Selling Shares in your home - IPO’S

My husband and I are both disabled and receive Social Security. A yesr and 1/2 ago, we were given emergency care of 3 grandchildren and it looks like they are here to stay. Our home is paid for. We lived on Social Security snd $750 @month trust payment. We had intended to put this home in trust for our grandchildren. However, with this economy and the cost of raising them our savings has been depleted. We now have about $8k in credit card debt and we still pay $400 per month on our SUV. We are at that level where we make too much money for any assistance.

We are thinking of this selling a share and n our home but dont want to do anything stupid. We have to come up with a solution our budget does not have wiggle room.

Had anyone researched this - it is not a reverse mortgage from my understanding

Sounds like someone is taking you for a ride. I’d run, not walk, away from whoever is trying to get you sell them “a share” in your home, whatever that means.

There is or used to be a non-profit group that helped people get out of debt and on a realistic budget, and Clark used to talk about them often (maybe he still does). Perhaps someone can point you in the right direction.

If it were me, I might consider just not paying the credit cards. Yes, it will ruin your credit, but you probably won’t be in a position to take on any new debt in the future anyway. You’re going to be in a bad place when it comes time to replace the car either way. I don’t know what to do about that.

That’s an unfortunate situation about your grandchildren. It sounds like you are saying that your expenses exceed your income and thus the CC debt will continue to increase over time. If that’s the case then selling a share of your home will only be a temporary stopgap. This is not something I would pursue. I think a HELOC is probably a better option to provide access to capital. However, you must adjust your lifestyle so that you are in the black.

Are the Grandkids of an age that they can contribute.
I know times have changed.

From age 11 on I had some sort of job… Delivering News Papers, Mowing lawns, various part-time jobs… gas station, grocery store. etc.

From age 11, I no longer got an Allowance… nor did I need one.

It might be one of these companies that loans you money against a share of your home. But, eventually you’ll need to pay them back plus interest or a share of the appreciation of the home. I saw one that would loan you up to $250k for 10 years. Then, after 10 years, you pay them back the $250k PLUS 30% of the appreciation over the 10 years. In addition, they’ve already devalued the house by 15% at the beginning to protect themselves against possible market drops. So, even if the house does not move in value over the 10 years, you would already owe them 30% of the 15% devaluation in addition to the principal. So, if your house is valued at $500k and you got a loan for a share of the equity for say $100k, then they would value your house at $425k ($500k - (15% * $500k)) for the deal. They give you the $100k and in 10 years you owe them $122,500 ($100k + 30% of the appreciation). This is if your home does not appreciate at all. If it does, then you owe them more. And If you can’t pay, then you’re in a world of hurt.

If you can’t get the budget to work and you’re deficit spending, then the only option may be to sell the house and rent. Unfortunate situation for sure.

We had to use the credit cards to upgrade the kid bathroom and pay for a plumbing leak. We have reduce all of our spurious charges (netflix, extra cell phones, etc.). I am thinking of getting this to pay off our vehicle and credit cards, and then we would once again have a budget in black, including some money each week to put back into savings in case of a needed repair. The children have medical and dental paid now, and counseling is now covered. They have been through an ordeal and we have finally got them on a routine. The oldest one has been with us since birth, and is in the Citadel on a full scholarship. He will help once he is done (He is a junior). The other two are 14 and 11. They did not have basic life, decision making and social skills. They are doing so much better now and are finally getting good grades (the 11 year old is in accelerated classes). I budget is so tight right now and we have all of this free and clear equity. I did not have work from home job but given my age and disability I am not able to take care of these kids, my husband (quindruple bypass) and work. With this house, we just don’t qualify for money for the children. I could try to go after the birth parents, neither are reliable or are able to contribute. I don’t want people to feel sorry for me. I feel truly blessed to be able to help the next generation. My budget is what it is. I do not want to lose the one asset that I have to pass on to them either.

I understand. Rent in my area, I would need a three bedroom, would be $1800-2000 per month. I think I would rather put in an irrevocable trust and not be able to touch it. I have to maintain credit cards for two years. After that, no one can touch it because it will be in trust. Taxes, Insurance, Flood Insurance, and HOA cost be $400 per month that I put in a separate account and pay in full when due.

Also, thank you for your explanation. The one I looked at reduces the value of your by 10%. It has to be repaid in 10 years. Interest is not charged, but I get what you mean the reduction is like an automatic interest. The kids would be gone by then and I could sell the house. I truly appreciate you taking the time to tell me beware of this.

I’m just going to caution you one more time. If you decide to go forward with it and the only way to get out of it in 10 years is to sell the house, then you’re basically making the decision to sell the house today regardless of if you want to sell the house when this comes due in 10 years. In this scenario, you’re boxing yourself in to only one outcome. A lot can happen in 10 years, and it will go by faster than you think.

Lastly, pay attention to the fees you’d be paying for this. I bet they’re quite high.

Good luck.

The kids might be eligible for social security on one or both of their parents’ accounts. And your state may be able to help pay for their care.