DEAR BOB: Is it a good idea to refinance my residence with a home equity loan? –Miriam G.
DEAR MIRIAM: You raise a fascinating question. If you have a high-interest-rate mortgage with a small balance, you might be smart to obtain a home equity line of credit (HELOC) for a larger amount and use part of that money to pay off the old mortgage.
Purchase Bob Bruss reports online.
That’s what I did a few years ago. I had an old $15,000 first mortgage on my second-home condo at 9 percent interest. The condo’s market value was about $175,000.
Wells Fargo eagerly approved a $100,000 home equity line of credit at the prime rate. I used $15,000 of that amount to pay off the old mortgage and had $85,000 remaining on my line of credit. I saved interest and it’s nice to have that credit line just waiting for my signature on a check.
DOCUMENT MARKET VALUE TO PROVE STEPPED-UP BASIS FOR INHERITANCE
DEAR BOB: My husband passed away last September. We own two homes in joint tenancy with right of survivorship. How do I transfer title into my name? My tax adviser told me I should have a Realtor evaluate each property to have the stepped-up value established. Is this correct? –Ellen C.
DEAR ELLEN: Yes. You received good advice to have both properties evaluated as to the market value of your properties on the date of death to determine your new stepped-up basis after inheriting the interest of your late husband.
A professional appraisal is not required. But you need a written market value opinion by an expert, such as a local Realtor, to establish your new stepped-up basis for the two properties.
For example, when I inherited a property several years ago, I used the local property tax assessor’s value, which was based on 100 percent market value at that time. However, tax assessments are not always accurate in all counties.
All that is usually required for a surviving joint tenant to clear the title of a deceased joint tenant’s name is to record a certified copy of the death certificate and an affidavit of survivorship. A phone call to the local recorder of deeds for each property will inform you of the exact recording requirements in that locality.
FHA AND FANNIE MAE OFFER COMBO PURCHASE-FIX UP MORTGAGES
DEAR BOB: I want to buy out my siblings’ share of our deceased parent’s home. I will be a first-time homeowner. In addition to financing my purchase, I will need funds for remodeling. How do I get started? –Anath B.
DEAR ANATH: An experienced mortgage broker in the community where the home is located can tell you if there are any local first-time home buyer mortgages available there. These plans vary by state, county and even city.
If you want to include the remodeling costs in your purchase mortgage, FHA and Fannie Mae (plus a few other lenders) offer such programs if the total mortgage amount falls within their maximum loan limits.
The new Robert Bruss special report, “How to Buy Fixer-Upper Houses with Little or No Cash for Fun and Fortune,” is now 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.
(For more information on Bob Bruss publications, visit his
Real Estate Center).