“Dear Steve,
I am a 63 year old woman with a 27 year old son that is not in the best of health, due to his HIV positive status. My husband fled to Canada, after an arrest for domestic violence.
I am now locked into an interest only mortgage, and even if I did pay a little more each month, I still would not be able to pay off the house until I was about 84 years old.
I applied, and got accepted for, the HAMP program, which helped quite a bit. The first mortgage is $100,000, and the second is $20,000. I have no credit card debt, and my car is paid for. I work fulltime, and don’t see myself able to ever retire, as I need to keep a roof over our heads.
At my age, (63), what would be the smartest thing for me to do in regard to my interest only mortgage?
I always pay on time, and for that reason, the mortgage company has given me an incentive to be able to work the total amount down by a little bit here and there, but it is not very much, and the situation scares me.
Suzanne”
Dear Suzanne,
So sorry to hear about your son. I hope he’s receiving medical care and the prognosis is good. Regarding your husband, good riddance it seems.
At the end of the day this is about math and options.
Which mortgage is interest only and how much is your home work, approximately?
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They are both interest only. Home is valued at around 140K. I have made many improvements since I bought it in 1998.
So here is the problem. You are not upside down in the house so something like a chapter 13 bankruptcy to strip the second mortgage won’t work.
Your options at this point are to refinance the loans, take advantage of any program the lender might have to convert the interest only mortgage to a fixed rate mortgage and end this interest only time bomb, or sell the property and buy something new that fits within your current income.
The last option is probably the most reasonable and logical.
I realize this is scary and worrying you but distill it to a math problem and the answer become clearer.