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Mortgage / Retirement dilemma
My husband and I are in our mid-50’s and live in Battle Ground outside of Vancouver, WA. 6 years ago we became empty nesters. We decided to pursue our dream of living in the country and purchased 7 ½ acres with a dilapidated 20 year old mobile home on the property for $360,000 with 10% down. The plan was to live in the mobile home for a year or so until we could get money together to build a home. Unfortunately this was the worst possible timing. The real estate market crashed almost immediately after we purchased this property and home values plummeted, leaving us $100,000 upside down within months. Many of our friends encouraged us to “walk away” and allow the bank to foreclose since we will most likely never recover our investment. We did not feel right defaulting on our loan and jeopardizing our excellent credit. We are not getting any younger and are wondering what our best options are at this point. Last year we were able to refinance from a 30-year fixed at 7.75% to a 15-year fixed at 3.25% which kept our payments about the same. We are paying an additional $350 towards principal each month in an attempt to pay the loan off sooner. We still owe $286,000 and Zillow is estimating a $240,000 value so we are still upside down by about $46,000. We love the property itself and would love to continue living there. The mobile home, however, is rapidly deteriorating. We have done some minor cosmetic repairs (new paint inside/out, new carpet, new deck, etc.) but now the roof needs replacing and we are facing some major expenses. Due to the age of the mobile home, our homeowners insurance company has reduced our coverage from replacement cost to actual cash value. The dilemma is determining how to move forward. I know there are smarter people than I who specialize in this type of circumstance who may be able to offer some advice. We want to have our mortgage paid off by the time we retire in 10 years but will need to replace the mobile home. Would it be most expedient to just move to a new home when what we owe matches the value of the property? The other option may be to purchase a new mobile home, however, they depreciate and I don’t think this will help us improve the value of the property. The real question is should we still try to build? I don’t know if this will ever be a sound investment since we’ve had to dig out of such a hole. I’d appreciate any advice or suggestions. Thank you.
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