Mom turning 60. Dad divorced her for a younger woman. What’s next?

Pay off the house with what? If she doesn’t have an income she can’t afford to live there

Edit: I will highjack my top comment to give some actual advice. Paying off the house is the worst thing she can do in this situation. She needs access to liquid assets or she will run out of money in her lifetime.

Sometimes end of life care uses all or most of a persons assets, so if you decide to support her, keep in mind no matter what you do there is a chance she will not have a house to give you. If I were you I would put everything in your name before she passes if you go this route.

And the last thing, it is better to have her move in with you. She gets help with things around the house and her assets last much longer. My parents did that with my grandmother and it was better for everyone. Obviously this depends on family dynamics.

Don't forget when she is 62 she can get a spousal social security benefit that is a portion of her former husband's benefit (assuming he had social security). Even if he has not yet retired. If she waits, the benefit increases.

She doesn’t want to move so she wants to pay off the house asap and eventually leave it to her children. My siblings and I are open to supporting her living expenses as they are very minimal.

This is a bad idea. It's too much house for one person to keep up, and means that everything is more expensive to maintain. Her staying in that home till she dies means roof replacements and other large expenses. If there are stairs, those will be an issue when she gets older.

Better to find a smaller home and buy it outright.

Unless I’m missing something this house is worth $750k and she’s going to live in it alone, despite the fact she can’t afford it?

Time to have a tough conversation with mom about finding a more reasonable place to live.

So she wants to take her entire life/retirement savings to pay off a house to leave to her children while her children fund her retirement for the next ~30 years? Sounds like a great deal…for her.

My mom just turned 92. Hope you’re patient.

I had the fun job of doing their settlement which we finally completed a year ago

Why did you do it? This is why divorce lawyers exist.

She should sell the house and get something smaller. $400k equity means she probably could pay cash for a small condo and depending on where have money left over. She doesn't want to leave but she needs to be realistic, do you or your siblings even want the house after she passes?

Like everyone else has said, she can not afford that house. The property tax alone would probably be too much.

The dad having to stay on the loan just to keep the interest rate was a massive red flag that she can’t afford it too. (And he’s eventually gonna get screwed more than likely).

She can't afford to keep the house. She needs to sell it.

I think your Mom should abandon this idea of going broke to keep her house. She needs to sell and use the proceeds to right size her living space for being a single woman. She may even be able to afford to fully pay off a condo or townhome and not have much of a tax burden in the right location. Asking you and your siblings to support her so she can empty her nest egg when she could live another 20+ years with rising medical needs is not smart financial decision making. I was in my late 20s when my parents got divorced and both of them urinated on several financial electric fences in the name of their own egos. I would not advise your Mom to make that same mistake.

Also, why isn't she getting spousal support to live on until your father retires? This seems like a unwise concession for her to accept as part of a divorce settlement in this situation.

Please please sell the house. Between repairs and property taxes, it will suck her dry and she’ll lose it anyhow, only get less money for it because of poor maintenance. I’ve seen this play out. The house has so many emotional ties, memories, connections with status, so it will hurt, but it will drown you if you don’t have the income for it.

Doesn’t sound like your mom can afford to keep the house. Why wouldn’t she want to take the equity and buy something smaller and easier for her to maintain?

She isn’t in a position to have her cake and eat it too as far as the house goes. Is she thinking long term and of all the expensive maintenance a house will have over the next few decades? Doesn’t sound like she understands this.

I think a lot of people have given you good thoughts on various aspects of this issue. There isn't enough information to give you anything more than some cursory thoughts. You need to actually work through the details.

You say "she wants to pay off the house asap" - 350K from what? - if she gets down to Zero reserves (which I would never recommend) - she still has 50K in mortgage left. Consider if you and your sister can afford to pay the mortgage, taxes and ongoing maintenance of the house since you will ultimately inherit the house. Even if you did that, I am not sure she could live on the money she has plus LTD.

I suggest you actually build a realistic budget for her living expenses and the house costs (mortgage, insurance, utilities, maintenance) - after setting aside some emergency reserves, the cash she has is worth about 10K/year, that plus her LTD will not likely be enough. You may have to sell the home, and downsize and she may have to work for a while (if she can). One more option to consider is renting the house out if the income net of mortgage will allow her to rent a smaller apartment (perhaps with your assistance) - once the mortgage is paid off, that income would increase.

They couldn’t afford that house when they were married! They are reaching retirement age and still have a huge mortgage. Unless your mother managed to get completely screwed with this settlement then he doesn’t have any fucking money either. The house needs to go on the market. Yesterday.

