Q–Thank you for warning that other reader not to pay off his mortgage with a big lump sum payment. I almost made that mistake. I was considering paying off my $42,000 mortgage balance with a big sales bonus I received, but after reading your article, I held off and kept the funds in a money market fund.
About two months later, my adult son got an opportunity to buy his employer’s business. I was only too happy to loan him the money to do so. If I had tied up the money paying off our home loan, I wouldn’t have been able to help my son and make a terrific investment in his business, too. Also, my wife and I feel good about not having all our eggs in one basket of a paid-off home.
A–I’m glad you didn’t make that big lump sum mortgage payment and tie up your cash. By having the money available for investing in your son’s business, you helped him while helping yourself, too.
It’s fine to own your home free and clear by making gradual monthly payments. Extra monthly principal payments of $100 or $200 are a great way to get the mortgage paid off early and save thousands of interest dollars. But big lump sum prepayments, such as you considered and then rejected, tie up cash that might be quickly needed elsewhere for an emergency or investment.
Q–We made a purchase offer to buy a house and the seller accepted. Our offer included a $1,000 earnest money deposit. One of the contingencies was a professional inspection.
The inspector discovered badly bowed roof supports in the attic. The cause is the too-heavy weight from four layers of roofing (our building code only allows two layers). The inspector is afraid the roof could collapse unless the old roof layers are removed.
The seller refused to have the work done or give us a credit allowance off the purchase price, so we told her we want to cancel our purchase and get our $1,000 deposit refunded. She refuses. The realty agent has been of no help in the matter. What should we do?
A–The type of defect you describe is why I recommend buyers always have a professional home inspection. The seller probably was not aware of the overweight roof, which a professional inspector could easily spot.
I presume you have sent the home seller (and the realty agent) a written cancellation of your purchase and demand for refund of your $1,000 deposit.
If you don’t receive a prompt refund, Small Claims Court is the appropriate place to sue the seller. A local real estate attorney can provide further details.
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Have a question about real estate? You can write to Robert Bruss in care of Tribune Real Estate Features Service, 435 N. Michigan Ave., Suite 1400, Chicago, Ill. 60611. Answers will be provided only through the column.
