by Peter G. Miller
Question: We're considering refinancing our home in order to add a pool. The value of our property has increased to the amount needed to have the pool and necessary equipment installed.
What would be the added value after a pool is installed in southwest Florida? We were told 15 to 20 percent, not sure if that is correct. Also, we might finance with a 1 percent loan for 5 or 10 years that would lower our payments and allow us to pay off the principal sooner as long as we manage our money correctly. What is the good and bad for this type of loan?
Answer: To find the additional value represented by a pool you should first speak with several local brokers who are active in your neighborhood.
As to that mortgage, what you describe is puzzling. If rates are at 6.6 percent or so at this time, how can you get 1 percent financing? What you likely are describing is an "option ARM" loan with low monthly payments, payments made possible because you're not paying required interest. The result is that the loan produces "negative amortization" -- that is, the size of the loan grows each month you make a 1-percent payment. Instead of a quick loan pay-off you would instead have a loan balance which gets larger each month.
Of course, if you were to re-pay such a loan at a self-amortizing rate the 1 percent figure would be meaningless.
Please speak with more lenders. From what you have written, the financing you discuss will not produce the results you want.
Question: Who does the canceling on a new home contract? The buyer? Or the buyers agent?
Answer: The buyer can make a decision to end a purchase agreement and a buyer's broker can transmit your choice -- but wait: What penalties and damages do you face by canceling? Will you lose your deposit? Could you be sued for damages? What about being sued for "specific performance" and being forced to purchase the property? Do not say anything until an attorney reviews the agreement.
Question: Can you give back a house to the seller two weeks AFTER escrow closed?
Answer: No. After closing you own the property ... and likely owe a lender.
When you buy a home you need to get it right. That means using a buyer broker and a professional home inspector and having the best possible financing.
How would you just give it back? What about all the closing and marketing costs which were paid?
Speak with an attorney for details.
Question: My wife and I accepted an offer contingent on the buyers selling their home. We gave them 90 days. We are about 65 days into it and have a new offer on the table that we would like to accept. If the previous buyers want to get a bridge loan so they don't lose the house, are we obligated to wait for them to get or possibly not get financing (prolonging things with no promises) considering that the contingencies were on the sale of their home not on a bridge loan?
If so, what recourse can we take to cover our backside?
Answer: If the buyers have 90 days then they have 90 days, not 65. If they are willing to get a bridge loan to close the sale, and if your sale agreement allows them to remove the contingency in ways other than by selling the house, that's great -- you've sold your home.
I would not have given the buyers a 90-day option. Instead, I would have said that I could require them to either close the deal in 72 hours or they would get back their deposit if I found another buyer.
For specifics, have an attorney look at your sale agreement.
Question: I'm buying a modular home. Can I purchase with a reverse mortgage?
Answer: It's irrelevant that you're buying a modular or a stick-built home. What counts is that you're age 62 or above and have equity in the property, otherwise you cannot get a reverse mortgage.
If you buy for cash or with a small loan you could then get a reverse mortgage (the reverse mortgage would pay off the small loan). For details, speak with an attorney who deals in elder law.
Question: I'm closing on a condo I bought several months ago. I received a phone call this past weekend that there was a roof fire and damage to my unit. The seller is trying to repair the damages from the fire. Do I have the option to get out of the sales agreement based on the fact that the unit is not in the same condition when I made the offer because there has been fire damage to the unit?
Answer: The remedy here is for the seller to restore the property to the condition seen at the time the sale agreement was written. Typically insurance will cover all or most of his costs, the work will be done and everyone will be whole.
Alternatively, if the owner does the work and you back-out of the contract then the seller may well be entitled to keep your deposit. See an attorney for specifics.
Accidents happen. It makes sense for everyone to go forward with the understanding that you must receive the property in its pre-conflagration condition. Given repairs, you might actually get a better unit.
Question: When I purchased my home back in 1998, I received a refund check for excess deposit funds and it was somehow dropped behind our dresser. The check was discovered when we moved our dresser in 2006.
The check is for $999.01 and I hope and expect that the refund check is still good. However, the check states that it's void after 120 days.
Since it was an honest accident and a mistake, and since the title company has keep the money for more than nine years, can I request a new check?
Answer: The title company kept the money because they have no choice, the check was uncashed. In some jurisdictions, they may well have turned the money over to a court or a state agency as unclaimed property.
Certainly you should contact the title company. The betting here is that they will review their books, see what became of the money and then either issue you a check or advise you where the money is kept. Send the title company a copy of the check with a letter requesting a refund. Send your letter by certified mail with a return receipt requested.
You might also want to check Unclaimed.org, a site operated by the National Association of Unclaimed Property Administrators. There is no charge to use this site.
Question: I have 80 acres of land, one of the highest points in my county. I'm the last one on my road who has cell phone service. Everyone southwest of me has no service, Just wondering what I can do or who I can contact about coming and looking at my land to see if it is a good location for installing of a cell tower.
Answer: No problem. Go to any nearby location where there is now a cell phone tower and speak to the property owner or see if the tower has some contact information. Also, check the local newspaper archives to see if they have past stories regarding cell phone towers -- you may be able to get names from such stories.
Question: What complexities lie with willing real estate to three children? The home is mortgage free. What rights does each child have over the real estate and what happens if one sibling does not want to sell the property or buy the other two children out?
Answer: If the time comes when one wants to sell and the others do not, or vice versa, then if common sense is missing the matter can wind up in court as a suit for partition -- an effort to force a sale through a court order.
Speak with an attorney who specializes in elder law to determine how best to leave the property. Also speak with the children, explain the issues, and if old enough see what preferences they might have.
Question: Are you eligible to do a 1031 exchange on your primary residence? If not, is there any other similar programs?
Answer: When you sell a home which has been your residence for two of the past five years, you may protect as much as $500,000 (if married, $250,000 if single) from capital gains taxes. For general information, see IRS Publication 523, Selling Your Home.
However, when it comes to exchanges, here's what the IRS says: "Section 1031(a) provides that no gain or loss is recognized on the exchange of property held for productive use in a trade or business or for investment (relinquished property) if the property is exchanged solely for property of like kind (replacement property) that is to be held either for productive use in a trade or business or for investment.
Under ? 1031(b), if a taxpayer also receives cash or property that is not like-kind property (boot) in an exchange that otherwise qualifies under ? 1031(a), the taxpayer must recognize gain to the extent of the boot. Section 1031 does not apply to property that is used solely as a personal residence."
Note the last sentence and speak with a tax professional for specifics.
Question: I recently sold my house to a relative, but at closing I found out that escrow credited my buyer's mortgage broker some $9,000 for fees incurred to solicit the loan without my permission and that's besides the $15,000 I credited my buyer for closings stipulated in the contract. I tried hard for two weeks to retrieve the money but the loan agent told me they will only reimbursed me $2,800 because of some miscellaneous expenses they incurred. I don't know what to do from this point. Is hiring a lawyer my best option?
Answer: Could the money credited to your buyer be a "seller contribution" designed to entice the buyer to purchase your home? As to the fees paid to the lender, you should be paying no fees unless the sale agreement requires otherwise. Most likely, you agreed to pay for "points" or some other lender fee.
Have an attorney review your sale agreement to see if there are grounds for such charges.
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