Ok. Everybody says to sell the house... So I'll try to find alternatives...

Can she get a house-mate? Or rent rooms? Or (in a more general way) generate some income with it?

If not, it seems that you and your siblings are actually buying it, by paying for her expenses. If it's the case, could you buy her out today, and rent the house back to her? She would be debt-free and probably better manage here expenses.

If you can't buy it today, are you sure you would buy it later?

How does one pay for a house without a job? If that’s the plan, hire a professional resume writer to get her a job.

Paying for her expenses is not going to cut it and is not fair to your own family. Mom needs to be able to support herself and if she can’t, downsize to something much more affordable.

She has to rent out rooms? Because the house is too expensive for her to keep.

She needs to either sell the house or turn the house into an income machine.

Airbnb? Is she hospitable? Can she run an bnb?

Does she have the ability to warn money another way?

My siblings and I are open to supporting her living expenses as they are very minimal.

Are you guys considering her mortgage payments (including property insurance, property taxes, and HOA fees) as "living expenses"? As long as you guys are covering that for her, she should be OK to stay in the house. Otherwise she needs to sell.

There is not enough information to provide an answer. What is her LTD income? What will her Social Security be? What is her budget, with sinking funds for major home repairs & car replacement. How much are the kids planning / willing to contribute to her upkeep? You can plug these numbers into a retirement planner. I use the Fidelity online retirement planner.

Living expenses usually don't stay minimal with a house to support. Usually one LTC and maybe one SS is not enough. I'm surprised your dad let her keep his name on the loan. The most financially astute thing is usually sell the house, divide up the proceeds, and she would move to a low maintenance condo or townhouse.

ETA: Roommates Golden Girl style might work, too, though, it still doesn't seem right to leave dad's name on the mortgage when they are divorced.

You need to have a come to god talk with her. She cannot afford that house at all. She needs to sell it and take the equity and put it into a retirement plan. Then she needs to go get a job. From there she needs to collect spousal social security at 62.

She’s about to be in for a shock.

She’s only 60 she could have another 30 years in that house and it may not hold the same value. Sell the house

If the children are gonna own inherit it, they should buy out the mortgage and keep their mom as a renter for a nominal fee like 1 dollars.

They can take over the mortgage and the mom can live there until she passes or needs a different setting for care (based on her wishes, of course).

If not, she might have to sell after all.

She probably has enough assets that she can afford to keep this house if she is willing to return to work for the next 10 years, depending on what her payment actually is on that loan. She is not, however, in financial independence/ retire early territory if she feels strongly about keeping this 750k property until she dies. 

It would be really helpful to know what her minimum payments are on the house and other expenses, and what her LTD payment is. 

It is probably not a good idea for you and your sib to bear the cost of supporting her for the next 40 years, particularly if she does not have long-term care insurance and has medical issues she may end up on Medicare, which would threaten her ability to keep that house to pass on to you regardless of what she wants. 

There isn't going to be much left if she has a medical emergency and has to sell the house to pay for the expenses that will probably be lien on the house or estate. She really need to just sell the house and move to smaller place. Manage her assets and work a part time gig or something.

Many people I met who have relatives leave them a house that cost too much to maintain. Your mom has money. Stop trying to fund her lifestyle so she depends on you all. Let her get a part time job or some kind of other income.

The other option is to rent the house/room and get income there.

Unfortunately keeping the house is a luxury she can’t afford on her own. You and your siblings might be willing to cover her costs but I can see this being a lot more than you expect.

I’d recommend. Selling, downsize and using this as an opportunity to rightsize her spending as well.

Expecting she lives as long as we all hope she does, she is several hundred thousand dollars short from a reasonable retirement. Are you committed and able to bridging that gap?

She can't afford the house not afford supporting herself. Owing 350k still at her age is huge. Clearly she doesn't need a big house just got herself. Her only reason for wanting to keep it is for you, her kids to get it in the future when she dies. Who will pay the Mortgage? Taxes,maintenance? Time for you all to face reality. Sell the home, buy a small apartment for her or have her live with one of you if it's possible & set that money up to create an income.

Agreeing to pay her living expenses is generous, but she’s still relatively young. Are you prepared to do this for the next 20-30 years? Does that include all the home maintenance and repairs that are bound to become necessary as the house ages?

Selling the house and buying something smaller (ideally one floor) outright is maybe a better move. Frees up cash and gives her something more manageable so she can be independent for as long as possible.

