someone or they will take the house and you get nothing). I would work out a refinance or something but I would see how much is left on the actual mortgage before doing anything.
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What would you do if you sold? What other assets do you have? Where would you live? Does your home need lots of repairs?

Credit unions are very good to their members. I just joined one and all I had to do was make a $25 contribution to a charity I was happy to support. Their interest rates are great, and the members are the shareholders, so they don't try to squeeze out every cent they can.
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The NYT article on the upcoming changes in RM was on 9/16/13, if you want to read it, just Google...NY Times Tighter Rules Reverse Mortgage. The author was Tara Siegel Bernard. The biggest change is that there now will be a financial assessment on the applicant to make sure they have the income to pay for the required insurance and taxes for the life of the loan. If they don't then they will have to do a reserve of that amount (kinda like an escrow account), which is going to be beyond what many lower income or lower value property owners can do or will take a big part of the RM funds. If all you get is a SS check, you probably are not going to qualify unless you have substantial savings.

Also you now can only access 60% of the RM in the first year. The RM amounts on FHA backed ones is somewhere between 50% - 60% of the value of the property. If your property is modest, it is not going to be very much $.
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Vi - Being 5K underwater is nothing in today's real estate world. How much of a mortgage do you have left? What are the terms for paying it off before the end of the contract....by this I mean will there be a penalty for doing this & how much.

Vi & Pickles - Personally I think you have to be very, very careful with a reverse mortgage as you are essentially taking on a huge debt that has to be paid back eventually. There has been alot of concerns with how RM are done and their being done for many who are totally unsuitable for what is required. Because of this there are federally mandated requirement changes in RM's that go in at the end of this month (although that might be kicked back a month due to the sequestration/shut down), the biggest new qualification is the asset requirement. You now have to be able to show that you have the ability to pay for the taxes & insurance on the RM property for several years (you are required to pay for those
under RM's), if you only have SS as income with no savings or other assets, then you probably will not qualify for a RM. For those that have more income, they may have to set up what is basically an escrow account to cover the taxes, insurance and other required by the property owner items for a few years before the RM can be done. What often happens is that since the property is owned outright, the owners are paying for a low value homeowners insurance policy based on it's value ages ago and do not have other insurance on it, like flood, windstorm or earthquake insurance. Well with the RM all of these are now required - along with mortgage insurance - as there is a new mortgage & the mortgage holder needs all these in place. Could be a huge amount of $$ needed for the insurance escrow (like a 5K windstorm or 3K flood policy per year), which many cannot do.

Vi - a 6% is high, I would think you should be able to get it much lower. Now refi has costs so you should shop around for the best mortgage situation. If there is a credit union in your area which does mortgages, I would see what their terms are.
5K is what % of the appraisal? What is the balance on your mortgage? Those are the #'s I would pay more attention too along with your mortgage contract pay-off terms.

I bet most houses in the US right now are underwater except for some areas. This is due to all the foreclosures or short-sells the past couple of years that have lowered the comparables for real estate sales. But realize that once these all get done then the values of the other properties will adjust back up. But I bet you are concerned that the value will go down more?? If this is the case, I would suggest you take the time to drive around your neighborhood and the surrounding neighborhoods. What kind of vibe do you get?.....are the properties being maintained, are there families moving in, are there busy schools & churches. Then you live in a stable neighborhood and your property value will hold or go up. But if you drive around and there are shuttered or abandoned houses, schools closed, churches that once were thriving Lutheran or Episcopal are now shuttered or turned into a non-denominational ones with more immigrant members, then you probably are in an area in which the property values are decreasing.

So what happens with the house for the long run? Do you just love your home & it's neighborhood and can see yourself living there for the next decade. 73 is young, really truly it's young and you could easily have another couple of decades
in the house. Is your health good and you are still easily able to do things on your own and your neighborhood has things close that you need. Do you right now feel safe? Can you walk to mass transit or a bus stop or to the store? Are the churches active in your area? My mom was able to stay in her house till she was in her 90's (then I made her move into IL) but her neighborhood has good supportive services for the elderly. She has great neighbors which is so important and there are other elderly still living in their homes that she knew. She was never one of those old ladies who felt trapped in their home as her neighborhood is safe.
So how do you feel about your neighborhood?

If you were to move, it would be to what? Buy another house, rent,get a condo, move in with your kids, buy a houseboat......what have you thought of doing? Really 73 is young and just what do you want another couple of decades to be like? What is your bliss? Homeownership for many is a total pain. Personally I hate dealing with a house but just love land and having a big garden that it is my own private park. That is my bliss, what is yours?
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You would probably do great with a reverse mortgage deal like the commercial on TV with that actor who tried to run for President but fell out of the race early on. I can't remember his name, He was also on Law & Order, but, I had a friend whose Mother did that and she was perfectly happy with it.
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