Q: I have never asked questions of someone I do not know over the Internet, but I do need to do something. I am just plain scared.
I inherited this old house that my family bought in 1944. Well, I ended up taking a mortgage out on the property. Then I did some work on the house with some of the cash in the cash-out refinance, but not enough to make the house perfect or valuable enough.
I have had nerve damage to my legs since 1999. Because I wasn’t working, I started living off of the cash I took when I mortgaged the property.
I get $650 in disability checks each month and some Social Security. I am 61, never married and owe $145,000 on a home which has gone down on value from $288,000 last year to $275,000 this year and I was told I’d be lucky to get $250,000 out of it. That possibly would leave me 80,000 to 100,000.
I now owe my lender about $154,000. I am in arrears with the mortgage because of going through a loan modification. My lender wants $1,600 per month, but I can only pay $948 and I have had to take in boarders.
I’m not sure what to do next. I’m not interested in a reverse mortgage, and I’m told if I pay off the house, then I’ll have to use the cash for Medicaid reimbursements. Someone from legal aid told me if I sold the house and collected the money, I’d have to spend it all right away.
The lawyer I spoke to told me he thinks I have been used. He said we should go to court and had me sign a paper that charges me $129 per hour. If we win, the money will come out of what I get. If I lose, then the rest of what I owe him will go against the loan.
I am tired, exhausted and the housing market is so bad. I know if I had the $9,000 to give to the lender, the company would probably leave me alone. They have put me through hell. I feel sick every day. What should I do?
A: It sounds as though you are between a rock and a hard place. You own this property, but have a mortgage you cannot afford. You’re living on disability, but you don’t get enough to get you out of trouble.
Here’s what I know from your email:
You no longer can climb stairs. You don’t want a reverse mortgage. You don’t want to stay in the property. If you sell the house, you’ll be ineligible for your disability payment (according to legal aid). You feel you were cajoled into signing a paper that provides for legal representation at $129 per hour.
I don’t know if you’re lucky or unlucky, but you should try to find someone else who can help you figure out what kind of money you would get out of your property and whether that would be enough for you to live on if you lose your disability.
Let me put it this way – you’re only getting $650 per month in disability. I don’t know what other income you’re getting, but if you sell the house and clear $100,000, you may be able to invest the money in a safe investment and draw down some of the money and you’d have more monthly income than you have now. Plus, you won’t have to pay the monthly mortgage, or taxes. You would have to pay rent somewhere, but you might be able to find a place that suits you and your medical condition, and costs a lot less.
Can you live with any of your family members? Maybe that’s the best way to do it for a while. You could contribute to their household, but not have to worry about taking care of a house.
Find a good real estate agent and talk to him or her about listing your property. Also, get a second opinion from someone else on your situation. Talk to a different attorney in your area that in knowledgeable about elder care issues and real estate; it might be useful to get that person’s opinion of your situation.
Taking the first step is the hardest, but if you figure out your plan, you’ll get through it.