DEAR BOB: Thank you for the recent information on reverse mortgages. My grandmother owns her house but could use some extra income. She is interested in a reverse mortgage but can't find a lender near her home in North Carolina. I gave her that Fannie Mae number you recommend, 1-800-732-6643, but it didn't help. I also told her to phone Norwest Mortgage, but their nearest office doesn't make reverse mortgages. Can you help her find a reverse-mortgage lender?

--Roman W.

DEAR ROMAN: Many senior citizen homeowners, such as your grandmother, need extra income but have difficulty finding local reverse-mortgage lenders.

A new reverse-mortgage information source recently has become available. Are you or your grandmother Internet savvy? The National Reverse Mortgage Lenders Association has added state-by-state information on reverse-mortgage lenders.

It's so simple even I can understand it. Just go to their Web site, click on lenders and then click on the appropriate state. Then the Web site produces names of reverse-mortgage originators near you. I checked North Carolina for your grandmother and found five lenders. One will even let her apply online. The others show their toll-free phone numbers.

If you or your grandmother aren't computer-savvy yet, a local public library reference department will gladly show how to reach on the Internet.

DEAR BOB: I am in the market for a mortgage on my commercial property. However, all the lenders I've contacted want me to personally guarantee the loan. I would never want to jeopardize my home and other assets for the sake of a commercial mortgage. How can I avoid this?--Bert H.

DEAR BERT: You are a wise real estate investor. We agree the property alone should be security for its mortgage. You should not have to incur personal liability or pledge additional assets.

Many commercial mortgage lenders try to get borrowers to become personally liable in the event of default. But some commercial lenders do not impose this unreasonable requirement. To find these lenders, my suggestion is to contact a commercial property mortgage broker in the nearest large city. These brokers can perform finance miracles by finding you the right lender.

DEAR BOB: I inherited a property that I want to sell so I can reinvest closer to my current home. If I buy an investment property for more than I sell the inherited property, does this qualify for tax exemption? The property comes from my mother's estate. Does this make any difference?--Edgar M.

DEAR EDGAR: From the facts you stated, it appears you have no serious tax worry. This is because an heir receives inherited property with a new cost basis stepped up to market value on the date of the decedent's death.

To illustrate, if the property you inherited was worth $200,000 when your mother died, but you sell it for a net price of $210,000, you owe tax only on the $10,000 profit. Your mother's adjusted cost basis is irrelevant. Unless the property skyrocketed in value after you inherited it, you don't have a serious tax problem. But consult a tax adviser to discuss the exact details.

DEAR BOB: I live in a small town where the highway department plans to build a highway bypass. If they take my house by eminent domain condemnation, what happens to my mortgage?--Helen R.

DEAR HELEN: If your property is condemned by a government agency by right of eminent domain for a public purpose, such as a new highway, the Fifth Amendment of the U.S. Constitution requires you must be paid its fair market value. The agency will appraise your house and make you an offer. However, it is in your best interests to hire your own appraiser to determine if the government's offer is fair.

Eminent domain condemnation offers from government agencies often are low, so don't be afraid to negotiate. If the government agency won't increase its payment to what you consider fair, hire a lawyer who specializes in eminent domain. Be sure the lawyer's compensation agreement is based on any increased amount he or she obtains for you above the government's initial offer.

When the condemnation occurs, your mortgage lender must be paid off from the eminent domain proceeds. However, if only part of your property is taken by the government, you'll need to negotiate with your lender as to how much of that money should reduce your mortgage. A real estate lawyer can assist you.

DEAR BOB: About four years ago, my then-fiance and I bought a house together with a mortgage at 8.5 percent interest. Two years ago we split up. I kept the house and she signed a quit-claim deed to me. However, the mortgage remained in both our names with the understanding I would refinance when able.

Can she force me to refinance? I don't want to burn any bridges. For the past two years, I have paid the mortgage from my income as a waiter. But when I applied to refinance, I was told that I don't earn enough. Should I contact my current lender? How can I get approved?--Jeffrey C.

DEAR JEFFREY: Your ex-fiance cannot force you to refinance since she gave up her interest in the house via that quit-claim deed.

My suggestion is to ask your current lender if they have a "streamline," "low documentation" or "easy qualifier" refinance program. Many lenders do.

Presuming you have excellent credit and an on-time payment record with your current lender, you should qualify for an interest rate reduction. It won't hurt to ask. But I would not volunteer that your ex-fiance is no longer on the title. That will just confuse the lender.

DEAR BOB: Maybe I missed it, but have you written about using that new $250,000/$500,000 home-sale tax exemption on the sale of a rental house? My wife and I are thinking about moving into a luxury rental house we own, living there for two years and then selling it to take advantage of the $500,000 tax exemption. After selling that house, we would move back into our current residence. What are the pros and cons of doing this?--Keith E.

DEAR KEITH: Yes, you can do that. Your rental house must be pretty nice if you expect a $500,000 profit on its sale. Just in case the IRS questions you, be sure you can prove it really was your principal residence for at least an "aggregate" of 24 months during the five years before its sale.

Evidence can include utility bills, voter registration, and driver's and vehicle license transfers. Many rental house owners are doing exactly what you plan to do because the income tax savings are so huge. However, when you move back to your present residence, you cannot use the $250,000/$500,000 home-sale tax exemption for at least 24 months. Check with a tax adviser for complete details.

DEAR BOB: I am on Social Security disability and receive $1,143 per month. My credit is not very good, due to medical problems. I have a VA home-loan entitlement that I have never used. Can I buy a house? If so, what price range? Anything you can tell me would be most appreciated.--Tim G.

DEAR TIM: My advice is to consult an experienced mortgage broker in the community where you want to buy a house or condominium. He or she can give you exact details on the mortgages for which you might qualify. Just because you are on Social Security disability does not disqualify you from obtaining a home loan. However, your bad credit record might.

Readers with questions should write Robert J. Bruss at P.O. Box 280038, San Francisco, Calif. 94128.{copy} 1999, Tribune Media Services Inc.