Best refinance strategy for mortgage with small balance

DEAR BOB: Is it a good idea to refinance my residence with ahome equity loan? –Miriam G.

DEAR MIRIAM: You raise a fascinating question. If you have ahigh-interest-rate mortgage with a small balance, you might be smart to obtaina home equity line of credit (HELOC) for a larger amount and use part of thatmoney to pay off the old mortgage.

Purchase Bob Bruss reports online.

That’s what I did a few years ago. I had an old $15,000first mortgage on my second-home condo at 9 percent interest. The condo’smarket value was about $175,000.

Wells Fargo eagerly approved a $100,000 home equity line ofcredit at the prime rate. I used $15,000 of that amount to pay off the oldmortgage and had $85,000 remaining on my line of credit. I saved interest andit’s nice to have that credit line just waiting for my signature on a check.


DEAR BOB: My husband passed away last September. We own twohomes in joint tenancy with right of survivorship. How do I transfer title intomy name? My tax adviser told me I should have a Realtor evaluate each propertyto have the stepped-up value established. Is this correct? –Ellen C.

DEAR ELLEN: Yes. You received good advice to have bothproperties evaluated as to the market value of your properties on the date ofdeath to determine your new stepped-up basis after inheriting the interest ofyour late husband.

A professional appraisal is not required. But you need awritten market value opinion by an expert, such as a local Realtor, toestablish 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 percentmarket value at that time. However, tax assessments are not always accurate inall counties.

All that is usually required for a surviving joint tenant toclear the title of a deceased joint tenant’s name is to record a certified copyof the death certificate and an affidavit of survivorship. A phone call to thelocal recorder of deeds for each property will inform you of the exactrecording requirements in that locality.


DEAR BOB: I want to buy out my siblings’ share of ourdeceased parent’s home. I will be a first-time homeowner. In addition tofinancing my purchase, I will need funds for remodeling. How do I get started?–Anath B.

DEAR ANATH: An experienced mortgage broker in the communitywhere the home is located can tell you if there are any local first-time homebuyer mortgages available there. These plans vary by state, county and evencity.

If you want to include the remodeling costs in your purchasemortgage, FHA and Fannie Mae (plus a few other lenders) offer such programs ifthe total mortgage amount falls within their maximum loan limits.

The new Robert Bruss special report, “How to BuyFixer-Upper Houses with Little or No Cash for Fun and Fortune,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at Questions for this columnare welcome at either address.

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

Copyright 2006 Inman News

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