Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, June 18, 2006.
DEAR BOB: My husband and I, in our 70s, live in our home of 48 years. Our three children are in their 40s. Our will stipulates the house will go to the three siblings upon our death. However, since one unmarried daughter living at home has been on disability for the last 25 years, we wonder if that is a good idea? If her brother and sister want their financial share of the house, the disabled daughter would not have the money to buy their shares. Nor would she have a place to live. We want to show compassion and yet be fair. Our children are very kind, sincere and loving of each other. Wanting their share of the money would be based on need, not greed. What should we do? –Mary Jane T.
DEAR MARY JANE: That is a difficult situation with no right or wrong answer. If I were in your circumstance, I would probably leave the house to the special-needs daughter alone. Or, you could leave it to all three siblings equally but give the daughter a life estate in the house as long as she lives in it.
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Either way, the disabled daughter will have a place to live. I presume the house is mortgage free so making mortgage payments is not an issue.
PROFITS ON NEW CUSTOM HOMES ARE NOT GUARANTEED
DEAR BOB: I have heard that some people can have a custom home constructed by a builder and after construction is complete wind up with 50 percent to 60 percent equity in their new homes. Is this true and how can I go about doing this? –Greg H.
DEAR GREG: That’s easy. Just hire a quality custom-home builder who charges low construction prices! If you already own a building lot, that gives you a head start.
There is no guaranteed way to turn a fast profit on new custom homes unless you can lock-in a low construction price and market values rise during the construction period.
HOW DOES A REVERSE MORTGAGE WORK?
DEAR BOB: Please explain how a reverse mortgage works. Who actually owns the home, the person buying out the mortgage or the homeowner? –David P.
DEAR DAVID: If all owners of a principal residence are 62 or older, and there is no or a small existing mortgage balance, the reverse mortgage lender pays the senior citizen homeowner either monthly lifetime income, a lump sum, and or a credit line (except in Texas). It’s the homeowner’s choice which alternative or combination is preferred.
The homeowner continues to own the home, subject to the reverse mortgage, which does not require any repayment until the homeowner sells the residence, moves out longer than 12 months, or dies.
Then the reverse mortgage “matures” and must be paid off, including principal and accrued interest. The remaining equity does to the homeowner or the heirs. More details are in my special report, “The Whole Truth About Reverse Mortgages for Senior Citizen Homeowners,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 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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