Sell or Keep Inherited House. Advice Needed...

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#31
Houses are getting smaller nowadays. Some have weird designs.
Really need some time to get used to it from living in spacious landed to highrise condo, you don't have that much space to keep all the things that you onced owned, and still like to keep them.

But it's good in a way when you move to a condo - everything new and no clutter for awhile, and easy on cleaning too.

Don't forget the monthly service and maintenance charges you have to pay - abt $300 to over $400, and subject to one car park lot per household for most new condos, and they suka suka increase the conservancy charges and sinking fund when the estate needs major repair work.


(04-01-2013, 04:25 PM)Cloudman Wrote:
(04-01-2013, 11:03 AM)etan Wrote: Go house hunting with your family, and see if the new house is ideal.

I did suggest to my family to go view some alternatives but they have been extremely reluctant so I know where they stand on my idea to consider selling Tongue
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#32
No one has mentioned reverse mortgages. I do realize they are unpopular in Singapore and only a few banks offer it (I only heard OCBC offers it), but its worth mentioning as an alternative given the stated requirement of reluctance of moving out but still wishing to cash out on the house. There is (A) interest rate risk and (B) the risk of reposession if house values tumble.

To mitigate (B), you can take out a reverse mortgage well below the current valuation of the house. e.g. if you enter into a term reverse mortage for 25 years. Assuming a interest rate of 5% (you need to assume a conservative interest rate - rates will not stay so low especially over 25 years) and a monthly income of $2000, you will owe the bank 1.2 million after 25 years. That's about 50% of your current house value - making it fairly unlikely for the bank to repossess. To be even more conservative, just pick a higher interest rate and/or a lower monthly payment amount to calculate a monthly income you can be comfortable with. You can use the FV function in excel to assist. At the end of 25 years (or sooner), assuming your children have left the nest and started their own families etc and/or property prices rise even faster and/or your mind changes, you could choose to sell the property and pay any outstanding balances.

You can't really mitigate (A), except by the fact that you can sell your house and pay off the reverse mortgage (basically you aren't locked in). Be aware though that higher interest rates and lower property prices are likely to correlate. But the nice thing about a reverse mortgage is that the amount owed starts small and climbs gradually. If you eventually intend to sell the house at a right time much less than 25 years, then your interest costs may be bearable given your objective of staying in the house and taking your time to sell (hopefully at a right price).

See this for a cautionary tale.
http://www.asiaone.com/Business/My%2BMon...57639.html
http://www.income.com.sg/aboutus/release.../jul27.asp

I already suggested a reverse mortgage as a possibility, so it may seem weird that I'm posting a link with a negative story. But like all financial products, you can get too greedy and/or abuse it.

The mistake made by the couple in this story was to take out an initial 495K in principal sum at the beginning of the reverse mortgage. From 1997 to 2008, SIBOR fluctuated between 3% and 10%, so you can imagine how that 495K (plus 2K per month) ballooned. Their safety margin of was eaten into when house prices collapsed by about 50% and exacerbated by their withdrawal of 495K + interest.

If you are suitably cautious, a reverse mortgage is a possibility as it allows you to stay in a preferred home while realizing some monetary value.
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#33
Reverse mortgage is not an option here due to the owner age, which must be at least 65 base on info collected. IIRC, the owner is only 50 years old.

In the couple story, it seems that they got the reverse mortgage below 65. I assume it is the previous requirement, not the current one.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#34
(04-01-2013, 04:25 PM)Cloudman Wrote: I did suggest to my family to go view some alternatives but they have been extremely reluctant so I know where they stand on my idea to consider selling Tongue

tell your kids if daddy sell the house will make enough to help buy each of you a 3-room hdb flat in future. Then I think there's a high chance they will change their minds Big Grin

then appeal to the wife sympathy that "but I'm doing this for the sake of our children's future" Big Grin

so in this way you are really dividing the estate now rather than leave it hanging for later and you are helping your kids have a roof over their heads which is a decent thing any parent would do if they can afford it.
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