Buying Home Means Buying Location

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WITH PETER G. MILLER

I Co-Signed on My Father’s Mortgage. He Passed Away. What Happens Now? Q: I am a co-signer for the mortgage on my dad’s house. He passed away and I was told that I have to pay for the house. I lived with my dad, so that is not a big deal. I want to keep the house, but now one my two brothers is saying he wants the house. Will I lose the house or is there nothing he can do since I was a co-signer? A: Did your father leave a will? If so, that will determine who gets what.As to the mortgage ,i t ’s not clear that you have to immediately pay it off. First, if your father left the property to someone else, the estate would need to settle the debt represented by the mortgage.Second,unlike other situations where there is a title change, the Garn-St.Germain Act provides that a lender cannot require the immediate repayment of a mortgage when there has been “a transfer to a relative resulting from the death of a borrower.”Third, if there is no will then a court will determine what happens with the property. For details, see an attorney who specializes in probate matters.

Q: What’s a “blanket” loan? A: The traditional answer is that a “blanket”mortgage is a single loan that is secured by two properties. Recently, however, the term sometimes has been used in situations where a new home has been purchased, but the current residence has yet to be sold, what lenders have usually called “bridge” financing.When the first property is sold, the money from the sale is used to reduce the blanket loan debt, and the blanket loan becomes just a simple mortgage on the remaining property. Example:You have a home worth $400,000 with a $250,000 loan balance.The new home is priced $600,000.A lender then offers you a “blanket”mortgage.You can borrow up to 85 percent on your existing home (more or less, depending on the lender), so you would be able to raise $90,000 ($400,000 x 85 percent = $340,000. $340,000 less $250,000 = $90,000). You would then buy the second home for $600,000, but the mortgage would be $510,000 ($600,000 less $90,000). When the first home is sold, another $60,000 less closing costs would be available to reduce the debt on the second property ($400,000 less $340,000 = See ASK OUR BROKER, Page 2

Give Your Home a Grand Entrance BY KIT DAVEY CTW Features

T

he entryway is the first impression potential buyers receive as they enter your home. Most of us overlook the possibilities of this small yet important space.With attention to detail and a little creativity, your foyer can be a gracious introduction to the rest of your home.

GETTING STARTED Start by putting yourself in the shoes of the buyer – ring your doorbell and step over the threshold of your home. Is the doorbell easy to find? Does it make a pleasant sound, or does it grate on the nerves? Consider installing a new bell, if necessary. Once inside, give your home the “sniff test.” If you detect anything offensive such as pet smells or cooking odors, make a note to air out your home, have the carpets, bedding and drapes cleaned.

Lighting Most front halls are poorly lit. If your hall feels gloomy, lighten it up by: • Cleaning the overhead fixture and putting in the highest wattage bulb(s) permitted. Replace the fixture if it is dated or tired-looking and invest in one with a higher wattage. Install a dimmer switch so you can control the mood and quantity of light in the space. • Adding an interesting antique or hand-painted mirror to reflect available light. • Replacing opaque or colored glass side panels with clear glass. Dry clean or replace door and side panel curtains with sheer fabric. • Painting the area (including

A vibrant front door and bright illumination can create an impressive foyer that sets the tone for the rest of your home. the back of the front door) in white or a light color that matches or blends with the adjoining spaces. • Using a light-colored area rug, or replacing dark flooring with lighter-colored material.

CREATE SPACE Unfortunately, many entryways are too narrow and barely can accommodate more than

two people. Ensure that your hall has enough standing space for four people and leave open a clear pathway for traffic (Two people should be able to pass each other, shoulder to shoulder, without bumping into furniture or accumulated clutter.) If you don’t have enough standing space or a free traffic channel, don’t even think of putting any furniture in this area! To create

the illusion of more space, don’t use an area rug. If your foyer is spacious enough to accommodate furniture, try using a piece that can double as a storage unit, such as an armoire, a tansu, a tall dresser, or a hutch. If you don’t need additional storage, place a sofa table with an antique chest, a

See ENTRYWAY Page 2

Buying a Home Means Buying the Location BY CHARLES SCUTT CTW Features

“Don’t buy the house; buy the neighborhood.” –An old Russian proverb Sure, it’s easy to fall for that love-at-first-sight residence. But it’s just as easy to suffer a broken heart when you learn too late that the surrounding community is less than desirable.Which is

why – whether you’re smitten with a particular picket-fenced abode for sale or have yet to discover your dream home – it’s essential to investigate the vicinity carefully before buying a property. “Buying a home is the most important financial decision most people will make in their lives, so you should take the time to educate yourself as best as possible,” says Manuel Iraola,

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president/CEO of Homekeys.net, an online real estate company in Miami.“One of the most important components of your research should be understanding the value of your home, which is determined in part by the value of the surrounding community,” including nearby comparable homes, schools, municipal services, and more. And that’s where a real estate specialist can help.To save time

and frustration, Eric A. Jacobs, owner of E2 Properties, LLC, a boutique real estate brokerage firm in Hollywood, Fla., recommends recruiting the services of a licensed realtor in the area you are interested in purchasing.This expert “will likely already know about the schools, activities and other characteristics of the neighborhood that may be important to you.”