First, what is the current house payment , utilities, taxes and insurance plus monthly expenses for everything else? How does she pay for health insurance now?

What is her LTD payout and when does it end? What will her social security payout be when it does end?

I'd gather all this and understand the deficit. Then. In what way would you help her financially?

Also, how long will your dad let her keep the existing loan? There is a good chance interest rates will stary dropping this year but it may take a year or longer to even reach her current rate.

leave it to her children.

And then what do the children do with it? They sell it because all the children and their families are not going to live together. She'd be better off selling the house and using the equity to buy something smaller that she can afford. I don't see how she can afford mortgage, taxes, insurance and maintainence on an income of disability.

She cannot afford the house. She MUST sell it, and then buy or rent a smaller place to live.

And with no income, she'll need to budget to see how to stretch her living expenses for about 30 more years, or whatever her life expectancy is.

It's not really looking comfortable, honestly.

She needs to downsize. Because she can't afford the house and because she should get her husband's name off her assets

Sell and find a cheap in-law room/apt quick. Living on LTD with an enormous house with all the maintenance that goes with it isn't a good prospect for someone. Face it, mom's life is upside down and she needs to pare down the spending, not increase it. Just my 2¢.

A $750k house will eat her alive with maintenance OR she will let it deteriorate and the value will slowly drop until land value only.

What she wants and what she can afford are 2 different things.

She has a net worth of $700k. What are her annual expenses?

She can sell everything and invest in a 60:40 ETF and pull out 28k/yr to live off of with her disability and SS payments. Calculating her total income and x-husbands SS determine what she can afford and perhaps she sells the house and buys something more affordable for cash to be debt and rent free and have the personal security of feeding she owns something.

How much time is remaining on the loan and what's the monthly payment? How is her health?

A house isn't easily divisible. How does she intend to leave it to her 'children' (plural)?

If the idea is that they'll just sell it when she's gone, but until then, they'll be paying the mortgage, it may be better that the children take posession now and let her pay rent, or at least enter into some kind of agreement about her living expenses and the eventual disposition of the house.

There are potential surprises down the line you want to avoid. Please do talk to an estate lawyer about all this.

Mom could potentially live another 20-40 years.  It's not fair of her to expect her kids to find her lifestyle for 40 years.  If she's physically capable of doing so, Mom should be working to help provide for her own needs.

And a single 60 year old woman with no/low income doesn't need a $750k house to herself.  Her living expenses are NOT low if she has a $350k mortgage to pay.  Mom either needs to take in tenants or sell the house to get her equity.  

Mom should also look up how much Social Security she can qualify for, and determine how to maximize that. 

The idea that you will pay for Mom's expenses for the remainder of her life for the possibility of getting her house is ludicrous.  There are any number of reasons Mom's house might need to be sold before the end of her life (liquidated to cover care expenses, for instance) so it makes no sense for you to think this is a good deal.

Mom needs to adjust to her new reality and live within her current means.

She unfortunately needs to sell and downsize.

FYI, if by LTD you mean a private LTD plan, as opposed to SSDI, you should know that private plans usually stop paying out at age 65. Actually, so does SSDI.

Uh, is she not getting spousal support? That's income. Or is the 200K some kind of payoff in lieu of spousal support for life (I hope not, hopefully it's just a split of her share of marital assets). If you're married that long, you get spousal support until she re-marries, no?

She can't afford to pay off the house. Or does she expect to return to work? If not, she should file for SSA disability. Either way, LTD or SSA Disability, can she afford the expenses of keeping the house? She shouldn't stay in the house just to leave it to her children. But if she wants to stay for herself, then she needs to figure out if she can afford it.

She needs to get a job that is AT LEAST double her monthly cost of the mortgage, utilities, and food. If she can’t do that she can’t afford to live there. She needs to sell and downsize.

Time to sit mom down and politely explain to her she isn’t keeping that house.

My suggestion is for one sibling to live with her and thus inherit the house. Please pick a sibling that actually want it. They will take care of the house and pay anything for the house. The other siblings can chip in for the mom's daily support. Please discuss reasonably since even if the other sibling get a house, they also become the carer so its not like they get so far ahead in terms of time and money.

She needs to sell the house and move to an apartment or a much less expensive home. Otherwise, you’re going to be supporting her for possibly 30 years. A smaller place will be easier for your mom to upkeep. This would give her more cashflow to supplement her LTD now and then social security.

Any chance one of the kids can build a mother in law apartment? I’d sell the house build an Adu, invest what’s left over.

