On homes and real estate: First-timer is frantic

Q. I am a first-time homebuyer. Two months ago, I put in an offer on a house, which after a day or two of counter offers was accepted. Since then, I have been completing things like inspection, the mortgage application, and insurance. My mortgage rate is good until a week after the estimated closing date. The seller asked if I would be willing to rent the home to her until her apartment was ready. I told her I just wasn’t comfortable with that.

I have been in nearly constant contact with the mortgage company, real estate agents and insurance agent. I had an insurance quote but needed the date it should be effective. Nobody could give me a date because the legal work was not yet completed. I called every few days to check and got the same answer.

Finally, I was told everything was acceptable except for several mortgages/modifications on the title that had not been discharged and we cannot close until these are resolved. I was told that I could just have the insurance policy effective and it could be changed later. So now I am less than five days from the mortgage rate expiring, with issues prohibiting closing, and an insurance policy that needs to be timed perfectly to make it to the bank on time.

An increased interest rate would cost me about $20,000 over the life of the loan. If I am unable to close before the rate expires, do I have the right to ask for adjustments to the contract?

A. You may not realize it, but many closings involve just the sort of uncertainty you’re suffering — in fact, it’s almost routine. I’ll bet your insurance company is used to it. Of course, your situation is complicated by the mortgage commitment deadline, but don’t forget — these days, rates vary so often that they might go down instead of up while you’re waiting.

Just try to keep calm and carry on. And by the way, your refusal to let the seller stay was wise, but it may explain why they’re dragging their feet. If you did let the sellers remain after closing, you’d want a written agreement that the rent would rise (a lot) if they later failed to leave when scheduled. Your attorney would have other suggestions for what should be written into any agreement.

Q. I am a lifetime resident up North. Ten years ago, we purchased a condo in Florida and used this as a winter home for three months of the year. Two years ago, we became Florida residents and are now here a little over six months of the year. Now, you guessed it, we are contemplating selling our old home of 35 years. We think the capital gain would be in the $60,000 range. Would this be taxable?

A. As a married couple, you can take tax-free profit of up to $500,000 on the sale of your home. The house must have been your principal residence, where you lived most of the time, for at least two of the five years before you sell. So to use this tax break, better get it sold before you have been Florida residents for three years.

Q. You made a mistake in your column. The answer is that VA loans do require escrow accounts. The same is true for FHA loans.

A. That’s what I always thought, but it isn’t so. Yes, the FHA does mandate an escrow account with any mortgage it insures. But I discovered that the VA does not actually require it when guaranteeing a loan. It’s the lenders, most of them, who insist on escrow accounts with VA mortgages.

Q. We own a home in a partnership with my daughter. The mortgage does not have her name on it. We will buy her 50 percent share. What do we have to do to remove her name from the deed?

A. It’s simple. The current owners, the three of you, sign a deed turning over title (ownership) to the new owners — you and your wife. Or, your daughter signs a new deed turning over her share to the two of you. The lawyer who makes sure the document is properly worded may suggest one way or the other. Your signatures are acknowledged (notarized) and the document is then entered in the public records.

Depending on the dollar amounts involved, your daughter may have some income tax consequences after the sale, so it’s a good idea to consult a tax professional before doing anything.

Ÿ 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.

© 2012, Creators Syndicate Inc.