Mom's bad with money. Should I refinance her house and move into it?

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Mom's bad with money. Should I refinance her house and move into it?

neogeo0823: Jul 4, 2007; NO THAT'S NOT ME!!

Hello, BFC. My wife and I have been attempting to become Better With Money since we went through a bankruptcy ~3.5 years ago. Things are getting better, and I've finally come around to cleaning up the last few bits of poo poo on my credit report and taking care of an issue I've been putting off as long as possible because I knew it was gonna be a pain in the rear end to deal with.

Here's the background: Around 14-15 years ago, my mom had me, a stupid 19 year old at the time, cosign on a home equity loan that was going to go towards some remodeling and repairs to her house. I don't recall the full amount of the loan, and can't find out now, since the loan was bought out by Key Bank in 2011. I can give info from that point onward, though. The total amount of the loan at that time was $8,272. Since then, the loan total has decreased to $7,226 as of today. So, in 8 years, 3 months, my mom's only been able to pay down ~$1050, or ~13% of the total of the loan, by making $65 payments to it monthly. I understand that the math doesn't add up there. I don't know the details, really, beyond "it's on ymm report, and she makes this payment every month". In addition to that, there's the mortgage itself. I'm not on that, and my mom couldn't provide the exact balance when I talked to her earlier, but she said it was ~$22,000, on a mortgage that I know for a fact is at least 33-35 years old. I don't know the interest rate on it, but I know she said she pays $785 per month on it. Finally, there's a lien on that mortgage, totaling ~$9,000(also not on that), that she says she doesn't have to pay on, but will be owed on if the house is sold or refinanced.

So how does this effect me? I'm the cosigner on that ~$7,200 HEL, and I'm at the point where my wife and I are trying to stop renting an apartment and actually buy a place to live. Even though I'm not paying anything towards it, that loan shows up on my credit report as debt in my name, and considering it and an $11,000 consolidation loan are my two biggest debts, it's counting pretty heavily against me. I don't like this, and I've asked my mom to either refinance the loan, or otherwise find a way to take my name off of the loan. Doing so has created an issue, where my mom's utterly stuck in her head, and convinced that no one would ever refinance anything having to do with the house because there's no way they'll give her favorable terms. She's refused to even call and ask any of the lenders I've suggested on the grounds that she believes they're gonna "laugh (her) right out of the office when they see what terms (she's) trying to get". So, regardless of whether or not she actually could refinance anything, she's already written it off in her head as impossible.

Earlier today, mom told me that she's been wanting to sell the house and move elsewhere lately. My sister(30 years old and still living with her. Lost cause, long story, good god) has also been expressing that she want's to (finally) move out of there and begin adulting. So neither of the people who live in that house want to be there any more. This is the point where my wife and I hit upon a(probably) stupid idea: Adding things up, the mortgage is ~$22k, the HEL is ~$7k, and the lien is ~$9k, for a total of ~$38k still owed toward the house. The house itself isn't in bad shape. It's got a relatively new roof, new furnace, sewer line was replaced maybe 6 years ago, kitchen and bathrooms were remodeled when the HEL was taken out, and it's in a decent neighborhood. Overall, it's not a bad place to live, with not a ton of repairs or changes needed. So, what if I went and refinanced the remaining balance on my mom's house under my name, and my mom and sister moved out and moved on with their lives? It's something I hadn't considered until maybe 3 hours ago, and since you guys know way more about this poo poo than I could ever google, I'm hoping some of you can take me on this hypothetical journey into what this situation would entail and how it could end for my wife and I.

So, what would that process look like? Cursory googling tells me it's possible, but doesn't seem to cover much of the process of it. My wife had questions about the lien, like what happens to it if we refinance? Do we owe that money, or does mom? Are there taxes on it and if so, would those be our responsibility, or my mom's? Would this even be a refinance thing, or a buy/sell kinda thing? Basically, we have no clue how to approach the solution, and want to know what options we have and what we need to consider.

# ? Aug 11, 2019 22:50

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# ? May 5, 2024 15:14

Dik Hz: Feb 22, 2004; Fun with Science

neogeo0823 posted:

Hello, BFC. My wife and I have been attempting to become Better With Money since we went through a bankruptcy ~3.5 years ago. Things are getting better, and I've finally come around to cleaning up the last few bits of poo poo on my credit report and taking care of an issue I've been putting off as long as possible because I knew it was gonna be a pain in the rear end to deal with.

