What to do with In-laws - housing / finance

[mane01]

A mistake was made 8 years ago to remodel my wifes parents house at the height of the housing boom. Long story short we lost a our 300k equity was gone, not a big deal in the long run, however we didn't know until it was too late that My wife couldn't stand living with her parents... so with a 50% recovery we(both parties) decided to sell the home. The in-laws will wind up with $72k and no home.

Now they do have a mobile home in AZ where they lived half of the time with no payments however they are 72 and want to be next to their other children, but have their own place and can't afford a house payment.

So my thoughts are a Reverse Mortgage Purchase, according to what I've been told (and read), they can purchase a $130k property with 50% down and the reverse Mortgage will pay the monthly until they die or do not live in property anymore.

We approached them with this idea but they are skeptical and to be honest I don't want to give them financial advice because they lost most of their nest egg with our shared home. They mentioned that they might use the money to pay off their CC debt (which is around 20K).

My thought today is to find a financial advisor that can recommend this option or come up with other options. But the people I've called don't deal real estate, mostly investments.

I'm afraid they'll pay off their debts with this 72k which will be in their hand in 10 days and not buy a house but just decided to live with us at our new place, which will drive me crazy.

Any ideas / thoughts?

[Fishindude77]

I would stay away from a reverse mortgage. Most of those are glorified rip off schemes preying on the desperate.

Obviously there is a lot more to this story, but if $72K is all the liquid cash they have available at their age, they can't afford a house, and certainly can't afford a second home (trailer) in AZ. They need to sell the trailer and get whatever they can for that, then look for something affordable to rent, or take their $72K and go live in that trailer.

You also mention debt, but don't explain it? Sounds like they are nearly broke, with exception of maybe social security income or whatever pension they may have? If you or other family can't support them or house them, in all likelihood they are faced with living in government assisted housing soon as the majority of their cash is gone. May as well face the music, and start pointing them that way.

Don't feel too bad about not bringing them in under your roof. Your number one priority should be to take care of your immediate family, so you don't wind up in their situation a few years down the road.

My mother in law is in the same shape. Luckily, between the wife and I and her brothers, we can pick up the tab for anything she can't. Also, she recognizes that she is broke and lives pretty frugally.

[disneysteve]

take their $72K and go live in that trailer.

This sounds like the way to go given the limited info you've provided. They have a paid for home. If they want to be closer to family, move the trailer. Problem solved.

Use 20K to pay off the credit cards (what's that about anyway?). And keep the other 52K as an emergency fund. Does their monthly income provide enough to cover their expenses if they live in the trailer?

[snafu]

There is no easy out for in-laws in the situation described. As Fishindude77 points out, the reverse mortgage is almost a scam that preys on those least able to understand and manage money. Do debt laden in-laws still expect to spend part of the year at the trailer in AZ? They could reverse their practice and live in AZ but visit family in the summer, a week or so in each household. If that phase has passed, D Steve's suggestion to move the unit needs to be fully explored. Depending on it's age, trailer park facilities in their family's area, and cost of the moving service, it can work.

Option two could be to likewise sell the AZ trailer and get a modest, affordable apartment, rent controlled if possible. All the excess stuff acquired to fill a house would need to be sold. Surely they get Social Security, is there a pension from work? Have they explored their eligibility for any of the state or federal programs for low income seniors? Would all family members be willing to contribute a bit each and every month for any shortfall? This presumes the CCs are paid in full and parents agree to live on cash. When the money's gone, spending ceases.