QDEAR BOB: We have a jumbo loan of about $425,000 on our home with 6.75 percent fixed-rate mortgage. The loan agent who helped us refinance about three years ago phoned to tell us we can obtain a no-cost refinance with 6.25 percent interest. However, I am self-employed and I recall the hassle I encountered the last time we refinanced. I had to supply tax returns and a pro-forma statement of my earnings. When is the right time to refinance? -- Robert N.

ADEAR ROBERT: A jumbo mortgage means your loan exceeds Fannie Mae's and Freddie Mac's $322,700 secondary-mortgage-market purchase limit. Loans below this limit usually get the lowest rates.

There are no longer any rules as to when it is the right time to refinance. According to my calculator, you would save about $140 per month, or $1,680 per year, by refinancing.

Over the 30-year life of your mortgage, the savings could be substantial if you continued to own your home. However, if you plan to move in a few years, there won't be much difference.

If you expect to remain in your home fewer than five years, inquire about five-year adjustable-rate mortgages. Jumbo ARMs are currently available with around 5 percent interest. That would be a substantial savings compared with your current interest rate.

However, if you stayed more than five years, your new ARM would adjust to the current interest rate five years from now.

DEAR BOB: About a week before my father died of cancer, he contacted his lawyer about avoiding probate for his small estate. His only significant asset was his house, worth about $300,000. I was at the hospital when the lawyer explained the benefits of a living trust to avoid probate. Then the lawyer said that because of the few assets, it would be much easier to just add my name to the title for the house as a joint tenant with right of survivorship.

As I am my father's only living child, age 56, this sounded good to me. The next day, the lawyer brought a notary public to the hospital and my father signed a joint tenancy deed, which was recorded a day or two before my dad died. After my father died, his lawyer had me sign an affidavit of survivorship, which was recorded to show I now hold title alone to the home. If I sold the house now, would I owe any capital gains tax? My late father bought the house many years ago for about $20,000 -- Jeff G.

DEAR JEFF: Your situation is not unusual. For convenience to avoid probate costs and delays, many parents add their adult children to their residence titles as joint tenants with right of survivorship.

Your circumstances show no intent to make an immediate pre-death gift. Rather, it was a simple way to avoid probate costs and delays for you after your father died. It accomplished that goal.

Joint tenancy is sometimes called a poor man's will. But that's not really accurate because a will has no effect on real estate held in joint tenancy.

Assuming your father left a total estate of less than $1 million, no federal estate or gift tax was due. Your cost basis for the house is the $300,000 market value on the day your father died, when you received sole ownership control as surviving joint tenant. Consult a tax adviser for details.

DEAR BOB: My late husband and I bought our home in 1989. He died several years ago and I still owe about $17,000 on the mortgage. However, I have messed up my credit and have been trying to straighten out my credit cards and other debts. My home equity is about $200,000. I am 74, in good health and I want to live in my home as long as possible. Is there any way I can qualify for one of those reverse mortgages you often write about? -- Barbara K.

DEAR BARBARA: Yes. Perfect credit is not required to obtain a senior citizen reverse mortgage. The fact that you have a small mortgage is also irrelevant, although it must be paid off from the reverse mortgage proceeds because reverse mortgages are first mortgages.

It sounds to me as if you are house rich but cash poor. You are a perfect reverse mortgage candidate. The reverse mortgage lender pays you, rather than the traditional situation in which mortgage borrowers repay their lenders.

You could select from a reverse mortgage lump sum, such as to pay off your existing mortgage; a credit line, except in Texas; lifetime income; or any combination of those options.

DEAR BOB: A few years ago, a neighbor tried to claim squatter's rights to my separate lot behind my home. Because I wasn't using the land, I let him plant a small garden. Every year I noticed the garden kept getting bigger, but I didn't say anything.

Then he expanded his garden too much, so I told him to stop using my property. He hired a lawyer who sued me for squatter's rights to the entire lot. The judge said that for the neighbor to gain title to my lot, he had to occupy it without my permission. She said his use was "permissive" because I had observed him using my lot, so he couldn't obtain either a prescriptive easement or squatter's rights adverse possession. I just thought you and your readers should watch out for their property rights -- Jess H.

DEAR JESS: Thank you for sharing your experience. It alerts us to watch out for adverse possessors and encroachments.

