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posted: 3/3/2012 12:01 AM

On homes and real estate: Credit unions can offer favorable mortgages

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Q. I heard on a national radio program that some credit unions are offering a "no closing cost" refinance loan. Is there such an animal? How do they make up for the loss of the closing costs? Is the loan rate less favorable? Do you know if any local credit unions offer this product?

A. Credit unions differ from other lenders because they are cooperatives run by their own members. They are nonprofit and can usually offer their members favorable loans. Some credit unions represent specific neighborhoods, employee groups, ethnic organizations or the like. It may not be difficult, though, to find one you could join. To learn what's available locally, by all means contact them and ask.

Q. We've been working with a wonderful broker getting our house ready to list but haven't done so yet. We were contacted by someone who wants to come look at our house now. What is customary to pay this wonderful agent if we sell without having to list?

A. Many real estate agents are willing to sign a listing contract with the provision that no commission will be due if the place is sold to so-and-so within the next 30 days. (If you couldn't arrive at a sales contract by that time, you might want to turn you agent loose on so-and-so anyhow.) Meanwhile, you won't lose marketing time during the most favorable season of the year.

Finding someone who wants to buy your house is just the tip of the iceberg. Making sure they're financially qualified, negotiating a binding purchase contract and seeing the deal through to a successful closing can involve a lot of work and expertise. If so-and-so really buys, that wonderful broker might agree to furnish the other services for a reduced commission.

If in the end you do just dismiss your agent, well -- brokers are used to breaks like that. Flowers or a gift card with a letter expressing appreciation would be a pleasant surprise. Even better, promise to recommend the agent to your friends.

Q. My brother and I inherited my parents' house and it's in my brother's name. We went through probate, and everything is fine. The house, however, has a mortgage, and we did not inform the lender of our father's death. The loan is still in Dad's name. We are both disabled with very little income. I am afraid that if we tell the lender, they'll call in the loan or make my brother refinance it.

We only owe $9,000. There has been no problem making the small payments. The only problem is that my brother is not getting credit for the loan. So would we have to refinance it? Or should we leave it the way it is?

A. Lenders hardly ever call in a loan when property is inherited. But I don't see any problem just going along as you are.

I don't know what you mean by your brother not getting credit for paying the loan. Are you talking about using the mortgage interest as a deduction on his income tax return? With a debt that small, the amount of interest is so low he's probably better off taking a standard deduction anyhow.

At any rate, they wouldn't ask you to refinance, because lenders don't want the paperwork involved in a new loan for that small an amount. And while I'm pretty sure they wouldn't call the whole $9,000 in at once, I don't see any harm in just continuing to make those payments.

Q. My parents have proposed selling a rental property to my brother and me for a token amount, rather than waiting to inherit. Without taking into account improvements, etc., when we sell, would our cost basis be that token amount or the actual value at the time we purchased it?

A. Your cost basis starts with the actual amount you pay for the property.

If, on the other hand, you wait to inherit it, you will receive a new stepped-up-basis value at the time of death. If, on yet another hand, you receive the property as a gift, you take over your parents' cost basis. That may have been reduced by depreciation taken as an expense over the years, and it can be fairly complicated. And a "token amount" sale may be considered by the IRS as a gift.

As landlords, you will want your own certified public accountant, and all this is a good first question for your tax professional. Even better, go together to a lawyer who specializes in estate planning -- someone who can take into account your ages, financial situations and the like. That's the person to suggest the better course.

• Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through askedith.com.

2011, Creators Syndicate Inc.

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