Smart Money: Owning home about lifestyle, not just dollars and cents

Bruce Williams is a national radio talk show host and syndicated columnist.

Dear Bruce: I'm a 41-year-old single female who makes more than $100,000 a year and lives a very simple life. I keep wondering if I should think about purchasing a home.

There is no question that it would cost me more in mortgage payments than what I am paying in rent, but I was raised in a single-family home and I really miss that lifestyle.

My friends keep asking why I want to get saddled with the problems of homeownership, but frankly, I'm not so busy in my off-work hours that this would pose a hardship. What do you think? R.M. Piscataway, N.J.

Dear R.M.: When you buy a home, you buy a lifestyle. It may very well become a good investment. We have seen substantial rises in real estate prices in the last decade or two. The primary goal, in my view, would be to improve your lifestyle.

You mentioned that you have lived in a single-family home and have enjoyed the freedoms that it offers. What difference does it make if you rent or pay a mortgage? If you enjoy working around the house and enjoy where you live, I'd go for it.

If you are fortunate and it goes up in value, then that's great too. Even if it does not, but you are still happier because of the buy, then isn't that what life is all about?

Dear Bruce: About 13 years ago, my wife and I divorced, and she moved to England. At that time, we were both on the mortgage. I applied for a mortgage that is cheaper for me. I have sent her three quitclaim deeds. She has not signed any of them. The lawyer for the new mortgage company has tried to contact her.

Once again, she has not responded. All we get is a run-around. Is there any way that I can legally bypass this? I am 71 years old and have no savings. I need to get a part-time job just to keep afloat. I hope you understand my problem. J.M., via e-mail

Dear J.M.: If I understand your question correctly, you are asking if you can refinance. Until such time as your ex-wife gives up her interest in the property, it's very unlikely that you will be able to get a new mortgage, because her signature is required.

If she is just simply trying to spite you, I'm not sure there is very much that can be done. To ensure that these documents are reaching her, you may have to send these instruments by some registered means.

Dear Bruce: I had an unsolicited offer for the purchase of my house. The price offered was in the right neighborhood. I countered with another offer. I wanted it to be clear to the prospective buyer that there were some problems with the house, and this would be a "buy as is" proposition. Specifically, there is a portion of the roof that sags that I don't wish to deal with.

Is there anything else that I need to say in my reply to them with regard to deposit and other details? C.D., Melbourne, Fla.

Dear C.D.: You've got to be kidding me! You should not be replying personally to them. I understand that you are trying to save money, but this is no place to save pennies. Your attorney should be responding with an offering agreement.

It may be that upon inspection of the house, the prospective purchaser may wish to back away, and that is his or her privilege. If you try to attempt negotiations of this kind by yourself, you are exposing yourself to enormous liability for potential minor savings. Don't do it.

Dear Bruce: My son is contemplating buying a house, but would like to reduce his credit card debt first. His girlfriend is heavily in credit card debt and wants to declare bankruptcy before they marry. Then she will help him pay off his debts. My son doesn't agree.

If his girlfriend files for bankruptcy, will this affect my son's credit after they get married? Will the bankruptcy also affect the purchase of a house, even if she filed for it before they were married? D.C., via e-mail

Dear D.C.: If your son's girlfriend goes bankrupt now and then they marry, only his credit and income will be considered if they wish to buy a home. She pretty well knocks herself out of the box for a good many years.

You didn't mention how far in hock your son is, but if he has substantial credit card debt, it's likely that he will not be able to get a mortgage, either. If she does declare bankruptcy and they marry, it would be better for her to do any personal credit business in her maiden name and use her married name only for social reasons.

Without question, her bankruptcy can come back to haunt both of them. It would seem to me that before these two think about marriage, they should get their finances in order.

Dear Bruce: I'm a 35-year-old married man with a combined income of $60,000 a year. We are in the fourth year of a $30,000 mortgage at 7.25 percent. Since we plan to keep this home for the foreseeable future, would it pay us to refinance now and save about 1.5 percent? We would recapture the costs in about 18 months. T.W., via e-mail

Dear T.W.: Other things being equal, without question this would be a wise move. I don't believe these low rates are going to be with us for an extended period of time, but a mortgage will be with you many years. If you can recapture your costs in under two years, it is a smart move.