A prescriptive easement encroachment can occur when a neighbor uses part of your property without your permission for the number of years required in your state. But squatter's rights or adverse possession develops when someone occupies your entire property without your permission for the required number of years.

The fact that you were aware of your neighbor's partial use of your lot means that it is considered permissive use. To obtain a prescriptive easement or title by adverse possession, the use must be "open, notorious and hostile." To obtain title to the entire parcel, the adverse possessor must pay the property taxes for the required number of years.

DEAR BOB: Last August we bought our first house. The seller was a nice woman, but she lied to us. Her son had apparently fixed up the house to conceal defects that we have now discovered. For example, the roof leaks into the attic where the insulation absorbs the dripping water. Only after a heavy rain did we discover that the roof leaks in many places. We are disappointed that our home inspector didn't discover this defect. His answer is that it was dry when he inspected the attic. Even I could see the evidence of water stains on the rafters. Do we have any recourse against our inspector to help us pay the $7,850 cost of a new roof? -- Hector G.

DEAR HECTOR: If you bought your home during a dry spell, perhaps there wasn't any evidence of the roof leaks. If the water hadn't yet dripped through the ceiling, you couldn't expect the seller to have found that the roof leaked. Of course, if a ceiling was freshly painted to conceal evidence of water leaks, that's different.

Without solid proof that the seller must have known of the leaky roof, you'll have a tough time convincing a judge. As for holding the professional home inspector liable, you'll need evidence of the water leaks and his negligence in not spotting them. My recommendation is to forget it.

DEAR BOB: About two years ago, I paid cash for a condominium in a small complex of 16 units. After I bought it, I learned that the four directors and officers are solidly entrenched. They act as if they own the entire complex and we other 12 members are peasants. They refuse to increase our monthly dues to pay for necessary maintenance, such as new hallway carpeting, which is badly needed. Two of the directors and officers are absentee owners who don't even live in the complex. I like my condo much. But I realize that if I should try to sell it, I would have great difficulty because seven of the 16 condos are now occupied by renters. What can I do?

-- Agnes H.

DEAR AGNES: Before you bought your condo, why didn't you follow my frequent advice to ask current condo owners: What do you like best and least about this condo complex?

You probably would have been informed about the problems you listed.

My family and I have owned in a condo complex for more than 25 years, and I keep close track of what happens in the complex. I don't hesitate to speak up when the directors and officers stray. For example, we recently got rid of a divisive director who constantly caused problems.

The best you can do now is attend every board of directors meeting. Before the next board election, get to know all the owners and make certain you are nominated for the next vacancy. Unless you get involved in managing your condo homeowners association, you have no right to complain.

DEAR BOB: Last October I started refinancing with my current mortgage lender. The appraisal was fine. But the loan officer kept stalling. Then she quit and I was assigned to a novice loan officer. However, I didn't push too hard because interest rates were slowly falling. However, my refinanced mortgage still hasn't closed. My current loan officer says my original loan papers have been misplaced.

What should I do? -- Lynn W.

DEAR LYNN: You must be an extremely patient person. A home loan refinance should not take longer than 30 to 45 days. If your loan officer didn't return your phone calls within 24 hours, you should have immediately phoned his or her manager. The squeaky wheel gets the grease. Lenders depend on borrowers for profits.

If you aren't being treated the way you want, lots of mortgage lenders are eager for your business.

DEAR BOB: My 50-year-old brother and his two sons lived with my 75-year-old mother in her house for 23 years. My mother's will says my brother can live in the house free for a year after her death to get himself together. My gripe is that upon my mother's death, my brother and I will own the house together. I want to sell it quickly because my wife and I could use the money. But in my mother's eyes, her 50-year-old dependent son can do no wrong. What can I do? -- Pat C.

DEAR PAT: Perhaps your brother took good care of your elderly mother and she chose to reward him. You have no legal right to inherit anything.

Your mother left you a 50 percent interest in her house a year after she died. Be grateful. That's life.

DEAR BOB: Explain the difference between joint tenancy and tenancy in common. -- Shirley S.

DEAR SHIRLEY: There's a huge difference. Joint tenancy with right of survivorship means the last surviving joint tenant co-owner owns the entire property. A joint tenant's will has no effect on his joint tenancy ownership share.

Each joint tenant owns an equal share. For example, if there are three joint tenants, each owns one-third of the property. When one of them dies, the remaining two then each own half of the property. Eventually, the sole surviving joint tenant owns the entire property.

