DEAR BOB: I am a 74-year-old widow. About six years ago, I added my daughter’s name to my home’s title in joint tenancy with right of survivorship so she wouldn’t have to worry about probate costs when I pass on. I’m doing pretty well, health wise, but am running low on income since my airline pension income was cut about two years ago. However, I am told I can’t qualify for a senior-citizen reverse mortgage because my daughter is on the title. Is this true? I asked her to quitclaim her interest back to me but she is reluctant –Martha Y.
DEAR MARTHA: Because your daughter is obviously not yet 62, her being on the title to your home disqualifies you for a reverse mortgage. All co-owners must be at least 62 because reverse-mortgage eligibility is based on the age of the youngest owner.
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Your situation is another example why I do not recommend adding heirs to real estate titles to avoid probate.
However, your problem has an easy solution, which is good for you and your daughter. You can create a revocable living trust with your daughter named as the successor trustee and the heir of your living-trust assets after you pass on.
Before you do this, be sure she agrees and signs a quitclaim deed to you. Then obtain your reverse mortgage. After it is recorded, you can then transfer title to your home into your new living trust, thus avoiding probate after you pass on.
The reason you should wait until after the reverse mortgage is recorded to transfer title into your new living trust is reverse-mortgage lenders insist the title not be in a living trust when the reverse mortgage is originated.
LAST RESORT TO REMOVE A LEANING TREE
DEAR BOB: My neighbor’s property has a big old tree that leans dangerously toward my house. About a year ago, in a storm a big branch fell on my house but fortunately didn’t do much damage. However, I am concerned the tree has become heavier and seems to be leaning more toward my bedrooms. I’ve tried being nice to the neighbor, even offering to pay for trimming or removing the tree. But she refuses to allow me to hire tree professionals to work on her property. What should I do, as I am very worried about this dangerous situation? –Herm W.
DEAR HERM: Check with your city officials to see if there is a city ordinance affecting your situation. If so, the local code enforcement officer can probably help. That’s what I did a few months ago in a similar situation. The local code enforcement officer contacted my absentee neighbors who agreed that two of their trees were dangerous and they had them removed at their expense.
If the neighbor is not cooperative, your legal action is to file a private nuisance abatement lawsuit. This is not a do-it-yourself project. You will need to hire a local real estate attorney. If the judge agrees the leaning tree is dangerous, he can order the neighbor to trim or remove it as a private nuisance.
“FLEX MORTGAGE” CAUSES NEGATIVE AMORTIZATION
DEAR BOB: I have read several articles about “flex mortgages,” and they are getting a bad name. I refinanced my home in January 2005 and have one of those loans, which expires in January 2008. No one told me about how bad negative amortization can be. How concerned should I be? Should I refinance out of this bad loan? There is a prepayment penalty for doing so. I am planning on selling my home by the end of 2007 –Juanita J.
DEAR JUANITA: I presume “flex mortgage” is another name for an “option mortgage” where you have the choice of making monthly payments of interest only, below-interest only, amortized payments, or partially amortized payments. Any unpaid interest is added to your mortgage principal balance. The result can be “negative amortization” where you owe more than you borrowed.
At least six months before your too-short three-year loan comes due in January 2008, you should list your home for sale and hope it sells within a few months.
Because your mortgage has a prepayment penalty, and you only plan to keep the home another year or so, refinancing now to a fixed-rate mortgage would be a waste of money.
The new Robert Bruss special report, “Five Easy Ways to Buy Your Home and Investment Property for Nothing Down,” is available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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