Dear Bruce: Where do I get information on reverse mortgages? Our parents are unable to meet their monthly obligations and pay the mortgage on a half paid-for house.

I read that a grown child might be able to pay off a mortgage, and the parents live in the home and pay whatever they are able for rent.

The grown child would be able to save the home, and it would benefit the parents and the child. If I remember correctly, there was also some tax benefit, perhaps after the parents pass away. L.R., Caldwell, Kan.

Dear L.R.: In essence, a reverse mortgage is a loan against the home's equity and having it paid off after the individuals pass away. With a house that's only half paid for, I doubt seriously that a reverse mortgage is the way to go. If you are able to purchase the home and allow your parents "life rights" to stay in the house free or as free as possible, that would work for both you and them, although I cannot see any tax advantage for this.

Unfortunately, as the purchaser, you would have to pay off their mortgage and get a new one. You will not get the lowest possible rates, because it is not for your personal domicile. It would be a good and kind thing to do, assuming there are no other children in the family who would object.

Dear Bruce: Recently, you advised the person whose mortgage is nearly paid off to get a new primary mortgage or home equity loan while the rates are low. You appear to be advising him to invest the money elsewhere when the investment climate perks up.

What if that doesn't happen for several years? Assuming that he has no other use for the money, he'd be paying interest, however small, for no reason.

My house is unencumbered, so if you're suggesting a new mortgage, then I'd sure like to understand how it works. K.F., via e-mail

Dear K.F.: There are a number of variables that must be considered. If a person is relatively young, borrowing the cheap money that is available today, even at some modest net cost, is not the worst idea in the world.

There are places where you can break even with a very modest amount of risk. For example, there are many short-term corporate bonds that will pay at least the amount equal to what you pay on a mortgage today. Most money people agree that this cheap money will not be around forever.

If you are able to borrow today and handle the payments, the availability of that money four or five years from now, for a relatively conservative net cost, may prove to be a very profitable venture.

It should be understood that in any investment climate there are some risks, however modest, and if you are not prepared to take those risks then this is not a good plan.

Dear Bruce: The utility company has a 4-by-4-foot box on our front lawn on the corner of our property. It's an eyesore and mars the entrance to our home. I checked with the utility company, and they say they have a legal right to locate it there. Our survey doesn't show any easement.

I told them they could put the box in the back of the property where it would be hidden.

They say they could relocate it, but it would cost me $50,000 to move it. We have high property taxes. Why should we pay for this aggravation? J.W., Westlake Village, Calif.

Dear J.W.: It's entirely possible that the property in front of your house that you think of as your own is really in the public right of way. Often people are mistaken as to where their property line begins.

In the absence of that, it's likely that they do have the legal right to locate this utility box where it is. Without this right, we would have no utilities to serve us. That said, if you are still concerned, take your survey, titles and any other appropriate documents to an attorney and have the matter searched to ensure that the utility company does have the right to have their box there. There have been occasions where they do not.

More often than not, they are within their rights to locate these service areas in places that may not be particularly attractive. The alternative of going without telephone or electric service is even less attractive.

Dear Bruce: In 1972, we sold our home in Seattle and bought a home in Renton, Wash. I was a single mother raising a large family. The real-estate agent said to put one of my children's names on the title. I understand that this made my son a part-owner. Now my son is demanding a portion of the proceeds of the sale. To whom can I turn for help? B.H., Renton, Wash.

Dear B.H.: I seriously doubt there's anyone you can go to. I don't understand why you took advice from a real-estate agent as to how to title a piece of property. That's akin to going to the plumber when you need medical advice.

This deed was done a quarter-century ago, so you probably can't upset it now. The real shame is that your son won't just sign off since he made no contribution to pay for this property in the first place.

This is a relationship that needs a lot of work. Perhaps your son's siblings could have a chat with him to show him the error of his ways.