If it were me, sell the house and get a cheap rental. If the disability lasts the rest of her life then 700K should be enough to live reasonably well.

Does she work? She's only turning 60. If she doesn't have an income, she needs to get one. She has $350,000 left to pay on the house plus she is left with almost no retirement. Will she draw social security? My advice as an almost 59 year old woman, she needs to sell the house and downsize. She needs a job.

She can’t afford that house. There is no getting around that.

Reframe your thought process. She has a net worth of 350k. At 60 years old. No job, just ltd. If you met anyone else in that situation would you tell them to Live in a $750,000 house? Not a chance.

Your mom should run up a list of what her current expenses are and what they are likely to be in the future. Without such a spreadsheet it's impossible to even guesstimate how things will roll out in the future.

Since it seems that she was married to your father for more than 10 years then she can draw on his retirement, once he retires. She could claim one retirement income once she hits 62 and let the other one grow until full retirement.

Since your father's name is on the mortgage she won't be able to single-handedly sell the home, even if she wished to. He will have to sign off too.

So basically what I'm suggesting is that she lay out a plan for the future. When she will retire and how. She does not have a lot for retirement so planning is going to be crucial.

Often a divorce decree will allow one person to assume the mortgage. Did you check with their lender? Do not pay off a house with that low interest rate. She needs to worry about herself and not what she leaves behind, and I suggest you tell her that! Get a budget, stick to it. Get rid of anything she doesn't need to pay for. She has some cash but what income does she have? SS at 62 will help. Do not tie up all her cash in a house.

Step 1 is getting your mom to understand she needs to move to a more affordable place. She should find a smaller place that’s set up to age-in-place that costs about half of her current home so she can buy it outright without touching her other money.

You and your siblings need to also think about how much you plan to financially support her over the rest of her life. Assume you’ll get no inheritance at all from her. You all and your mom also need to go ahead and accept the fact that she’ll most likely have all of her money eaten up by end of life care and go on Medicaid and end up in a Medicaid facility. As part of that, you could think of ways to shield some of her assets now, because if you wait until you think she needs that care, it’s too late. You could buy the new place she’s going to live in and have her gift you the same amount of cash, and then that money and house won’t get taken by Medicaid if she doesn’t need to use their services for the next 5 years.

She should also be eligible for his SS,

https://www.ssa.gov/sf/FactSheets/WomenandSSrev1.pdf

Make sure she checks into that, it might help determine if it’s more financially reasonable for her to keep the house or not.

I’ll state the obvious. If she is going to payoff the house, then having a low interest rate doesn’t matter at all. As everyone else has pointed out, this is a bad idea regardless.

If y’all intend on paying the payment that seems to be the only way this is possible and she will need to live very frugally. Other people are saying to have her move in with you but neither of you may want that. It sounds like she really needs to downsize and put that money, proceeds from the sale into the bank

Unless you're going to give her money for it, she probably doesn't have a financial path to stay in the house, let alone pay it all off and keep it until she dies.

It's very sweet and admirable that she wants to be able to leave something for her children.

But it's not realistic.

She needs to downsize considerably. You should consider hiring a financial advisor who specializes in retirement to help her plan - but please please please only hire one that charges by the hour, or a flat fee. Do not hand over her assets to some insurance salesman who claims to be a financial advisor and is going to take 1% of her assets every year.

If she sells the house, downsizes to cut costs and lives within her means, she can put some of the cash from the sale of the house to work in an investment and grow it. She might need expensive elder care. If she doesn't, she may be able to grow the money to something meaningful that she could pass on to her kids.

She may be able to leave something meaningful for her kids. Trying to keep the house is one of the worst possible options in her situation to try to achieve that goal.

She could get a roommate and a part time job. My EX husband gets $3100.00 a month and is a notary public as a side hustle. He brings home almost as much as I do. His healthcare is better and cheaper than mine also.

I don't think she's going to be in any financial condition to be leaving anyone anything. She needs to start focusing on herself and what's best for her. This is probably going to be tough for a caring mom.

She cannot afford to keep the house. She needs to downsize and invest the equity from the house as her nest egg.

What's the younger woman bit have to do with anything? Maybe one of the kids can move in and take over mortgage payments? then she could help them with day-to-day things like groceries, electric, etc.?

Check on the pension and social security too

Mum refinances and buys a condo that she moves into, sells house to kids, kids move into the big house which they need and pay the mortgage.

What state do they live in? She may have access to half of his retirement by law too.

You need to talk to an estate planner and someone familiar with Medicaid planning. Lots of things to know and plan for ahead of time.

