Q. I haven't bought a house before, but I want to buy one now. I would be paying cash for the house. Everyone seems to mention having an attorney handle the purchase. Is this always necessary, even if the property is owned by a bank? Also, what would be the average cost an attorney would charge for this?
A. Closing customs vary widely across the country. In California, buyer and seller need never meet -- they "go to escrow." In Maine, on the other hand, the parties "pass papers." In different states the process is handled by registered escrow companies, banks, real estate brokers, settlement firms or title companies. Theoretically, it could even be done by the parties themselves.
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The main thing you need is assurance that you're not buying unknown legal problems that would come along with the property. Where lawyers are not used, the same research will be done by someone else, somewhere along the line, so buyers know they're receiving clear title. And then at the final closing, it helps to have someone on your side double-checking to make sure you're getting the proper debits and credits.
It's best to go along with your community's usual procedures. If you don't, it only complicates matters. And it's always acceptable to ask ahead of time how much the service is likely to cost.
Q. Can you tell me the difference between cost basis and stepped-up basis?
A. Cost basis for real property is the initial purchase price, to which is added some closing costs and the amount spent on permanent improvements (new roof, new towel rod) over the years. Stepped-up basis is the value at the time of death, and it becomes the heirs' new cost basis.
Q. I have been trying to buy a home for the last two years, and have been turned down due to back child support I owe. I have always had a good job and have made good money but not enough to pay the back child support in full but do make regular monthly payments. I have been turned down three times because of this issue. My income and credit score are great. My question to you is how can I buy a home with the back child support issue. Is there any way?
A. Here are three ways: You could make up those back payments. Or save up enough to buy for all cash. Or find a seller who is willing to take back financing -- lend you the money to buy the house, and agree to accept the purchase price in monthly mortgage payments.
It's hard to see how your income is great if you can't afford the child support payments, or how your credit score is great if that problem shows up on it. You don't say how much you're spending on debt every month as compared with your income, or whether you're prepared to make a sizable down payment. All that would matter to a seller who was deciding whether to take a chance on you. If you do find one, expect to pay more than current average interest rates in return for the homeseller's added risk.
Q. I read with interest your column about getting a reverse mortgage from a son rather than a bank. This exact situation came up when my father needed extra cash to care for my invalid mother. After investigating, I felt that bank fees were outrageous, and the money he could receive was less than needed for her care. Therefore, after discussion with my siblings, I had a contract drawn up and gave him funds monthly until my mother passed away. My siblings understood and accepted that I would own his house after his death.
When that time came there was no argument, and I recouped my investment. Yes, my experience is anecdotal, and worked out well in my family. But from this experience, I must respectfully disagree with your advice.
A. It sounds as if you have a loving functional family. You have no idea how rare that is -- or maybe it's just that I only hear from the ones that get into trouble. With the reader you mention, his family was opposed to the idea of a private reverse mortgage. And I still maintain it is better to keep financial things impersonal wherever possible. I will also mention that newer regulations about closing costs have made regular reverse mortgages more attractive in recent years.
• 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.
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