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tetaje269 · Jul 18, 2009, 05:45 PM

What's the best way to make use of $100,00 cash when you have a mortgage balance of $370,000 and cannot afford the monthly payment due to the death of a spouse and loss of income - pay down the mortgage balance and then refinance at a lower interest rate? Or what?:confused:

ebaines · Jul 21, 2009, 06:23 AM

Obviously your $100K won't pay off the mortgage, so presumably you have other sources of income, right? If you can refinance to a lower rate then by all means do so - that's free money to you! You need to set up a budget, and from that you will determine whether you can afford the mortgage on the full $370K, or should use some of the $100K to reduce the principal (and hence pay less each month). You should also consider that you need to have a good savings cushion available for emergency purposes, so whether you should use the $100K now depends to a large degree on what you have in other retirement accounts, savings, investments etc.

tetaje269 · Jul 21, 2009, 08:04 PM

Originally Posted by ebaines

Obviously your $100K won't pay off the mortgage, so presumably you have other sources of income, right? If you can refinance to a lower rate then by all means do so - that's free money to you! You need to set up a budget, and from that you will determine whether you can afford the morgage on the full $370K, or should use some of the $100K to reduce the principal (and hence pay less each month). You should also consider that you need to have a good savings cushion available for emergency purposes, so whether you should use the $100K now depends to a large degree on what you have in other retirement accounts, savings, investments etc.

Thanks ebaines. Yes there is income from work. The objective is to reduce the mortgage to an affordable monthly amount - that can be handled from current income from work. Even with a reduced interest rate the monthly mortgage is still unaffordable. The only relief sought will have to come from paying down the principal. I do intend to put away something in a retirement account and into an emergency fund. Again, thanks for your suggestion.

tetaje269