What is her LTD amt per mo/yr? Most plans end at 65 by the way… Is she on SSDI, how much is that?

She could downsize to a small apartment, rent the house out for income, and still leave the house to her children (as a rental property or otherwise)

Depends somewhat on rental values in the area. Also, she may need someone (perhaps you if interested) to mange the property for her.

Don't get to stay in the house, but at 60 also don't have to go try to find a job.

Could also sell the house and downsize without worrying about the headache of being a landlord.

Aside from that, you mentioned you and your siblings are open to supporting her, you could just pay her rent if she wants to stay.

The worst possible option is paying off the house at a 3.7% rate. In some ways, the fixed rate loan itself is a more valuable thing to leave than the house in this market.

Mom could sell her current house and buy (in cash) a smaller house and have no mortgage. She can leave that house to the kids. Even in Southern California I can find a house under $400k. To me, this makes the most sense.

Sell the house, buy MUCH smaller.

Consider annuity with parts of the 200k cash to provide her with a monthly income.

Keep the house. She can take equity from the house anytime she needs. She’s likely not going to find similar amenities for similar payments. There’s some tax advantage to for her heirs. She can get a roommate to help pay.

What does the age of your Dads new spouse have to do with any of this?

Keeping the house long term is probably not a good decision for your mom. I suggest you consult a financial planner.

She should sell the house and move in with one of her kids.

Schwab pays about 5.2% annually with their money market SWVXX or you could do the SGOV which pays a little more and has tax benefits. The monthly income would help pay the mortgage. Approx $860/month. These are basically risk free

JEPI pays 7.45% but there is risk involved.

Make sure the house agreement is iron clad so your dad can't get any proceeds in the future or if he should remarry, the new wife cannot get anything.

Your mom at some point will be able to halt property tax increases. She might be eligible sooner than the norm due to disability.

Hopefully your mom has an agreement to stay on the health insurance.

The mortgage payment and upkeep are expensive. Maybe look at other housing options.

You're a good son for helping her through this.

She needs to find a job, obviously. Preferably something that pays in cash like cleaning. Go and put a nice personal letter from her to all the nice houses near where she lives offering cleaning services.

Then if she's really stuck she can rent a room out on airbnb or try driving for Uber.

But she needs to be able to earn enough to be able to pay off the mortgage, maintain the house, and feed herself without your help, as quickly as possible to get herself to pension age.

Just be aware if you start giving her assistance now, it will just make her reliant on that and unable to find a job - which means you'll be paying it forever. It will end up costing you a downpayment on your own house.

Sell the house. Why on earth does one person need a 750k house.

Can she rent a portion of the house for extra income?

a brother or a sister maybe... who knows.

Make sure she gets title insurance if she pays off the house. Lots of scammers taking advantage of older people who have their homes paid off. This just happened recently to a 77 year old man in Northern California.

I would rent out rooms in the house or sell it and find an affordable rental if I were in her position.

She needs to sell the house. Or get lots of roommates. How much is that mortgage?? Is her LTD enough to pay the mortgage?

Yikes only $100K in retirement. Even if she got half they clearly didn’t even plan for retirement together much less separately.

Your mom could do an Assumption on the loan. She basically takes over the loan with the terms.

The deed would have to be settled by the city though.

I think the most logical thing to do in this situation is sell the house and roll over the equity into a condo or apartment that she can own outright and not have to worry about paying a mortgage.

So is one of the children planning on moving in with her to help with expenses?

She should sell the house if the kids don’t want it. If any of them do, they should buy it and rent it back to her (multiple kids could chip in). She’d be out of debt and whoever wanted the house would end up with it eventually.

Here are my uneducated thoughts.

I assume there's legal documents saying your mom is the owner even though your dad is on the mortgage. Seems like he'd have the right to refinance as he wishes... If she doesn't pay the mortgage, that goes against your Dad's credit? Sounds messy.

Siblings have a role here. Mom wants to leave house...but only way to do that is to continue to pay mortgage.

Why not sell the house for the outstanding mortgage to the siblings? This gives them 1/2 the value of the house + whatever appreciates over the remainder of her life. She can live rent free or provide siblings with some affordable rent reducing mortgage obligations.

It guarantees her a roof over her head and her desire to will the house to her kids (actually sooner than later)

If siblings can't afford mortgage, maybe some compromise can be made?

How much does LTD pay?

She could live another 30 years and need to be in a full time care facility that costs 20k/month. The house is not going to the kids.

Keeping the house is a mistake. Too much house for 1 person and she can’t afford it.