Q: DEAR BOB: My husband is 81 and I am 76. We have a home equity loan on our house for almost 50 percent of its market value.

The monthly payment of $732.84 for five more years practically wipes out our Social Security and pension incomes, not leaving much for food, medicine and household expenses, but we want to stay in our home as long as possible. Is there any hope we can we can get one of those reverse mortgages for senior citizens?--Anne Z.

A: DEAR ANNE: Reverse mortgages are available to senior citizen homeowners, at least are 62, who owe little or nothing on their residences. Since reverse mortgages must be recorded as first mortgages, your current 50 percent mortgage is too large for you to qualify. If it were 10 percent or less of your home's market value, then a reverse mortgage would be feasible.

There is no perfect solution to your problem, especially since you want to stay in your home. If you can increase your income, perhaps by renting out a room to a compatible tenant, the rental income could solve your cash-flow problem.

Would you be willing to sell your house to free up its idle equity? If so, you could sell your home for cash, pay off that expensive home equity loan, use the cash from your 50 percent equity for a down payment on another home and obtain a Fannie Mae reverse mortgage for home purchase, which requires no monthly payments.

Such a loan won't give you any monthly income, but you will then have that extra $732.84 you are now spending on loan payments to buy food and medicine. For the names of nearby Fannie Mae reverse mortgage lenders, phone 1-800-732-6643.

DEAR BOB: Last year we bought our home from a "for sale by owner" without an agent. We saw the lawn sign on a Sunday afternoon and stopped by the open house. After we inspected the house, the sellers showed us a professional appraisal they had. It said the house was worth $224,500 and was signed by a "certified appraiser."

We had $60,000 for our down payment and since we both have good jobs, obtaining a mortgage was easy. Little did we know we were overpaying for the house by at least $30,000, as the lender didn't tell us. After moving in, we learned similar houses in the neighborhood were selling for around $195,000.

Then, we learned that the appraiser is related to one of the sellers. To complicate matters, the appraiser has now retired and moved to Arizona. Do we have any recourse against the sellers and the appraiser for showing us that overvaluation?--Scott R.

DEAR SCOTT: Since the appraiser was not hired by you and was a third party not involved in the home sale, your chances of recovering damages from the appraiser aren't great.

Proving the sellers defrauded you would be an uphill challenge, too. The mortgage lender had no duty to explain to you that you were paying too much for the house, although home buyers should always insist on obtaining a copy of the lender's appraisal.

If a buyer's agent had represented you, as I constantly recommend, your agent would have had a fiduciary duty to tell you the home's correct market value, based on recent, nearby comparable home sales prices.

Your situation is a classic example of why home buyers need a buyer's agent to look out for their best interests. You can consult a local real estate lawyer, but don't get your hopes up about recovering any damages. Thankfully, home values are rising, so inflation will probably bail you out.

DEAR BOB: My wife and I made a purchase offer on a house. Our offer specified a 30-day closing. We did not know that the sellers were in deep financial trouble and a foreclosure sale was pending. About 10 days before the scheduled closing, the house was sold at a foreclosure auction to the bank that held the mortgage.

Now the bank is asking for about $40,000 more than we agreed to pay the sellers for the house. If the listing agent had told us about the pending foreclosure we would have closed our purchase sooner.

Instead, the sellers got nothing, and we lost a house we wanted. But we're not willing to pay the bank's $40,000 inflated asking price. Do we have any recourse against the listing agent?--Gilbert S.

DEAR GILBERT: Consult a local real estate lawyer. I presume you did not have a buyer's agent. The listing agent breached his fiduciary duty to the seller by not doing his best to get the house sold before the foreclosure sale.

He also breached his duty to you, as a buyer, by not informing you of the material fact of the foreclosure sale, which greatly affected your purchase of the home you wanted.

Although it might have been embarrassing to the sellers, the listing agent should have informed you about the pending foreclosure sale because it would have influenced your decision to make a purchase offer and your ability to close the sale before the house was lost.

DEAR BOB: My husband and I want to buy a home this year, but with fixed home loan interest rates around 8 percent, as I write to you, we're considering an adjustable-rate mortgage, which is about 1.5 percentage points less. With fixed rates so high, should we get an ARM instead? If so, which index do you recommend?

--Margee W.

DEAR MARGEE: Eight percent is not an outrageously high fixed interest rate. However, many buyers are switching to ARMs because ARMs are considerably less expensive and easier to obtain.

In return for the lower interest rate, ARM borrowers take on the risk of future rate increases. I hope you are considering an ARM with a fixed rate for the first few years, before the loan becomes a true adjustable mortgage.

I had an ARM on my home for many years. Mine was tied to the cost of funds index, which moved slowly. I liked that. Other ARM indexes, such as Treasury bills, certificate of deposit rates and LIBOR (London Interbank Offering Rate), tend to be more volatile and dangerous for borrowers. I wouldn't hesitate to take an ARM tied to the cost of funds index today.