Here's the background: Around 14-15 years ago, my mom had me, a stupid 19 year old at the time, cosign on a home equity loan that was going to go towards some remodeling and repairs to her house. I don't recall the full amount of the loan, and can't find out now, since the loan was bought out by Key Bank in 2011. I can give info from that point onward, though. The total amount of the loan at that time was $8,272. Since then, the loan total has decreased to $7,226 as of today. So, in 8 years, 3 months, my mom's only been able to pay down ~$1050, or ~13% of the total of the loan, by making $65 payments to it monthly. I understand that the math doesn't add up there. I don't know the details, really, beyond "it's on ymm report, and she makes this payment every month". In addition to that, there's the mortgage itself. I'm not on that, and my mom couldn't provide the exact balance when I talked to her earlier, but she said it was ~$22,000, on a mortgage that I know for a fact is at least 33-35 years old. I don't know the interest rate on it, but I know she said she pays $785 per month on it. Finally, there's a lien on that mortgage, totaling ~$9,000(also not on that), that she says she doesn't have to pay on, but will be owed on if the house is sold or refinanced.

So how does this effect me? I'm the cosigner on that ~$7,200 HEL, and I'm at the point where my wife and I are trying to stop renting an apartment and actually buy a place to live. Even though I'm not paying anything towards it, that loan shows up on my credit report as debt in my name, and considering it and an $11,000 consolidation loan are my two biggest debts, it's counting pretty heavily against me. I don't like this, and I've asked my mom to either refinance the loan, or otherwise find a way to take my name off of the loan. Doing so has created an issue, where my mom's utterly stuck in her head, and convinced that no one would ever refinance anything having to do with the house because there's no way they'll give her favorable terms. She's refused to even call and ask any of the lenders I've suggested on the grounds that she believes they're gonna "laugh (her) right out of the office when they see what terms (she's) trying to get". So, regardless of whether or not she actually could refinance anything, she's already written it off in her head as impossible.

Earlier today, mom told me that she's been wanting to sell the house and move elsewhere lately. My sister(30 years old and still living with her. Lost cause, long story, good god) has also been expressing that she want's to (finally) move out of there and begin adulting. So neither of the people who live in that house want to be there any more. This is the point where my wife and I hit upon a(probably) stupid idea: Adding things up, the mortgage is ~$22k, the HEL is ~$7k, and the lien is ~$9k, for a total of ~$38k still owed toward the house. The house itself isn't in bad shape. It's got a relatively new roof, new furnace, sewer line was replaced maybe 6 years ago, kitchen and bathrooms were remodeled when the HEL was taken out, and it's in a decent neighborhood. Overall, it's not a bad place to live, with not a ton of repairs or changes needed. So, what if I went and refinanced the remaining balance on my mom's house under my name, and my mom and sister moved out and moved on with their lives? It's something I hadn't considered until maybe 3 hours ago, and since you guys know way more about this poo poo than I could ever google, I'm hoping some of you can take me on this hypothetical journey into what this situation would entail and how it could end for my wife and I.

So, what would that process look like? Cursory googling tells me it's possible, but doesn't seem to cover much of the process of it. My wife had questions about the lien, like what happens to it if we refinance? Do we owe that money, or does mom? Are there taxes on it and if so, would those be our responsibility, or my mom's? Would this even be a refinance thing, or a buy/sell kinda thing? Basically, we have no clue how to approach the solution, and want to know what options we have and what we need to consider.

Is your name on the deed? How confident are you that your sister would actually move out? She'd be a tenant and entitled to certain protections that would make forcing her out take several months.

Honestly, what does refinancing get you? You'd essentially be co-signing on the mortgage and lien without getting anything in return. It's not like you could force a sale without the deed. Even if you got the deed, are you prepared to evict your own mother?

Also, if a $7200 debt with a $65/month payment is affecting your ability to buy a house, you really shouldn't be buying a house.

# ? Aug 11, 2019 23:29

neogeo0823: Jul 4, 2007; NO THAT'S NOT ME!!

