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posted: 11/2/2013 12:30 AM

Worried about reverse mortgage

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Q. My husband and I needed medical help years ago and applied for a reverse mortgage. I did not want it, but there was no place to turn. Now I am a widow 70-plus years of age and worry about leaving my family members with complications from the financial charges listed on the mortgage report I am enclosing. You can see that the debt is mounting up and soon the bank will own my home.

I love the peace of country living and would like to stay in my own home as long as I can. But perhaps I should sell now while my home is worth more than I owe on the mortgage. If I stay, what additional money would my family have to pay? I do know I can stay in the house till I die, but they don't tell you what happens after that.

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A. Don't regret what you did. A reverse mortgage was perfect for the situation you faced. And the bank will never own your home. As with any mortgage, all they own is a financial claim against it.

That mortgage statement shows you are being charged every month for mortgage insurance. (Of course, you don't actually make payments; the debt just piles up.) That insurance means you and your heirs won't have the problems you're worrying about. Here's how it works:

When you -- or the kids -- sell the house, there are two possibilities. Perhaps the sale brings enough to pay off the accumulated debt with something left over. As with any other sale, what's left belongs to the owner -- you or your family.

Or -- and this is the part you're worried about -- let's say that by then the debt has grown larger than the sale price of the house. In that case, again no problem. That mortgage insurance you've been paying for will make up the difference. Neither you nor your heirs would be liable for any shortfall. (Note: This is not true of all mortgage insurance, but it is with a HECM reverse mortgage like yours.)

In short, you can relax and enjoy the peace of country living. There's nothing to worry about.

Q. I am buying a four-unit building for investment. I could only get financial information after I submitted a purchase contract. I then found out the tenants are not current on their rents.

I may be closing soon if the home inspection goes well. What is my recourse about getting the rents from the closing to the end of the month from the current owner? My inspection is on Tuesday. Any advice would be appreciated.

A. I don't know what your purchase contract says about rent credits or adjustments -- or security deposits for that matter. Consult a lawyer who specializes in real estate immediately. You need professional guidance as quickly as possible, from someone who can go over the provisions in the contract and explain your options. If you don't do that, I suspect you're buying in to a lot of expensive headaches. A partial month's rent might be the least of your worries.

Q. When there is a buyer's agent showing and submitting an offer for the property listed with another agency, I'm told the seller would pay a commission to be split by both agents if the offer is accepted. This doesn't seem right. I've always thought a buyer's agent was paid by that buyer. Is there any more to this situation?

A. Yes, there's so much more that prospective real estate agents are required to spend hours studying the law of agency.

When property goes on the market, the listing agent usually promises to share the commission with any other broker who produces the eventual buyer. That other agent may be legally bound to put the buyer's interests first. Even in that situation, though, the buyer's agent is still allowed to accept the promised share of the commission paid by the seller. Most buyer-agency contracts provide that the buyer will pay commission only in a situation where none was offered by the seller.

The rule is that agency (where first loyalty lies) doesn't depend on which party is paying. Think, for example, of a contested divorce where one spouse might be required to pay for both side's legal costs.

Reader's comment: In a recent email, a reader asked: "Why, in new homes, is the garage so prominently placed front and forward of the house?" You offered a few possibilities. But another one occurs to me: The garage helps buffer the house from street noise.

This isn't to say that I'd want my own garage in front! Just that I've heard that given as an advantage by those who do live in such a house.

• 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.

2013, Creators Syndicate Inc.

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