Retiring but house has not sold?

Guest 0.10 Dollars($)

We are retiring, moving and our current house has not sold. Our bank, the holder of our mortgage, suggested that rather than continue to make our monthly payments, that we do what he is calling a (one pay mortgage?)

We will stop making payments alltogether (which will help our retirement cash flow) and when the house sells, the bank will collect the accrued interest from the proceeds.

He is offering prime today and I was wondering if this was a good idea and if anyone has ever heard of this before.

Thanks in advance for suggestions
Bob

gmakerley · Posted: Tue Jan 08, 2008 1:15 pm Post subject:

might the lender be talking about a reverse mortgage? if you are 59 or older, that would be a product that is quite possibly beneficial for you.

call your bank back up and tell them to get specific with what they mean.

Guest 0.10 Dollars($)

I did and he said it was a single payment loan. If the house hasn't sold in six months we would just renew. The interest would be added to the existing principal.

Bob

michelle · Posted: Tue Jan 08, 2008 8:11 pm Post subject:

Bob, Welcome to the forum,

I have never heard of such a program. Is this with your local bank where you hold accounts? If so, it might be something special to them.

If it really is what you say, it sounds like a great option for you to try. I would however, recommend that you ask some other questions before proceeding:

How will the bank report the loan to the credit bureaus? You need to make sure this will not have a negative impact on your credit rating or at least be able to weigh that should they say "yes" it will.

How many times will they let you renew? Depending on the market in your area, you should be sure that you will have plenty of time to find a buyer offering an acceptable price.

I would also recommend that you have a real estate attorney review the paperwork to make sure you fully understand what is being offered and the potential consequences this loan may have.

Again, at face value, it sounds great but since I really don't know the program I could not recommend you go for this loan until you have all your questions answered and are sure it is what you think is best.

I hope you enjoy your retirement.

Jason1 · Posted: Tue Jan 08, 2008 11:14 pm Post subject:

Hi Bob,

Michelle has offered one of the best pieces of advice. Should the banks offering be legitamately in your best interest the cost of a real estate attorney is cheap insurance.

In my experience a large percentage of the 'more creative' loan products are that their ultimate costs are far greater. Loans with higher risk layering equal higher rates of returns for lenders in compensation.

Please post details of what you find, if you would be so kind.

Best regards,

gmakerley · Posted: Wed Jan 09, 2008 7:48 am Post subject:

i agree with jason; that michelle has given you some healthy and sound advice. i don't necessarily agree, in this case, that you are in any jeopardy, but you ought to always review anything pertaining to a mortgage with your attorney.

from the sound of it, i think the bank is offering you a decent deal.

lisascherzer · Joined: 04 Jan 2008 Posts: 746 93.70 Dollars($)

Hello bforget,

It sounds like a bridge loan that they are offering. A bridge loan offers you no mortgage payments for 6 months or until the home sells (whichever comes sooner). You can get an extention after 6 months but at a cost of about 1% or more of the loan amount. The closing costs can be quite costly as well. I don't think that the bank you are working with has your best interest in mind. There are alternatives that will accomplish the same thing as a bridge loan with lower costs.

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