See LOCATION Page 2

LOCATION CONTINUED FROM PAGE 1 If you have children, the quality of your local school district is of paramount importance.Ask the school district for test scores, graduation rates, budget and salary figures, and student and parent demographic information that can give you an indication as to what kind of education your child may receive. The first step in researching a neighborhood is to “conduct a thorough self-examination and find out exactly what it is that you and your family want,” Jacobs says.“I recommend that people make a list of what they absolutely do and don’t want. For example, if you want a back yard and tree-lined streets, then searching the concrete canyons of Miami’s urban jungle is a waste of time.” Once you’ve identified one or more areas that pique your interest, take the time to walk its streets. “Several trips at different times should give you a pretty good idea of what you’re in for in terms of traffic patterns, activity patterns and the general vibe,” Jacobs says.“You have to peek at the dark underbelly.” That means making a visit to the local police station to review the area crime grid from its records department.The crime grid will give you a good idea of where and when cars have been

broken into, robberies, burglaries and all the other events that may cause you to reconsider your choice, says Jacobs, who adds that it’s also a good idea to conduct a search for registered sex offenders online (www.sexualoffenders.com is a good place to start). When it comes to crime concerns, keep in mind that areas where homes are in greater disrepair tend to have higher crime, says Jacobs.“If you notice several vacant houses on a street, you may want to find out if there are a lot of absentee owners,” he says. “Another thing to research is the actual commute time from the home you’re planning on buying,” says Alex Aguilar of RE/MAX in Granada Hills, Calif. Try to test the length and difficulty of the commute “around the time you would normally leave the house.” Additionally, check for any future proposed zoning changes or variances with the municipality, says Aguilar.This could signal the coming of commercial properties or low-rent housing coming to the area. While red flags like a sub-par school district, boarded-up storefronts and clogged roads are obvious indicators of a poor location, some warning signs are trickier to identify. “If you are considering a home that is the most expensive one in the neighborhood, there is a good chance that it may be

overpriced and/or overbuilt,” Iraola says.“If you purchase an overbuilt home, it may not fare as well holding its property value, as the properties competing with it for buyers may be located in different neighborhoods than the one you purchased in.” On the other hand,“If you buy a house priced lower than many of the others, you can more easily increase its worth with a little hard work,” Iraola says. If your homework uncovers flaws in the neighborhood, you may be able to use these points as leverage to lower the seller’s asking price, says Jacobs. Working with your real estate professional, present the information you’ve gathered to the seller.Tell them it’s better to negotiate with a buyer who already knows the neighborhood’s information. Indicate that the alternative is to risk a legal problem with a different buyer who may pay full price, but who would legally have a case against the seller for not earlier disclosing all the negative neighborhood information they now know.

© CTW Features

Ask Our Broker CONTINUED FROM PAGE 1

$60,000). Most lenders have such programs; speak to several regarding costs, rates,etc.

Q: Is mortgage insurance required with a Federal Housing Administration loan? What’s the difference in the long run if we get lender-paid mortgage insurance versus purchasing our own mortgage insurance?

A: Private mortgage insurance is not required with FHA financing. FHA loans, by their nature ,a re insured by the federal government.Borrowers pay an up-front mortgage insurance premium charge at closing equal to 1.5 percent of the loan amount plus a month MIP fee equal to .5 percent of the outstanding loan balance. You cannot purchase your own private mortgage insurance.Lenders obtain such coverage when borrowers purchase with less than 20 percent down and then borrowers pay the premiums. There are loans with “lender-paid mortgage insurance.”With such financing the lender charges a somewhat higher rate of interest and pays the mortgage insurance directly. Since interest is deductible, the theory is that the borrower gets a bigger write-off. However, legislation is being discussed that would allow borrowers to write-off MI charges.Also, while MI and FHA premium charges can end once the loan balance has been reduced to 78 percent of its original value, a higher interest level will stay with the loan forever. Q: I live in a small town. I rent, but I’m buying a house. My broker has told my ex-landlord that I’m buying, what I’m paying and when the transaction will close. I think this is private information and should not be revealed. To whom do I complain?

A: This is a question to take up with state or provincial real estate regulators.They will ask for evidence of the claims you allege.They also will ask if the broker is your agent (a buyer broker), the agent of the seller (a listing broker) or both (a disclosed dual agent).The status of the broker may impact the duties that are owed to you because there is a difference between being a “client” (and being represented by an agent) and being a “customer” (and relying on someone else’s agent).A list of regulators can be found at ARELLO.com. © CTW Features Peter G. Miller is a veteran real estate columnist and the author of “The Common-Sense Mortgage.” Have a question? Please write to [email protected].

ENTRYWAY CONTINUED FROM PAGE 1 bushy plant or a sculpture piece underneath it. Or, put an outdoor garden bench, a church pew or a shapely chair against the wall. If you use a dresser or table in your entry, don’t clutter it up with keys, purses and mail! Adorn it with a flower arrangement, a pair of candlesticks or a decorative bowl.

• Display your grandfather clock or an antique hall tree. • Install one or two narrow, wall-mounted shelves and rest framed art on the ledges. • Hang your collection of straw hats, beaded purses or masks on the wall. • Add texture by hanging a soft piece of art, such as a kimono on a bamboo rod, a tapestry or a rug. • In a corner, place an umbrella stand with your antique walking stick collection, a tall sculpture piece or a graceful plant.

DISPLAY YOUR ART If you have sufficient space, you can add a little flare:

© CTW Features