But tenants in common are much different. Ownership can be unequal and each tenant in common can pass his or her share by will.

To illustrate, one tenant in common might own a 10 percent interest, another might own a 50 percent interest, and the third could own a 40 percent interest. Consult a lawyer for details.

DEAR BOB: My brother holds a power of attorney for our dad, who lives in South America for business reasons. Dad inherited several commercial properties, worth several million dollars. They are managed by a professional management company that does a good job. Our dad's will gives all his assets equally to my brother and me. However, a few months ago, my brother used his power of attorney to sell off a large property. Our dad said that is fine. Is there anything I can do to prevent my brother from gradually selling off the estate?

-- Suzanna S.

DEAR SUZANNA: If your dad's will leaves everything to you and your brother equally, why do you care if the assets are real estate or cash equivalents? Your father must have confidence in your brother to manage his real estate, including selling it when appropriate, or he wouldn't have given him that power of attorney.

You have no vested right to receive your father's assets when he dies. DEAR BOB: My wife and I bought our house about 22 months ago. It was a fixer-upper, and she did a beautiful job upgrading it. All I did was supply the approximately $60,000 cash to pay for the improvements. According to the real estate agent who sold us the house, it is now worth at least $200,000 more than we paid. If we decide to sell after 24 months of ownership and occupancy, will we qualify for that $250,000 tax exemption? Or must we own the house for five years? -- Todd A.

DEAR TODD: To qualify for the Internal Revenue Code 121 principal-residence-sale exemption, you must own and occupy your principal residence an aggregate two of the five years before its sale. The exemption is $250,000 per qualified seller, so you and your wife will qualify for up to $500,000 tax-free home sale profits after 24 months of ownership and occupancy. There is no need to own the home for five years. Consult a tax adviser for details.

DEAR BOB: I have a real estate investor friend who owns six or seven rental houses. He tells me his plan is to refinance one or two houses every year to take out tax-free cash. I've never heard of such a thing. Is it legal? Why doesn't President Bush tax it? -- Angelita L.

DEAR ANGELITA: Tax-free mortgage cash-out is perfectly legal. What do you think has been sustaining our national economy for the last two years? Mortgage refinancing has pumped billions of tax-free cash-out dollars into our economy.

Cash-out refinancing means the property owner borrows more than is owed on the old mortgage. This is possible because the mortgage has been slowly paid down and the property has probably appreciated in market value.

The reason cash-out mortgage refinancing is tax-free is that borrowed money must eventually be repaid. Borrowed money is not taxable. That's why President Bush hasn't tried to tax cash-out mortgage refinances.

DEAR BOB: My husband and I, and our son, are on the deed as joint tenants of our condominium, which now has no mortgage. We want to transfer the title to our son as a gift, primarily because he has made most of the mortgage payments. We have never given any gifts until now. How does that unified estate and gift tax work?

Will we owe any gift tax? -- Mrs. M.V.

DEAR MRS. M.V.: You and your husband can each give your son up to $11,000 each per year without any gift tax consequences. You could give him $22,000 interests in the condo each year until he eventually owns the entire condo.

Another alternative would be to give the entire condo to your son in one tax year.

However, then you and your husband must file a federal gift tax return. Presuming the condo value is below $1 million, half of its gift value becomes a subtraction from each of your lifetime $1 million estate tax exemptions. Consult a tax adviser for details.

DEAR BOB: We plan to sell our home soon. A mentally handicapped person (age 50, but mental ability about 18 months) lives next door.

She goes to a school part of the day. But she often stands at her front door, bangs the screen door and screams extremely loudly until her elderly father takes her for a ride. Sometimes he yells back at her. Could we be sued by our buyer if we fail to disclose the situation? We are certain this hurts the value of our home -- Mr. O.M.

DEAR MR. O.M.: If this disturbance is easily heard from inside your house, it should be disclosed to prospective buyers because it clearly affects the desirability of your residence. A similar landmark case is Shapiro v. Sutherland (60 Cal.App.4th 666), where the court ordered rescission of the home sale for failure to disclose that an extremely noisy family lived next door.

Readers with questions should write Robert J. Bruss at 251 Park Rd., Suite 200, Burlingame, CA 94010, or contact him via e-mail at robertjbruss@aol.com.

{copy} 2003, Inman News Service