Q-I have a 30-year fixed interest rate home mortgage at 10 percent. Because I plan on keeping my home many years, I would like to refinance to save interest. My problem is I just started a new consulting business about a year ago, after working for a corporation for 30 years, so I don`t have a recent track record of regular earnings. However, I do have about $100,000 equity in my home and more than $200,000 in IRA-401K funds. I`m told banks won`t refinance a home loan without the borrower showing a one- or two-year record of recent earnings.
A-Start with your current mortgage lender, where you already are a well-established, valued customer. When you make your next mortgage payment, include a nice typewritten letter asking for a loan officer to contact you about refinancing your mortgage. If you don`t receive a response within two weeks, follow up with a phone call. Always start the refinancing process by giving your present lender a chance to keep your business. (Incidentally, the best lenders are now contacting their borrowers about refinancing because they know if they don`t, they risk losing millions of dollars of loans.)
If your current lender won`t refinance, first contact the bank where you keep your checking and savings accounts. If your IRA is with a bank or S&L, it should gladly refinance your mortgage. Should it refuse, move your IRA someplace else because your business obviously isn`t appreciated there.
Next, contact other local banks and S&Ls, explaining your problem upfront. With your large equity, some lenders will welcome your loan application. Others will show you to the door.
Finally, if you can locate a highly recommended mortgage broker, this might be the best loan source of all. Many mortgage brokers specialize in
”difficult” loans like yours. However, don`t expect to get a rock-bottom interest rate. Be especially careful when dealing with mortgage brokers because I`m sure you`ve seen many of the complaint letters about them in this column. It seems mortgage brokers are either very good or very bad, so deal only with the best.
Prescriptive easements
Q-I have a question about prescriptive easements. Is it true that a neighbor cannot get a prescriptive easement over part of my property if I grant him permission to use a strip of my land? Should I send him a friendly letter or send a letter by certified mail? Do I need to send a yearly reminder of my permission?
A-As you probably know, a neighbor can obtain a prescriptive easement to permanently use part of your land if he openly, notoriously and without your permission uses part of your land for a required number of years. This time period can be as short as five years in some states, such as California. No payment of taxes is required.
If your neighbor is using part of your land-for a pathway, for instance, or where a fence was built a few feet on your side of the property line, but you really don`t mind-granting permission will defeat a permanent prescriptive easement. The law doesn`t specify what form this permission should take, but I have given such permission to one of my neighbors in the form of a notarized letter sent via certified mail with a return receipt. That should be sufficient.
Foreclosures as investments
Q-I read in the newspaper that the number of house foreclosures has increased dramatically in recent months. I want to get started investing in real estate, first with a house for my bride and me. Later, we can buy houses for investment. I have a full-time job; so do you think I can do this on a part-time basis? How do I go about finding the foreclosures? I asked several real estate agents and they don`t know anything about foreclosures.
A-Foreclosures offer tremendous opportunities. Because you didn`t cause the default and someone is going to profit from the foreclosure anyway, it might as well be you. Yes, you can buy foreclosures on a part-time basis.
There are three major opportunities: (1) buy the house at a bargain price directly from the defaulting owner before the foreclosure sale, (2) buy at the foreclosure auction, and (3) if there were no bidders at the auction, buy from the foreclosing lender who acquired the house after the sale. I prefer the third opportunity because most lenders offer excellent financing to quickly get rid of the foreclosed houses.
Advice on tax appeals
Q-I am a tax appeals officer in the county where I live. I am retired from a ”real job” and enjoy this work tremendously. But perhaps you and your readers can benefit from a few suggestions. No matter how sad the property owner`s story, we can`t reduce the tax assessment because we feel sorry for the owner. However, we can and do reduce property taxes where the owner comes in with facts as to why their assessed value is too high. The best evidence is recent, verified sales prices of comparable nearby houses. The second-best evidence is a professional appraisal by a licensed appraiser. In some areas, property values have declined and we must reduce the assessment when shown the facts. Incidentally, homeowners should be wary about some of the so-called
”property tax consultants” who charge a high fee upfront and then don`t produce results.
A-Many thanks for your valuable insight. In recent weeks, several readers have written to ask about the property tax consultants who claim they can get tax assessments reduced. My suggestion is, before paying any fee, ask for references of previous clients and then verify that the tax consultant actually got the property tax reduced.
Make a deal
Q-About four years ago, we sold our home and carried back the first mortgage at 10.75 percent interest. Since we are retired, we enjoy a good yield that we cannot earn anywhere else with equal safety. However, last month we received a letter from our buyers indicating they plan to pay off our mortgage, so they can refinance at a lower interest rate. Do you think we should offer to reduce our interest rate?
A-Yes. If I were in your situation I would immediately phone the borrowers to work out a modification to your mortgage. By offering to reduce your interest rate, you may be able to keep a desirable loan and the borrowers won`t have to go through the hassle of refinancing their mortgage.
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Please note: Real estate laws differ from place to place, and laws of your area should be checked before making decisions on real estate problems.
