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Real Estate Mailbag

Saturday, March 19, 2005; Page F14

Q DEAR BOB: My mother recently passed away and left everything to me. She owned vacant land in Florida. How do I have the title switched to my name? I have been receiving queries from real estate agents asking if I want to sell the land. I sent a copy of her death certificate and the will to the local county tax collector's deed section, but they said I need to hire a lawyer. Is that true? -- Sharon P.

ADEAR SHARON: Unless your mother held title in a living trust, or you held title with her in joint tenancy with right of survivorship, a Florida probate proceeding will probably be necessary to transfer title to you, and you should do it as soon as possible.

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Yes, you should hire a Florida probate lawyer. The bar association in the county where the land is located can probably send you a list of local probate lawyers, but it would be better for you to meet with the lawyer to discuss the situation, rather than hiring by long distance.

This costly problem could have been avoided if your mother had held title in her revocable living trust. Then, after she passed on, as successor trustee you could have transferred the title without the necessity for probate proceedings.

DEAR BOB: My husband is 74, and I am 72. We own our home free and clear, except for a $100,000 home equity credit line with a zero balance, which we have for emergencies. But it's getting tougher to live comfortably on Social Security plus my husband's pension. A neighbor recently obtained a reverse mortgage to pay for a home health worker. She told us the cost is paid from her reverse mortgage and she is so much happier than if she had moved to an assisted-living home. Is a reverse mortgage a good idea? -- Nattie R.

DEAR NATTIE: You can use a reverse mortgage for any purpose you wish, even something such as a vacation or a new car. Most senior citizens use their reverse mortgages as a credit line alternative, occasionally taking a lump sum to pay for something such as a new roof.

Some senior citizens now use their reverse mortgages to pay premiums on long-term care insurance policies that cover expenses not paid by Medicare. Or you can select the monthly lifetime income choice to supplement your husband's pension payments.

The big advantage of senior-citizen reverse mortgages is that no repayment is required until the homeowner sells the residence, moves out for more than 12 months or dies. Then the home is sold (or refinanced by the heirs) to pay off the reverse mortgage, with the excess equity proceeds going to the homeowner or the heirs.

However, unless you or your husband expect to stay in your home at least five years, reverse mortgages usually are not a good deal. The upfront costs are quite high.

DEAR BOB: When I applied for a home mortgage, I was promised an 8 percent interest rate. Now I am told I qualify only for a subprime home loan at 13 percent for a $50,000 loan with a variable interest rate. My payments will start at $403 for 24 months, and by 2007 I will be paying $549 monthly. Starting in 2008, they want me to pay 328 monthly payments of $557. Should I back out? -- Pat M.

DEAR PAT: You were a victim of bait-and-switch tactics by that subprime lender. If I were in your situation, unless I desperately needed the loan, I wouldn't sign anything.

In today's home mortgage market, where prime fixed-rate home loans get about 6 percent interest, even subprime loans shouldn't cost more than 9 percent to 10 percent. Shop around among other lenders to compare loan terms.

DEAR BOB: How many times can my wife and I sell our principal residence and use that $500,000 capital gains exemption you often discuss? -- Kuldip D.

DEAR KULDIP: There is no limit to the number of times the exemption of Internal Revenue Code 121 can be used, but it cannot be used more frequently than once every 24 months.

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