DEAR BOB: We are in the process of interviewing agents to list our home for sale. As you often suggest, we are interviewing at least three agents, maybe more.

The first agent we interviewed was a high-pressure agent, but he was savvy. As you said, he prepared a computerized comparative market analysis showing us what our house is worth based on recent sales prices of neighborhood homes.

When we told him we planned to interview other agents before selecting the best agent to get our listing, he became defensive. We asked him to leave his analysis so we could study it, but he refused.

Although he is successful and we liked him, since he wouldn't give us the analysis, should we reject him?--Rupert H.

DEAR RUPERT: That agent probably was afraid other agents who you interview would pick his figures apart or rely on them to arrive at slightly higher value estimates for your home. But incurring your hostility was not smart. He should have left the paperwork with you.

DEAR BOB: My wife and I own an apartment building, which is worth about $600,000. We would like to retire to a better climate. Can we make one of those Starker tax-deferred exchanges to sell our building and to acquire more than one rental property at our new location?

If so, could we trade for two or three rental houses? Our plan is to move into one of the acquired rental houses in a few years. If this is possible, how long must it be rented before we can convert it into our home?--Todd L.

DEAR TODD: You can make a Starker tax-deferred "like kind" exchange for more than one property held for investment or use in a trade or business. The basic rules for such trades are that you must trade equal or up in value without receiving any "unlike kind" taxable "boot"--that means personal property--such as cash or net mortgage relief.

To illustrate, you can trade your apartment building for two or three rental houses if those properties total at least the sales price of your apartment building. Also, you must owe at least as much on those properties as you owed on the apartments, and you cannot receive any cash from the exchange. However, you can refinance either the old property or the new property, before or after the exchange, to produce cash to pay the sales commissions.

Be sure to consult a tax adviser or lawyer for exact details. As you may know, Internal Revenue Code 1031(a)(3) requires you to designate the replacement properties within 45 days after the sale of the old property closes. The acquisitions must be completed within 180 days. Meanwhile, the sales proceeds must be held by a third-party intermediary, such as a bank trust department or title insurance company trustee affiliate, beyond your constructive receipt.

As for your question of how long the acquired property must be rented before conversion to personal use, even the IRS doesn't have a firm answer. Most tax experts recommend at least six to 12 months.

DEAR BOB: My husband and I hold title to our home and a rental house in joint tenancy with right of survivorship. Will this avoid probate costs and delays?

I ask because a widow friend, whose husband died almost a year ago, still hasn't been able to clear the title to her house, which she and her late husband held as tenants in common.--Cynthia E.

DEAR CYNTHIA: Joint tenancy with right of survivorship avoids probate costs and delays. In most states, all that is required for the surviving joint tenant to clear the title is to record a certified copy of the deceased joint tenant's death certificate and an affidavit of survivorship.

However, I recommend holding title in a revocable living trust. Not only do living trusts avoid probate, but if one of the co-owners becomes incapacitated, then the successor trustee can take over and manage the property, even by selling or refinancing if necessary.

DEAR BOB: My husband and I own our house free and clear. We paid off the mortgage about four years ago. Since then my husband has said we don't need fire insurance. We're saving about $700 per year. He says if the house burns down, we can always sell the lot. I think we should have fire insurance. What do you recommend?

--Helene P.

DEAR HELENE: Run, don't walk, to the nearest insurance agent's office and buy a homeowner's insurance policy. It is foolish not to have a homeowner's insurance policy.

Perhaps your husband is not aware a homeowner's policy includes many types of coverage in addition to fire insurance. For example, it includes liability insurance in case someone is injured on your property. Such policies also include coverage for personal property damage, theft, water damage and wind damage, in most states. Shop around to buy reasonably priced homeowner's insurance.

DEAR BOB: Although I'm a successful officer of a high-tech firm, I'm interested in possibly switching into a career in real estate. What are the requirements to become a real estate appraiser, certified property manager and real estate salesperson or broker?--Keith H.

DEAR KEITH: All of the real estate careers you listed require state licenses. To qualify for the appropriate license examination, you will need to take one or more college-level courses. The exact requirements vary by state.

Your first step is to decide which real estate career you're interested in. For example, if you select appraisal, inquire at the state office of real estate appraisers for requirements. Most states have three appraisal license categories: trainee appraiser, licensed appraiser and certified appraiser. Experience, preparation and exam requirements are different for each level.

To become a certified property manager, you must acquire a real estate sales license and then take property management courses. The professional designation Certified Property Manager is issued by the Institute of Real Estate Management. To learn about course requirements, check the World Wide Web site at www.irem.org.

To become a real estate salesperson or broker, you must first obtain a sales license. Contact the real estate commissioner's office in the state where you want to practice to find out the state's sales license exam requirements. Licensed salespeople work under the supervision of a licensed broker.

After you gain real estate experience and take additional college-level real estate classes, you can take the exam to become a real estate broker. In some states, such as California, you can skip the sales license if you have a college degree. Licensed real estate brokers either work independently or as salespeople or property managers in a specialized realty firm.

