Need to Bail out my Mother

[Greg Heden]

I am looking for some creative ideas on how a can help my mother out of a predicament.  She is aging and was looking to relocate to Florida to get out from under her large, high maintenance upkeep, and two story home.  After deciding on a particular neighborhood(near my brother), she suddenly pulled the trigger and put in a cash offer with no contingencies, that was subsequently accepted.  The situation is that she has no cash and was naively thinking she could sell her home and magically appear in the new one!

Facts:

- Her current home is worth around 1.2M

- Has a mortgage of 85K

- Total cost to close on new home about 500K

- Applied for a heloc, but only qualified for around 435K when considering her income level

- She is dead set on this purchase and subsequent move, therefore, I must help facilitate or inherit anymore bad decisions.

I have the cash to bridge the gap between the HELOC and actual costs but was wondering if anyone had any other ideas on how to facilitate.

Thanks for any input!

[Bill B.]

No. You’re not listening. If I tried to place a cash offer with no contingencies on ANY property for sale. My realtor would say, show me proof you have the money. If I was selling ANY property and a buyer said they were paying cash, my realtor would say to the buyer’s realtor. ‘\”Prove you have the cash.”

You’re saying her realtor let he place a cash offer with no contingencies when she didn’t have the cash, and the buyer’s realtor accepted the offer with out making your mom prove she had the cash. They both failed HARD. This is day one stuff they should both know.  

The best answer if obviously to talk away and lose her EMD, hopefully less than $5k (1%) unless her realtor failed hard twice on the same deal.

The second best answer is take any “screwing over” call it 2% upfront and 12% interest? For the 60 days it takes her to well and get her money if her home is an easy quick sale. That costs her $10k in points and $10k in interest. This should be a non-issue for someone walking from their old home with $800k+. Just a small lesson learned. The $300k she has left will earn her more than $15k/yr in bank interest. She’ll have the money back in 18 months. 

Just lay out her options, lose $5k or pay $20k in internet/points. If you want to borrow her $500k for 60 days because you’re the good son (because your brother can’t/won’t help) then go ahead. But this is a VERY short term loan that’s going to be expensive if she can get it and you can’t give it to her at the family rate.