Q–About two years ago, my divorce was final. My wife got the house. I quit-claimed the house to her so my name is off the title. However, my name is still on the mortgage. Although I pay her $2,000 per month alimony, my ex is often late with the mortgage payments. This reflects adversely on my credit report. I’ve written to the mortgage company, but they refuse to take my name off the mortgage.
When I applied for a mortgage to buy a house with my new wife, I was rejected because my ex-wife had been late so many times on her mortgage payment. What can I do to get my name off the mortgage? Can I force my ex to refinance (although I’m not sure she can qualify)?
A– I’m sorry to report there is no way to get your name off the mortgage obligation on your former residence. Ex-husbands and their lawyers usually neglect to think about this adverse divorce consequence. Since your former wife probably can’t qualify to refinance, and she probably doesn’t want to sell the house, I’m afraid you’re the “stuckee.” There is no way you can force her to refinance. One solution to the late payment problem might be to make your alimony payment checks payable to the mortgage company so you know they will go to pay the mortgage, hopefully on time.
Q–I think a reverse mortgage would be a good idea for my husband and me. We own our home free and clear. Due to illness, we could use more income. Our house is worth about $140,000 and we need about $25,000 to pay off credit cards. How can we find out about these reverse mortgages?
A–There are three major nationwide reverse mortgage lenders: FHA, Fannie Mae and Transamerica. There are also several smaller regional lenders. Norwest Mortgage, with about 750 branch offices, is the largest originator of reverse mortgages for all these lenders. They probably have an office near you.
Q–When we bought our home last August, I was working at a temporary agency and my husband was a self-employed subcontractor. We went to our bank for the mortgage and were turned down. We were treated very shabbily. But we got a home loan through a mortgage company at 8.5 percent interest. In January I was hired full-time, permanent, at a large nationally known company. My husband is still self-employed. We want to refinance at a lower interest rate. How do we go about refinancing? We certainly don’t want to go back to our bank.
A–Why do you keep banking with that rotten bank? I’ve never understood why people keep their checking and savings accounts at a bank that treats its customers badly.
A mortgage broker is your best bet. Many fine mortgage brokers advertise in this newspaper. Give them a call. Explain your situation and ask if they can refinance your mortgage. Your interest rate isn’t very high. You would, at best, reduce your interest rate only about one percent. Mortgage brokers represent dozens of lenders, so they might have a lender who can arrange an attractive loan. It’s worth a few phone calls.
Q–We would like to refinance our home loan, so we’ve been following the mortgage interest rates on the Internet and in the newspaper. About a month ago, we applied with a mortgage broker who advertised a low interest rate with no fees except a $350 refundable application fee (since you said loan fees are not immediately deductible on home loan refinances).
Although we have excellent credit, we were told we couldn’t qualify for the advertised interest rate because we have too many credit cards. The mortgage broker arranged a loan one-half percent higher than we were originally quoted. We felt this was dishonest and demanded a refund of our $350. Only after we sued him in Small Claims Court did he return it. Where is the best place for us to refinance our home loan? Should we go directly to a lender or try another mortgage broker?
A–As in any business, there are good and bad people. I often recommend mortgage brokers, especially for difficult loan situations. Mortgage brokers offer the big advantage of having home loans available from dozens of lenders so they can match the borrower with the best lender. I’m sorry to learn your mortgage broker let you down.
Personal recommendations are the best way to find a good mortgage lender, whether a mortgage broker or a direct lender such as a bank or S&L. Don’t necessarily go for the lowest interest rate advertised, because those loans are often extremely difficult to obtain.
Q–We sold our home in March 1997. We were planning on avoiding tax on our profit by purchasing a replacement home within 24 months. But I read in your column a few weeks ago that this tax break was repealed. Since our profit was less than the new $250,000/$500,000 tax exemption, can we use the new tax break and forget about buying a new home?
A–No. It’s true the old “rollover residence replacement rule” of Internal Revenue Code 1034 was repealed by the 1997 Tax Act. However, since you sold your principal residence before May 6, 1997, the old, now-repealed rollover rule still applies to you if you want to defer your profit tax. You have up to 24 months after the sale to buy and occupy a replacement principal residence of equal or greater cost so you can defer your profit tax. Ask your tax adviser for details.
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PLEASE NOTE: Real estate laws vary from place to place. Be sure to check the laws of your state and municipality before making decisions on real estate matters.
Write to Robert Bruss at Tribune Media Services, 435 N. Michigan Ave., Chicago, Ill. 60611.