DEAR BOB: As you often recommend, we are shopping to get pre-approved with a mortgage company before we look at town houses for purchase. My wife has called four or five mortgage lenders. Because each offers so many different "deals," it's confusing. Is there any way to compare these mortgages?

--Linden C.

DEAR LINDEN: Yes. Although not completely accurate, the mortgage's annual percentage rate (APR) includes the interest rate and upfront loan fees, usually called points. One point equals 1 percent of the amount borrowed. The lender must tell you the loan's APR.

Some lenders pay various loan costs, such as for title insurance and appraisals, which is usually called a no cost mortgage; however, the interest rate will then be higher than if you had paid those expenses. Other lenders expect the borrower to pay these out-of-pocket loan costs, which are not included in the APR. There's no perfect way to compare mortgages, but the APR comes closest.

DEAR BOB: You often tell home buyers to include contingency clauses for mortgage financing and a professional inspection in their purchase offers.

We made an offer to buy a house. Since we were already pre-approved for a mortgage, we didn't include a finance contingency clause, but the seller refuses to allow a professional inspection of her house. Can we force her to let us have the house inspected before we buy it?--Talbert W.

DEAR TALBERT: No. A home seller does not have to allow the house to be professionally inspected before the sale closes. Rejecting your offer, or crossing out the professional inspection contingency clause, creates the seller's counteroffer, which you can accept or reject.

If the seller accepts your purchase offer but refuses to allow you to hire a professional inspector, I would be wary about that house. Perhaps the seller is concealing a structural defect she doesn't want you to know about.

In most states, sellers are now required to disclose any known defects in the house to the buyers. If the seller fails to do so and if the buyer can prove the seller knew about the problem, then the "bad house" seller can usually be held liable after the sale for damages to the buyer. However, the buyer's difficulty in such situations is proving the seller knew. That's why you should get a professional inspection; you'll know about all defects before the purchase.

DEAR BOB: My husband and I both have good jobs. In 1999, we earned almost $100,000 total gross income, but we're getting killed on our income taxes. We badly need deductions, such as mortgage interest. Unfortunately, apartment rent isn't tax deductible.

We have little savings, other than our 401(k)s, which we don't want to touch for a home down payment. We've been thinking about buying a town house, condominium or small house in the $200,000 to $250,000 range. Is there any way we can buy a home for a low or no down payment?--Victoria Y.

DEAR VICTORIA: Yes. There are many low- and no-down-payment methods for home purchases. For example, VA mortgages to qualified veterans are among the best home loans.

If you have good credit, another excellent program is the Fannie Mae "Flex 97" mortgage up to $252,700. It requires only a 3 percent down payment, and even the 3 percent can be borrowed, such as on a bank credit line or credit cards.

A few lenders, such as Countrywide Funding, now offer 100 percent mortgages. Get pre-approved for a mortgage by your actual lender before shopping for a home. Then you will know the maximum mortgage and home price range you can afford. But disregard any lender who says you are pre-qualified. That means nothing.

DEAR BOB: We have a mortgage on our house with a balance of about $42,400 at 8.5 percent interest. Since we missed the boat for refinancing at a lower interest rate last year, we're wondering if we should either refinance now with an adjustable-rate mortgage or if we should sell some common stocks to pay off our mortgage completely. What do you advise?--Lynn S.

DEAR LYNN: If you pay off your mortgage now, you will be making an "investment" at 8.5 percent yield. That's not a bad investment. However, don't pay off your mortgage if doing so will leave you property rich but cash poor. Another consideration is that your after-tax interest rate is probably only about 6 percent, which is a great bargain.

Many homeowners rush to pay off their mortgages because they hate the monthly payments. But when they need cash later, such as for an emergency or investment, they often learn borrowing quickly isn't easy, especially if a key wage-earner is then unemployed or disabled.

Lowering your interest rate by obtaining an adjustable-rate mortgage at today's rates of around 6.5 percent is a good alternative to consider. Shop for an ARM with a fixed rate for the first three, five or even seven years.

DEAR BOB: About five years ago, I foolishly put my sister on the title to my home as a joint tenant. We were getting along great then. I was ill, and I wanted her to have my house when I died, but I recovered.

In the past few years, we have had disagreements, and I don't want her to inherit my house. I would rather leave my house to a charity. How can I get her off my title?--Alfred S.

DEAR ALFRED: Consult a real estate attorney. Your situation shows why it usually isn't smart to add a co-owner to the title just to avoid probate. A far better decision would have been for you, five years ago, to create a revocable living trust, naming your sister as your heir. A living trust allows property owners to change their minds, just like a will.

However, changing the title now is far more difficult--or impossible. Unless your sister signs a quit-claim deed to you, legal action will probably be necessary. A partition lawsuit could force the sale of the property, with the sales proceeds divided between the co-owners.

But that's probably not what you want, unless you want to sell and move to a retirement home. Getting your sister off the title won't be easy.

Readers with questions should write Robert J. Bruss at P.O. Box 280038, San Francisco, Calif. 94128.

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