Inherited Mortgage

[skives]

My parents are in their mid and late 70’s and still owe on their home. They will never pay it off. I’m am the executor of their will and I believe they will leave the home to myself and my brother.

I assume we would have to take over the mortgage and property taxes till we could sell the home. Am I correct? If so my brother does not have the means to help at all so it would be up to my wife and I to pay it. Is there anything we can do before hand that would be help with those costs?

I’m not sure how much the payment is right now but I’m going to have a talk with my dad. I believe it’s between $1,500-$2,000 a month. That may include property taxes.

at this amount it would eat up all my wife and mines extra money each month. Our house by the way is paid off.

[disneysteve]

Yes the estate will have to continue making payments on the mortgage, taxes, utilities, etc. Do your parents have monetary assets like cash, stocks, bonds, retirement accounts, etc? If so you can use those funds to pay the carrying costs on the house. If not and they live fully on SS and pension payments then you’ll have to pay the costs yourself but you’ll get the money back when you sell the house. If you have to split the house proceeds with your brother make sure you carefully account for carrying costs you paid and discuss in advance with him that you will need to be reimbursed after the sale so that the split won’t quite be 50/50.

[skives]

They live solely on SS and a pension. I assume when one of them passes the other will have to sell it because they won’t be able to afford it on their own SS.

i am going to ask about how much life insurance they have but I assume it’s only enough to cover funeral costs.

[disneysteve]

They live solely on SS and a pension. I assume when one of them passes the other will have to sell it because they won’t be able to afford it on their own SS.

In that case, you may never have to worry about it. By the time the other one dies, the house will be out of the picture.

[myrdale]

They live solely on SS and a pension. I assume when one of them passes the other will have to sell it because they won’t be able to afford it on their own SS.

This isn't a criticism of your parents, but on society as a whole, because I think what you have described is average.

I can't understand the rationality of buying something you'll never pay off.

I can't understand the rationality of buying something, knowing that if half the income disappeared, you couldn't afford.

My personal advice would be for your parents to sell their house today and buy something much smaller / cheaper with cash to remove the mortgage from their current / future budget.

[disneysteve]

My personal advice would be for your parents to sell their house today and buy something much smaller / cheaper with cash to remove the mortgage from their current / future budget.

My mom wasn't in that situation because her house was paid off and she could afford it just fine and had a decent investment portfolio, but 17 years ago when she was about 76, she sold the house and moved to a subsidized senior apartment building. She did it for a few reasons. The neighborhood was changing and we could all see the writing on the wall with that. She was getting older and navigating and managing a 3-story home was getting harder for her. We lived 30 minutes away and wanted her closer to us as she started needing more assistance. And going from owning to renting would save her a couple hundred dollars per month (owning a home, even a paid off one, is expensive).

I agree that your parents should seriously think about their futures. Their future housing needs. Their future physical limitations. And their future financial situation. If they only have SS and a pension, they probably qualify for reduced cost housing. Chances are they could shore up their finances and get into a place that would better meet their needs as they age and cost them a lot less per month than the house is costing. Plus it would remove a huge burden off the surviving spouse after the other dies.