[USER]

My mom recently passed away and had her house completely paid off. Our intent is to sell the house.

My portion is (splitting with siblings), estimated around $150k.

My family and I just built a house (which costs us WAY more than planned, as any build does) and we’re stuck with these crazy high interest rates. Currently 7.5%!

In our monthly payment, $2000 goes towards interest alone!!

So… without y’all being financial planners and legal consultants, should we use that money to help pay off our mortgage?

Does this make sense long term?

We do not have other debt. No CC, vehicles, etc.

What other options should we use the money?

Thanks!!

[Cindy]

I don’t think there’s enough information to make a statement.

As someone else said, have you contributed to IRA’s? Do you have enough liquid savings for emergencies? Do you have children and want to save for college or trade school? How much you earn, your income tax situation (mortgage interest is still tax deductible), job stability also factor in.

Even though you would probably have to pay a fee, seeing a professional to get advice seems warranted.

[Deb]

I’d sock some of the money away in a high yield CD for three years, wait for interest rates to go down (hopefully), refinance the house when that happens and pay down your mortgage.

[Charita]

I’m sorry for your loss. I went through something similar recently ish. And I say ish because this was a year long process. Some food for thought. Consider capital gains taxes. If she passed very recently and you sell the house, your cost basis is $0 so you and sibs owe taxes on the entire sell price. Depending on your tax bracket that could be tens of thousands. If you sit on the house for a year and a day your cost basis is the value at her time of death. You would only owe taxes on any appreciation between now and then. Likewise, you can claim any depreciation from now to then as a loss, reducing your tax liability for other income. If the house is paid, this might be a better strategy. Talk to a CPA first to verify and run the numbers!

If you put a lump sum down on your mortgage, ask about a mortgage recast to see if you can reduce your payments. Some do, some don’t.

Suggested: How to pay off debt with $5k inheritance?

[Cherie]

If you don’t have other immediate needs. And have 3mo minimum expenses in savings.

Then I would put on mortgage. You can then contact your Mortgage company and ask them to re-cast the loan. This only costs about $200 depending on lender. And will lower your monthly payments without re-finance. This will not change your interest rate. Just update monthly payments based on what you now owe.

You can still pay extra every month, to pay off early but then it’s up to you.

[Shannon]

I would pay off smaller debt. Then take what is left and refinance your mortgage in about a year. That way the money is coming directly to the principal, you should ideally get a lower interest rate and a smaller monthly payment. Without a refinance apply to the principal will keep you high rate and higher monthly payment.

[Jennifer]

Put 6 months of expenses in liquid assets. Then I would address any smaller, high interest debt. Any remaining funds I would dump into a principal only payment to your mortgage.

However, if your mortgage is a converted construction loan, I would look at doing a refinance before you do that as historically converted construction loans are higher interest due to the risk involved to the bank.

[Geri]

Can you refinance now that the home is completed?

Interest rates are lower now so if you can take some of that $150k and use it as a down payment towards a refinance you can get lower monthly payments.

I would definitely put a huge chunk of it in the bank for emergencies, pay off other debt as well.

Useful: Parents recently received a large inheritance and need guidance on what to do next

[Janet]

When I had a mortgage, I could pay off 20% of the principal every year without penalty so if you have a similar setup I would put up to 100K on the mortgage.

I would then buy 50K of physical gold, not stocks. Gold has increased by 20% since Dec and is just going to keep going up. It has continually gone up for decades. It fluctuates day to day but continues to climb. Next year you can sell off an amount equal to the profit you have made in a year and let the rest continue to increase in value. Do that every year until the house is paid off.

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