Q. We have found a home we like in what appears to be a great neighborhood, but of the 42 homes on that street, seven are for sale. And the one we like has been on the market over two years. All those for sale signs have us worried there’s a mass exodus going on. What questions can we ask, and to whom, that might give us more info into a potential problem?
A. People who live on that street will have their own ideas about what’s going on. Try knocking on doors. Local residents may well enjoy inviting you in to discuss the neighborhood.
If you do decide to buy, ask the broker(s) questions about the listed price of that home. If it hasn’t been lowered in the whole two years, the property’s not worth that much.
Q. Our mother put her house into a trust five years ago with her three children listed, and she only now told us. She believes that if she should go into a nursing home and end up on Medicaid, that when she dies we will be able to sell the house and keep what money we make off the sale. And we will not have to pay back what Medicaid has paid for her to keep.
She’s now at that point that she probably will be going to a nursing home. We really don’t know what a trust on a house involves. Will we be responsible for taxes and upkeep on her house? What happens when she dies?
A. There are all kinds of trusts. I’m afraid you’re getting this week’s “see a lawyer” advice. You need someone who can read over the document and explain how it affects you. The attorney who set it up in the first place might be your best bet.
Q. My wife and I are at odds about using our 401(k) plans to pay off our mortgage, which would leave us with very little in retirement funds.
We have eight years left on the loan and our income has been cut in half. I feel it would be best to get rid of the monthly payment of over $1,800. My wife feels if we did that then we have nothing to fall back on.
A. You don’t mention some of the most important facts, so perhaps you haven’t considered them yet. First, have you had these 401(k) plans long enough to be vested? If not, withdrawal now might mean you’d lose some of your employers’ contributions. And are you at least 55 years old? Sounds like you are, but if not, you’d owe a 10 percent penalty for early withdrawal.
You don’t say whether your mortgage has a high or a low interest rate, which might be relevant. And is that $1,800 payment entirely for principal and interest, or does it include an escrow for property taxes and insurance? If so, remember you’d still have those expenses after a payoff.
Money taken from your 401(k) will be subject to income tax, possibly at a higher rate than you usually pay. Estimate how much you’d have to set aside for taxes.
It’s a poor idea to touch retirement money. Leaving it to grow tax-deferred pays off big in the end. And while you can borrow for a lot of things, you won’t be able to borrow for retirement.
READER COMMENT: As a retired associate real estate broker, I was interested in the item about what questions homeowners should ask when interviewing prospective brokers.
Asking how many homes an agent sold last year might reveal important information, but one has to wonder how much personal attention one would get from an agent closing 100 sales a year in relation to one closing 20.
Take the time to measure the broker’s presence in the area. Do they advertise in the local paper? Do they have an Internet presence that is easy to navigate?
I would ask:
Ÿ Where does most of your business come from? A good agent gets a lot of sales from referrals (unless they are just starting out).
Ÿ Why don’t properties sell? The answer should be “properties that don’t sell aren’t priced right.” I think that most conflict between sellers and their agents originates in this area.
Another thing to observe during the interview is how interested the agent is in your motivation for selling. What is more important to you, selling the property quickly so you can move on or getting the price you want to get? Your motivation should determine how the agent markets the property. Finally, during the interview, the agent should be more interested in learning about you than in extolling their personal virtues.
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.Copyright © 2014 Paddock Publications, Inc. All rights reserved.