Sell the house, or pay off the mortgage?

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My parents bought a home on a first time home buyers program in 1999. Part of the mortgage agreement was that the buyers of the home (my parents) could only sell the home to other buyers in the first time home buyers program until 50 years after the original sale of the home, and the home could only be sold at the price determined by the county. My parents agreed to the terms because they never thought that they would have any reason to move and because they thought the program was the only option they had if they wanted to own a home.

In 2009 my parents got behind on the mortgage payments and began working with Bank of America on a loan modification. After initially being accepted they were declined and the past due payments that originally totaled 5 thousand dollars now equal 20 thousand dollars.

However my question is not about loan modification though. Recently my grandmother passed away and left all her money to my father and my uncle. My parents now have enough money to pay off the mortgage in full (which they want to do so they can have more money each month to save etc.) but my question is: should they? Considering they can’t sell the home for any real profit in the future, shouldn’t they just sell the home and buy another house? And if they do sell the house, are they still on the hook for the 20 thousand in late fees and interest?
Yes it is 50 years. I read the agreement between the county and my parents. I know it sounds messed up, but it is the reality.

4 Comments
  1. Reply
    Woof
    May 4, 2011 at 12:58 am

    50 years? You don’t have your facts straight.

  2. Reply
    Ian
    May 4, 2011 at 1:05 am

    First point is that the $ 20,000 needs to be paid whatever you do, that is in arrears and they owe that money to the bank that provided the mortgage.
    After that they need to consider where they want to live, what kind of house they would like in that location, and then check on what that property might cost. If they can finance that with their inheritance and the proceeds from the sale of their existing house, then they should probably go for it.
    Conditions like your parents agreed to are not uncommon. These terms are used by the local authorities to ensure that there is always a supply of affordable homes in that area.

  3. Reply
    the kid
    May 4, 2011 at 1:11 am

    Sell and buy an unrestricted place.

  4. Reply
    Joe Sheehan
    May 4, 2011 at 1:43 am

    If it is a restrictive mortgage then the problem should be solved if they pay off the mortgage. There should be no restrictions after the mortgage is satisfied. Even if you do want to sell, it may make more sense to pay off the mortgage first just so you can sell with out restrictions. Check these options over with the program that administrates this first time home buyer program.

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