Carry Note Yourself on a Hard-to-Sell Home
QUESTION: My husband and I were young and naive, and we bought a new mobile home in 1982. The home had all the things we wanted and what we thought would help the mobile home sell when we were ready to move up to a house. We paid 10% down and financed the rest with a typical 15-year mobile-home loan.
Three years ago, we put the mobile home on the market. Today it is still for sale. The problem is that we now have children and have outgrown it. Also, our income has almost tripled.
It has been suggested that we walk away from the home but we are afraid of what it would do to our credit rating. We have also considered renting it out, but are concerned about it being maintained. Also, it is located in a park and the management frowns upon renters.
We currently owe about $14,000 on the mobile home. We have that amount in savings and gross about $50,000 a year.
ANSWER: When you bought the mobile home it fit your life pattern at the time. Disregard the advice of friends that you simply walk away from it. You obviously have an excellent credit rating and this could put big dents in it for many years to come.
I suggest that you knuckle down in your selling efforts--offer to carry the entire note yourself after the payment of a modest (perhaps $500) down payment at an interest rate that is no higher than the current market--perhaps lower.
Remember your own situation as it was eight years ago. There simply have to be other young couples in exactly the same boat today, and the only trick is in finding them.
I’d enlist the services of a good real estate broker with experience in mobile homes for openers, and emphasize to him or her your new flexibility in financing. There may be interested buyers at military installations in your area.
I suggest that you go ahead and find your dream house while conditions are good and worry about the mobile home later. I really doubt that the park management could effectively block your renting the place if it got down to the nitty-gritty, anyway, but a buyer would be much better.
Borderline Case to Refinance Adjustable
Q: We have a one-year adjustable-rate mortgage (30 years) at a current rate of 12%. Our renewal is due soon. Every year our mortgage keeps on increasing--it never went down from the 9.24% in 1987. Is it worthwhile to refinance to a fixed rate now and beat the renewal? We plan, however, to stay in our house for three more years. What is your outlook for a decreasing interest rate for the fixed rate this year?
A: I don’t know what interest rates are going to do, but I suspect that rates will either remain flat or slip down slightly. You are a borderline candidate for refinancing. Normally, if you can refinance down 2% and are planning to stay in the house at least two years, it pays. I’d say yes to it.
How’s this for a bargain? You borrow X number of dollars to buy a house and the lender, over the life of the mortgage, collects three times as much from you as you borrowed.
This is the lender’s definition of “bargain.” If you feel differently, you can sharply reduce the interest paid and cut years off the life of the mortgage through painless acceleration. Our leaflet, “Free and Clear: Getting the Mortgage Monkey Off Your Back,” explains how. Send a long, stamped, self-addressed envelope and $2 to cover costs to Don Campbell, P.O. Box 80260, Phoenix, Ariz. 85060.
