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posted: 11/8/2013 12:03 AM

Federal law helps some heirs keep parents' low interest rate

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It's against the law for a bank to demand that a mortgage be paid off immediately when a spouse dies, but that protection can extend to heirs, too.

Q. You recently wrote that a federal law prohibits a lender from demanding a mortgage be paid off immediately if one spouse dies but the other decides to remain in the home and continues to make the payments. My mom died years ago, and my dad and I bought a home together because I needed to take care of him. Dad passed away last month, so I am inheriting his half-interest in our home. Does the law you wrote about prevent the bank from requiring that the loan be paid off now, in a lump sum, even though my dad was (obviously) not my spouse?

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A. I'm very sorry about your loss. Though it's little consolation, you don't have to worry about your lender swooping in to demand that the loan be paid in full immediately.

The federal Garn-St. Germain Depository Institutions Act of 1982 prohibits a lender from making a married couple's mortgage immediately due in one lump sum after one of them dies. The survivor can stay in the house, as long as he or she continues to make the monthly payments in a timely manner and meets all the other terms of the original mortgage contract.

That same protection extends to you. The bank can't demand immediate repayment or try to change the interest rate if you continue to live in the property and make the monthly payments promptly. Consult a real estate attorney if the lender starts to hassle with you.

Q. We have just purchased a condominium. Are the dues we will pay to our homeowners association tax deductible?

A. I get asked that same question a lot, and no one is ever pleased with my response.

The Internal Revenue Service generally won't let you deduct the fees that you pay to an HOA if you live in the property yourself. A partial deduction can sometimes be taken if, say, you work from home or rent a room out to a tenant.

HOA fees are completely deductible for rental-property investors who purchase a condo or townhouse and then lease it to tenants.

Q. Our bathtub looks awful. We think it has been here since the developer first built the house it in the 1960s, and it's pitted and stained. The problem is that it is cemented into the walls and tiles, so we'd have to rip those out, too, if we got a new tub. The bids we have received from three contractors to do the work range from $2,700 to almost $4,000, not including the cost of the new tub itself. Is there a cheaper alternative?

A. Yes. Many owners have the same problem but, like you, suffer with their unsightly tubs instead of spending thousands of dollars to replace them.

I was one of those owners until about two years ago. Instead of replacing my tub, a friend suggested I simply hire a professional to refinish, or "reglaze" it. The company I chose came to my house, filled the pits and hairline cracks, and then re-coated it with a highly durable glaze in the color of my choosing. The entire job cost $450, a whole lot less than I would have spent to replace the old tub with a new one.

Two of the largest national tub-refinishing franchises are Miracle Method, (888) 271-7690, www.miraclemethod.com; and Perma-Glaze, (800) 332-7397, www.permaglaze.com. However, most communities are also served by many independently owned refinishers.

Real estate trivia: The national median sales price for an existing home for all housing types (mostly single-family houses and condominiums) was $199,200 in September, the National Association of Realtors says, up 11.7 percent from a year earlier. It was the 10th consecutive month of double-digit, year-over-year gains.

• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.

2013, Cowles Syndicate Inc.

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