Best place to get a reverse mortgage

DEAR BOB: My parents are avid readers of your articles andhave become quite the experts on reverse mortgages for senior citizens. Butthey live in a small town that has one bank, owned and run by an “oldgeezer” who has been there for 100 years. At least he seems that old. Iknow he charges high interest rates but he is so charming that most of the”locals” don’t bother to go to the nearest city about 50 miles awayto compare loan terms. Where is the best place for my parents to get a reversemortgage? Are reverse mortgages available at small-town banks? –Marsha W.

DEAR MARSHA: Yes, reverse mortgages are availableeverywhere, even in small towns. However, there are minimum property standards.

Purchase Bob Bruss reports online.

Perhaps you remember the angry West Virginia homeowner whosereverse-mortgage application was rejected because her only drinking watersource is a cistern (for some reason she didn’t want to drill a well). Frankly,I don’t blame the reverse-mortgage lender for rejecting that loan.

Your parents will discover most banks do not originatereverse mortgages for senior citizens. But a major exception is Wells FargoBank.

The easiest place to find reputable reverse-mortgage lendersfor your parents in their area is at www.reversemortgage.org.They should consider the FHA (HECM), Fannie Mae and Financial Freedom Planreverse mortgages.

More details are in my special report, “The Whole TruthAbout Reverse Mortgages for Senior Citizen Homeowners,” available for $5from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant delivery at www.BobBruss.com.

NOTHING ILLEGAL OR UNETHICAL ABOUT CHARGING LOW RENT

DEAR BOB: I recently remarried. My new wife and I each ownour own homes. We are going to move into her home when I retire next summer. Myadult son recently moved back in with us and is now re-enrolled in a localcollege. Rather than sell my home, I am considering renting it to my son.Knowing his financial limitations, I would be willing to rent to him at a bargainlow rent. But my wife thinks that is somehow unethical or illegal. I don’t seeit that way. However, I’ve never been a landlord. Is there anything wrong withrenting my house to my son at a low rent? –John C.

DEAR JOHN: No. You can charge your son any rent you wish.There is nothing unethical or illegal about charging him a low rent or even norent.

However, after you and your wife move out, you might suggesthe rent out one or two of the bedrooms to his college pals to increase hisincome. Many parents do that to teach their college kids the responsibilitiesof being a landlord.

Also, then you could charge him a higher rent if he hassufficient rental income — just a suggestion.

You must report rent received on Schedule E of your incometax returns. This is also where you deduct applicable expenses such as mortgageinterest, property taxes, insurance and repairs.

But the IRS does not allow you to deduct additional expensesexceeding the rent, thus creating a tax loss, if you charge a below-market rentto a relative. That means you probably won’t be able to claim a depreciationdeduction. For exact details, please consult your tax adviser.

GET YOUR TENANTS OUT BEFORE SELLING RENTAL HOUSE

DEAR BOB: Please give us guidelines to inform ourrental-house tenants we plan to sell their rental house. We are prepared tooffer them an incentive to stay in the house until it is sold, such as arent-back after the house is sold. What do you suggest? –Kathleen and Chuck N.

DEAR KATHLEEN AND CHUCK: Most experienced real estate agentswill tell you it is much more difficult to sell a house with tenants than tosell a vacant house.

If you offer the tenants a rent-back after the sale closes,you further hurt your chances of selling because most buyers want to move inimmediately and they don’t want to deal with tenants.

Presuming your tenants have a month-to-month rentalagreement, I suggest you give your tenants a 60-day notice to move. After theyare out, then you can paint and clean the house to get it into first-class conditionto sell.

The new Robert Bruss special report, “The 20 EssentialQuestions Smart Home Buyers Must Ask to Avoid Overpaying in a Buyer’sMarket,” 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 delivery atwww.BobBruss.com. Questions for thiscolumn are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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