How About A Course
Ms. Lank: Thanks for your help and prompt responses about the property we've been trying to buy on a short sale. We now have a close date of December 29, so the process lasted three and a half months from initial offer to close. Not bad by short sale standards but a clear indication these properties are better suited for either a) investors or b) someone with more patience than me.
This experience has left me with a question: Why doesn't the government require buyers to pass a test that shows they understand the basic principles of their mortgage?
I admit it would be hard to administer, but there are certain things all people should know before they sign the dotted line (what will happen to a balloon rate or ARM, what fixed means, how escrows work and what penalties are). I feel part of today's mess with the housing market is because nobody required buyers to demonstrate knowledge of these concepts. -- J.
Answer: Interesting idea. In different areas, some housing grants on the local level do require homeowner education.
Refinancing To VA Loan
Hello Edith: I would like to refinance my conventional loan to a Veterans Loan. Is it possible and what would be estimated costs of conversion? -- H.B.
Answer: For those who already have a VA mortgage, an inexpensive "streamline" refinance procedure is available. It won't work with your present conventional loan, though. You'd have to place a new VA mortgage with the usual closing costs.
Is It Self-Dealing?
Dear Edith: I'd like your opinion about a real estate transaction suggested by my husband. When we got married I kept the house I owned and I rent it out.
My husband is partial owner of a company. His company has offered to buy my house at slightly above its market value and then sell it back to me a few months later at a lower price. The company would use the loss somehow for tax purposes and I would make some profit. He thinks it is a win-win situation. Do you see any problem? -- K.
Answer: As a real estate investor, you should have your own attorney and accountant. Your husband's company must also. Those are the people to give you advice about the proposal. Offhand I see one problem: You will owe capital gains taxes, including some for recaptured depreciation, when you sell rental property.
Then again, I have the impression the IRS doesn't look kindly on what it calls "self-dealing." Is that what we're talking about here? I don't know. After all, I'm just a real estate writer. If the whole thing was suggested by one of those professionals, and if the others said it was a good idea, then you don't need my OK.
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