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I want to refinance my mortgage, but I’m going to be 70 years old. How will this affect my heirs?


I hope you can help me figure it out. I will be 69 years old and 70 at the end of the month. I have been offered a cash out refinance loan and have to decide on a 15- or 30-year loan. My monthly obligation will definitely be more for a 15 year loan.

I may not be able to – probably not – either to live long enough to pay, or to end my 11 years of current mortgage, in that regard. I am diabetic, give up other weaknesses. The mortgage lender knows my age, but the choice is mine.

Normally I guess one has to deal with it based on the will of the heirs, but in my opinion I have no heirs. I am unmarried, never married and have no children. My mother is dead, and my father is 97 years old. He lives with a woman, but they decide not to get married.

My brother and I have been separated since 1990. I don’t want to give her anything valuable – she tore me apart a lot when our mother died, and I don’t really have anything of value. I don’t want to leave him a mess. He is 67 years old, and who knows if he will survive if I die. Then there’s my niece, her only child, whom I rarely know. He has never tried to correct this fact since he was an adult. She is 38 years old, unmarried and has no children. I have 33 or more second cousins, but I haven’t had a relationship with anyone I’ve met for almost 30 years.

My hurt and resentment towards my brother and niece should not deny my obligation to leave a will. After all, they are my blood, and I am not emotionally attached to any nonprofit. I have close friends with whom I met from 1954 to early 1966, but no one else is significant.

In the meantime, I owe about $ 33,000 on my current mortgage. I’m asking for a $ 30,000 cash out, which I’d like to use for home improvement Assessment has been waived, but units of the same size in my condo sold for between $ 285,000 and $ 315,000. I live in a suburb of Los Angeles. The current monthly payment is $ 458, including property taxes, with an interest rate of 5.25%. The new payment is 3.28% at $ 531. Not all ads differ much considering what the current refi rates say, but my debt-to-income ratio is not wild.

‘Whose unpaid balance gets stuck when I die? Does the lender take it? ‘

Currently my only “real” income is Social Security and বাবা 900 my dad sent me monthly from a trust account. I want to go back to work next year because I’m bored, but it has nothing to do with debt. The extended 30-year loan repayment will include closing costs, prepaid taxes and more than $ 17,000 in outstanding debt in addition to the remaining mortgage and cash out.

Whose unpaid balance gets stuck when I die? Does the lender take it? Does anyone have to deal with the problem no matter what there is, or take the balance if it sells? Am I right in saying that if I take out a 15-year or 30-year loan, it is irrelevant because I could die before I pay it off?

Since the intended loan is significantly less than the value of the home, is there any other type of problem that my heir has to deal with? Of course, another earthquake could happen, but without some unforeseen catastrophe, or my payment arrears, who would be legally forced to handle a problem if I didn’t make a will?

Sincerely,

Golden Girl refinancing

‘The Big Move’ is a marketwatch column on the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next step should be? Email Jacob Passy at TheBigMove@marketwatch.com.

Dear Refinancing,

I would like to start by answering your question about the length of the loan, since I am concerned that you are underestimating the difference between a 15-year loan and a 30-year loan.

You know that monthly payments are higher for a 15 year loan – that’s true. But this may be more than you realize (unless the lender has already spelled out the difference.) For example, a ,000 100,000, 3% interest rate for a 30-year mortgage, the monthly payment would be approximately $ 422. If the same loan carries a term of 15 years instead, the monthly repayment would be about $ 691.

To underscore, monthly payments on 15-year mortgages are about 64% higher. Often, people are attracted to short-term loans of 15 years because it saves them interest in the long run. But for someone with a fixed income, that difference in monthly payments can make a huge difference.

Monthly payments on a 15-year loan, about 64% larger than a 30-year loan.

As you yourself have said, it is not clear that you will survive so long that you will somehow see the debt pay off. So short-term long-term savings won’t be worth it, perhaps. You are now relying on your father’s financial support, but will it continue if he dies? If not, again, higher monthly payments from a 15-year loan can suddenly become completely impossible.

It doesn’t matter if the mortgage was a 15- or 30-year term for debt settlement, for anyone who gets the house when you die. In fact, when we die, we still have to pay off our housing debts.

In your case, it sounds like you either have no will or have not specified who will inherit your property after your death. Most states follow a process to determine who is eligible for inheritance, starting with spouses and children, followed by grandchildren. In the event that none of these individuals are around, the state will consider other relatives, including siblings, nieces and nephews. The state itself may inherit the property.

If you die unintentionally and the state does not determine a proper heir to the property, theoretically your mortgage lender or service provider will foreclose on the home to cover the debt. If an heir is identified, or you name one, most states have laws to protect their home rights. If you die, your heirs will inherit the title to the house, but it is not a mortgage. Mortgages often include a price-on-sale clause for which you have to repay the loan if the house is sold – because that’s when the title is transferred.

When the title is transferred through inheritance, the law usually protects the heir. They can take out a mortgage and continue paying. In some cases, they may transfer the mortgage to their name, or they may sell the home to pay off the debt and then pocket the remaining money.

Feel free to think of more than just blood relatives when considering heirs.

If I could do a little overstop, I would advise you to reconsider who deserves your inheritance. Naturally, most of us think of leaving our worldly possessions to blood relatives – but in my view, the definition of family is broader than that. Your brother has hurt you, and you say you have virtually nothing to do with your niece.

It sounds like you have a lot of friends with whom you have a rich relationship. Of course, they may not be romantic in nature, but I’m sure these friends bring joy and comfort into your life. These people are your chosen family, and they deserve every right and privilege reserved for blood relations in general. In fact, you can bequeath your property to a friend instead of a family member.

Your friends may not be interested in your condo inheritance formula, but I’ll talk to them to see what they think of this type of gift. They may have a child of their own or another relative who may benefit from inheriting a home to live in (or the financial value of that property.)

You have worked hard to maintain your home, and you should feel comfortable knowing that you are going to your caregiver after you die. Let those you identify as your heirs know your plans. That way it won’t come as a shock when you pass, and they may feel better equipped to handle the various tasks that come with inheritance.

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