I'm trying to figure what would make economic sense to do with my house. I paid $30,000 for a 3-br ranch with half a block of land in 1983, but now I'm retired and alone on a fixed income. In recent years I spent most of my savings on replacement of both house and garage roof after severe storms (insurance wouldn't help because the house is old), and I replaced the complete electrical plant to avoid having my insurance canceled. I also replaced the back windows when I was working and could afford it. The back deck is rotted out, the bathroom sink doesn't work, the house badly needs painting, there's a huge hole in the floor under the kitchen sink, and this past week we had a windstorm that took out a backyard tree, which crushed a 6-foot chain link panel in the large dog pen. I'm partly disabled and not handy at all, but I can't afford to hire everything done that I need. I can barely afford the yard work and snow removal, most of which I cannot do myself. Due to refinancing, I now owe $40,000 on the house, more than I paid originally. A local house 'flipper' made me an offer, but it was less than I owe. I have no family left and close friends will help a little, but not with the major items that need skills and equipment.
Here's the problem. My mortgage payment is less than $600 and if I sold and moved, I could barely rent a 1-br apartment for that amount. Decent apartments run about $750 and up, which would be a stretch. I make too much (Social Security plus small pension) for subsidized housing or any other benefits. Even though my house needs repair, I can't see trading all this space for less than half as much, for much more money. Plus I'd probably have to get rid of my pets, a 15-year-old dog and three cats. Our city has Community Development loans for repairs, but I'd have to pay it back and the amount allowed doesn't nearly cover the worst items.
I know this is a long question for the newsletter, but can you give me some direction on the pros and cons I need to balance out here? I can't seem to determine the most cost-effective course of action, which would leave me in the best shape for the future.
Thanks a bunch, and thanks also for the newsletter! I've learned a lot from you.
J in SD
Sounds like you have a challenging question to answer. Not sure I can say that any one answer is better than another, but here are a couple of possibilities to consider.
- could you take in a border? Perhaps someone younger who could do some of the work for a lower rent? That way you'd only have to buy materials for the repairs. Naturally it would need to be someone that you were comfortable sharing a home with.
- borrowing for repairs might not be so bad. Suppose you had $150 a month payment to cover the borrowed money. That plus your $600 mortgage is still the same monthly expense as the 1 bedroom apartment. And you'd keep the extra space for your pet family.
Ofcourse any repairs should be preceeding by you're checking to make sure that the home is basically structurally sound. If you have holes in the floor you might be putting money into a home that's not stable.
We have a couple of articles that might help:
Hope that you find an answer that works for you.
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