USDA payoff

[steved0515]

Hi, my wife and I live in Maine in a USDA subsidized home. My wife bought the house in 1990 as a single parent and was eligible for subsidy. It is a 33 year mortgage so it's life ends in May 2023.
Since that time, we were married in 2007, resulting in an end of the subsidy eligibility. The interest rate has been a whopping 9.25% since.
I am now in a financial position where I want to get rid of this elephant but continue to remain in the house. I am recently retired and my wife and I have no plans to move (at the moment).
My question is regarding the subsidy recapture. As I understand it, I have two options if I want to pay off the mortgage without selling the residence.
OPTION 1 - I can pay off the principle, which would end my monthly payments but would leave me with a lien in the amount of the subsidy recapture amount (which is north of $20,000)
OPTION2 - I can pay the principle plus 75% of the subsidy and would be paid off and lien-free.

The principle is approx. $57,000.
I'm looking for advice on which option I should choose and why ?
Thanks, Steve

 

[single317dad]

In my opinion, that decision would come down to what you could do with $15,000 in the time between paying off the loan and future sale/transfer of the property. If you feel that your $15,000 will become more valuable than the $20,000 which will become due at that time, by all means ride out the lien for the duration. Your recapture amount should not continue to increase after payoff even if the property value does.

 

[steved0515]

In my opinion, that decision would come down to what you could do with $15,000 in the time between paying off the loan and future sale/transfer of the property. If you feel that your $15,000 will become more valuable than the $20,000 which will become due at that time, by all means ride out the lien for the duration. Your recapture amount should not continue to increase after payoff even if the property value does.

My wife and I may decide to stay for the rest of our lives. We're retired. So, I guess, under those circumstances, what effect would the unpaid subsidy recapture have on our estate when we die ? Would the $20,000 have to be paid by whomever inherits the house ?
Thanks,
Steve

 

[TigerD]

Or you could refinance and pay off both the house and the subsidy recapture.

Current rates are rather low.

TD

 

[single317dad]

My wife and I may decide to stay for the rest of our lives. We're retired. So, I guess, under those circumstances, what effect would the unpaid subsidy recapture have on our estate when we die ? Would the $20,000 have to be paid by whomever inherits the house ?
Thanks,
Steve

It's possible in some cases to carry the lien through probate and into the heir's hands, but there could never be a sale or any kind of financing of the property without paying the recap.

 

[steved0515]

Or you could refinance and pay off both the house and the subsidy recapture.

Current rates are rather low.

TD

Can't refinance due to poor credit. I'm just wondering why I should care about a subsidy recapture lien if I intend to remain in my home.
Thanks, Steve