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I had this call in from a friend that told me her mother in-law needs to refinance. She didn't know anything about the deal or what but she gave me the phone number. I called the lady and we talked for about 30 minutes going over everything until I got to the mortgage amount. She only owed 1200. Thats right ONE THOUSAND TWO HUNDRED DOLLARS. And she wanted to refinance. I told her it was very stupid of her to refinance. Does anyone disagree with me? No Debt just wanted to get off the 10% rate. But she only had 7 more months left I think. Kinda strange but she insisted that I do it or someone else will. I told her in my opinion it is not right but tell me your ideas on how to work with this.
Ben
UPDATE: SO I CALLED THE LADY BACK TODAY TO SHE WHAT SHE CAME UP WITH AND I FOUND OUT THAT THERE IS A COMPANY THAT IS GOING TO REFINANCE HER. HOW STUPID IS THAT. I BEGGED HER THAT IS WAS A STUPID THING TODO BUT SHE WAS SET ON GETTING THAT CASH OUT. UNREAL.
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You did the right thing, having your mortgage paid off is the very best thing for her.
Won't the costs of refinancing exceed the benefit/savings? I think you did the VERY right thing.
You did the right thing, plus you will be able to sleep at night. Can you even refinance $1200? Don't they have minimums?
The only way I would touch that loan is to do it as a cashout. Free up the trapped equity and have it start working for her. Obviously, I think it all depends on her situation. if she doesn't have enough saved for retirement (most don't), it might make the most sense to put her on a reverse mortgage and use her equity to supplement her retirment income. Get down to all of the financial details with her. Talk to her about assets, retirment, goals, etc. If she's not old enough for a reverse mortgage, I would at least look at the option of freeing up her idle equity with an interest-only mortgage and putting the money into an interest bearing account where she will get the benefit of compounding interest.
Looking out for your client will bring you 100 clients - I firmly believe that the way we treat people and provide honest answers is the very best policy - Good for you to be a PROFESSIONAL
If the lady looked like the one on the Picture, I would have run away!!!
I think you could have gotten out your check book and paid it off for her. Think of the press!!
Tell her the closing costs are $1200 and have her make the check out to her current mortgage company. Tell her to send it to you and then you mail it to the mortgage company.
:)
I like Chad's idea of getting her some of her freed up equity to have it start working for her. There are safe enough investments that should give her 8% return and she can start building a nest egg for her heirs.