Which home mortgage fees are justified?

DEAR BOB: Which home mortgage fees are proper for a lenderto charge borrowers? I recall you said some fees are unnecessary junk orgarbage fees to avoid –Stephen O.

DEAR STEPHEN: Mortgage lenders are constantly working 24hours a day, seven days a week, to create new names for unnecessary junk orgarbage fees to impose on innocent borrowers who have no clue when they arebeing ripped off. However, there are many honest mortgage lenders who won’t tryto impose unexpected last-minute fees.

Purchase Bob Bruss reports online.

I suggest you start shopping among at least a half-dozenmortgage lenders for a so-called “no cost, no fee” home loan. Intoday’s mortgage market with rising interest rates, I recommend obtaining afixed-rate mortgage.

However, if you are certain you won’t keep your home morethan five years, then an adjustable-rate mortgage (ARM) fixed for five yearscan save you a few interest dollars. But be certain it does not contain aprepayment penalty or negative amortization (where the interest rate adjustsmonthly or semi-annually and unpaid interest is added to your loan balance).

If you are dealing with a direct lender, such as WellsFargo, Bank of America or Countrywide, the lender’s good faith estimate mustreveal all loan charges. But you might be asked to pay legitimate fees to thirdparties, such as for the appraisal, credit report and lender’s title insurancefee. That’s fine. Those are not junk or garbage fees.

However, if you are dealing with a middleperson, such as amortgage broker, his or her written good faith estimate might be less reliable.The reason is the broker often says, “I got you the best mortgage, but thelender imposed these unexpected junk fees at the last minute. Take it or leaveit.”

Watch out for unnecessary, 100 percent pure lender profit,previously undisclosed junk or garbage fees with creative names such asunderwriting fee, document preparation fee, loan review fee, warehousing fee,and loan origination fee.

If the lender asks you to pay a loan fee of 1 percent or 2percent of the amount borrowed, usually called points, ask how much reductionyou will receive in the loan’s interest rate. For each one point loan fee paid,you should receive at least a one-eighth-percent reduction in your loan’sinterest rate for the life of the mortgage. Pay a loan fee only if you expectto stay in the house at least 10 years. Otherwise, take the no-cost, no-feemortgage with all lender charges included in the interest rate.

WHY ALL CONDO OWNERS SOMETIMES GET ASSESSED WITHOUTRECEIVING BENEFITS

DEAR BOB: Our condo homeowner’s association (HOA) gotassessed $6,000 each for replacement of roofs, which we have to pay even if wesell the condo and move out. My roof was replaced last year, but they stillwant me to pay $6,000. What can I do? –Rita S.

DEAR RITA: Your HOA did not get assessed. Instead, the HOAis assessing the individual condo owners $6,000 each to replace the roofs.

That’s the way HOAs work. It’s like a mini-democracy. Evenwhen your individual condo unit won’t directly benefit, you are subject tospecial assessments approved by the HOA board of directors, which benefit theentire condo complex but not your specific unit.

SHOP AROUND FOR PROBATE FEES

DEAR BOB: My widowed mother recently passed away. The lawyerwho prepared her trust wants to charge an outlandish fee just to fill out thedeath papers for the court for her small estate. Is it possible I could filethe papers myself with the court? Where do I obtain them? –Eugene B.

DEAR EUGENE: If your mother left her major assets in arevocable living trust, as I constantly recommend, no probate court proceedingsare required.

However, if she left a will with a testamentary orirrevocable trust, then probate court proceedings are usually required. This isdefinitely not a do-it-yourself project.

Shop around among probate attorneys. Although state law setsthe maximum probate attorney fees allowed, based on the gross value of thedeceased’s estate, most probate attorneys will “adjust” their feesdownward if you ask (unless there are lots of complications or a will contestinvolving the heirs).

Just because an attorney prepared a will and testamentary orirrevocable trust doesn’t mean you must hire that attorney after the principaltrustor dies. Shop around. You will be spending part of your inheritance forprobate attorney fees.

SPITE-FENCE RULES

DEAR BOB: Several days after we phoned our neighbor to askhim to quiet his barking dog and stop running his tractor and spewing carbonmonoxide near my disabled daughter’s room, he built a tall spite fence. I liveon a lake and had a nice view from my kitchen window for 28 years. The neighborhas lived next door for 17 years. But the couple next door is now splitting.What chance do I have to either remove part of the fence that blocks my lakeview or cut it down by 2 feet? He moved out but still owns the house. The wifeseems amenable to being reasonable. What recourse do I have? –Elly W.

DEAR ELLY: Unless your city or county has a view protectionordinance, you have no legal right to a view.

However, if the neighbor’s tall fence is defined by localordinance as a spite fence (usually 6 feet or taller built without a requiredbuilding permit), you may have a legal right to have the fence removed. Fordetails, check with a local real estate attorney.

ADDING NEW HUSBAND TO HOME TITLE WON’T SAVE TAX YET

DEAR BOB: In 1988 my husband and I bought a house together.In 1994 we got divorced and I changed the title to my name only. In February2006 we got back together and remarried in May 2006. I added his name back tothe title. If we sell our home within a year and file our income tax returnsjointly for 2006, can we claim the $500,000 home sale tax deduction? –Rita R.

DEAR RITA: Not yet. For your “new husband” toqualify for an additional $250,000 principal residence sale tax exemption,Internal Revenue Code 121 says he must occupy the principal residence at least24 of the 60 months before its sale.

However, he does not have to be on the title if he meets the24-month principal residence occupancy test and you both file a joint incometax return in the year of principal residence sale. For full details, pleaseconsult your tax adviser.

NO WAY TO LEARN WHO IS BUYING THE HOUSE NEXT DOOR

DEAR BOB: I am interested in finding out who is buying thehouse next door to mine. The sale is currently pending. Is there any way tolearn other than asking the buyers or realty agents directly? –Carole B.

DEAR CAROLE: No. Until a home sale closes and the titletransfer is recorded, the real estate agents and the other parties handling thetransfer cannot legally disclose who is buying the home. That is confidentialinformation.

Nor can they reveal the purchase price without breaching theirfiduciary duty to the seller and buyer. The only way to find out the buyer’sname now is to ask the seller. But that individual doesn’t have to disclose thebuyer’s name.

CAN HOME BUYER OBTAIN DISCLOSURES FROM PREVIOUS SELLER?

DEAR BOB: I feel the sellers from whom I bought my home didnot disclose a material and expensive problem with the house. The neighborstell me the previous owners tried extensive repairs over the years to remedythe problem, but did not succeed. Is there any way I can learn the disclosuresthe sellers of my house were given when they purchased? –Diane S.

DEAR DIANE: No. You have no legal right to obtain thewritten disclosures made to your seller unless that information is publicinformation, such as local building permits, pest control inspection report,etc.

Of course, if there are any warranties, such as a 10-yearroof warranty, you are entitled to the balance of that warranty period. Forfull details, please consult a local real estate attorney.

The new Robert Bruss special report “Probate PropertyProfit Secrets Revealed” is now available for $5 from Robert Bruss, 251Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instantInternet 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
).

Copyright 2006 Inman News

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