My name's not on anything other than the home equity loan. My sister always claimed that she was staying at home to help mom pay bills. If mom packs up and moves elsewhere, then I don't see her having any reason to stick around. Mom was the one who told me that my sister wants to move out, and I believe that's genuinely the case. And with mom telling me she wants to sell the house in the next year anyway, neither of them really seem to want to have a stake in the place any more. I don't really have any reason to believe that they would try to stay if I suggested this idea to them.

Can you elaborate on how refinancing the house related expenses would be akin to cosigning on them? As far as I can tell, I'd basically take over the loans from my mom, and she'd no longer be responsible for them. The way I'm reading it, and part of the reason as to why it doesn't seem like a terrible idea, is that it seems as though I'd be getting the house for $38,000 or so, which is far less than the worth of the place. Is that not the case?

As for having issues getting financing, I believe most of the issues arise around the fact that I have a bankruptcy on my report, and then this home equity loan that's 8 years old and only $1000 paid off. I could absolutely see a potential lender looking at that and wondering why I've taken that long to pay that little off and deciding not to offer a loan. I don't see the consolidation loan as being an issue, because it's newer, in good standing, and being paid off properly. My assumption is that my troubles with getting financing come down the fact that I need otherwise immaculate credit if I have a bankruptcy on my report, which this $7200 debt is very much not immaculate.

# ? Aug 12, 2019 00:23

howdoesishotweb: Nov 21, 2002

Is your mom okay with letting the equity she paid into the house transfer to you? There may only be 38k outstanding debt total, but what is the house worth? The only thing that makes sense is her selling you the house.

# ? Aug 12, 2019 03:49

TipsyMcStagger: Apr 13, 2013; This isn't where
I parked my car...

the house isn't only worth 38k... and she's definitely not going to sell you the house for 38k unless she's stupid and if she's that stupid shame on you for doing that to your mother.

Sounds like you have a really messed up family life overall. Your mother is seriously using 7200$ to hinder your future which is a pitiful amount in the 33 years you've been alive.

The only real solutions here are the following:

1. Convince your mother to stop holding you back. And if that fails...
2.Pay the loan directly yourself and cut ties with your mother in all financial ways and use it every thanksgiving as a good talking point.

TipsyMcStagger fucked around with this message at 04:22 on Aug 12, 2019

# ? Aug 12, 2019 04:18

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# ? May 5, 2024 15:14

Dik Hz: Feb 22, 2004; Fun with Science

neogeo0823 posted:

My name's not on anything other than the home equity loan. My sister always claimed that she was staying at home to help mom pay bills. If mom packs up and moves elsewhere, then I don't see her having any reason to stick around. Mom was the one who told me that my sister wants to move out, and I believe that's genuinely the case. And with mom telling me she wants to sell the house in the next year anyway, neither of them really seem to want to have a stake in the place any more. I don't really have any reason to believe that they would try to stay if I suggested this idea to them.

Can you elaborate on how refinancing the house related expenses would be akin to cosigning on them? As far as I can tell, I'd basically take over the loans from my mom, and she'd no longer be responsible for them. The way I'm reading it, and part of the reason as to why it doesn't seem like a terrible idea, is that it seems as though I'd be getting the house for $38,000 or so, which is far less than the worth of the place. Is that not the case?

As for having issues getting financing, I believe most of the issues arise around the fact that I have a bankruptcy on my report, and then this home equity loan that's 8 years old and only $1000 paid off. I could absolutely see a potential lender looking at that and wondering why I've taken that long to pay that little off and deciding not to offer a loan. I don't see the consolidation loan as being an issue, because it's newer, in good standing, and being paid off properly. My assumption is that my troubles with getting financing come down the fact that I need otherwise immaculate credit if I have a bankruptcy on my report, which this $7200 debt is very much not immaculate.

If the $7200 HELOC has never had a delinquency, it is helping your credit and not hurting it. Unless your income is so low that the $30 payment on it is enough to impact your debt-to-income ratio. Also, if it has had delinquencies, they'll impact your credit even if the loan is paid off.

Your mother should sell the house. That would pay off the liens, loans, and the HELOC. Selling the house to you for far below market value so you can turn around and sell it and pocket the cash is an rear end in a top hat thing to do to your mother. If you're planning to give her the proceeds from the sale, it is a horribly inefficient way to do so.

# ? Aug 12, 2019 11:52

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Mom's bad with money. Should I refinance her house and move into it?