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Lewes, Delaware
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March 19, 2004     Cape Gazette
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March 19, 2004

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CAPE GAZETTE, Friday, March 19 - March 25, 2004 - 39 Is an owner carry-back mortgage a good deal? Dear Edith: I recently made a bid for a property where the owner is planning to carry the note as an owner-financed property. There are apparently no fees associated with the loan, but he's charging a higher interest rate than available in the market. I've done a few cal- culations, and it seems to be a good deal, because there will also be no mortgage insurance needed. He'd like to receive the income for at least 15 to 30 years. What ques- tions should I ask? Can the owner write the loan so that it would pre- vent me from refinancing in a few years at a lower interest rate? If the bid is accepted, I will see a real estate attorney, but I'd like to have questions answered before signing a contract. - B.N. Dear B.N.: See the attorney be- fore you make your offer, so you can include Wording that makes it clear you will retain the right to prepay the mortgage without penalty. Find out if your state has a mortgage tax, and decide who would pay it. And have your own lawyer draw Up the mortgage doc- uments, or at least review them be- fore you sign. Inspector missed it Dear Edith: I received milita orders to move while I was in Jor- dan fighting the Iraqi War. By the time I got back, we had only two weeks to get to our new location, so we bought a house in a hurry. The inspection company gave us a standard report that failed to men- tion any water damage underneath the edges of the roof. This is the first used house we've owned, and we assumed the discoloring and paint peeling underneath the roof edges were normal wear. Five months later, a friend said it was not normal, and our roof was leak- ing near the edges and causing wa- ter damage. The inspection com- HOUSE CALLS Edith Lank pany sent a new inspector out who took pictures. He said it was obvi- ous it was an existing condition and needed to be repaired. Do we have any recourse against the in- spection company for failure to identify this obvious damage when we bought the house? If they tell me I'll have to pay for the repairs myself, should I seek a lawyer? -M., via email Dear M,: First, get a written es- timate for repair. Then talk with a real estate attorney about whether you should sue the inspection company or, if you think you can prove they knew about the prob- lem, the sellers. And if your dam- ages aren't high enough to warrant any further legal expense, ask the lawyer for advice about how to present your own case in small- claims court. At least you'll have the satisfaction of a judge's opin- ion. Payments went up Dear Edith: My son just called and said the mortgage company increased his monthly house pay- ment by $500 because they said that he was not paying enough property tax. If seems they would have sent some kind of advance notice. A house note that increases OPEN HOIISE SATURDAY, MARCH 20TH - tl-2 PM Best Value in Sandy Brae! Completely remodeled 4 bedroom, 2+ baths, dream kitchen, new tile, new carpet, new siding & roof and ready for your decorative touches. Call May Shanaphy Direct 302-226-4186 i!!iiiiiiiiiiiiiiiii! i: i Reduced to $274,000  Fo mSAL SSTATS lily $hutapky 0t" Cilldwell I*nkee Rsldilnflill lllrkcPilge 866.651.2191 RIIERMHAL BROKERAGE 4421 Coastal ilw,/. Rehoboth Beadl, DE 227-6200 by $500 could cause some people to lose their house. Is this a com- mon practice? - Concerned Morn Dear Morn: I'm sorry your son had that payment shock. I wonder if his is a new home, where taxes are originally charged just on the vacant land, and then go up sharply later. The mortgage com- pany is allowed to charge one-12th of his next estimated tax and insur- ance bills, plus a two-month extra cushion to keep in his escrow ac- count. A large increase may mean he didn't have enough there to pay a past bill and they want to recoup what they paid out, as well as plan for next year. An accountant could look over your son's documents to see if everything seems OK. If they aren't, your son could get in touch with his state banking au- thorities. What about lease options? Dear Edith: We would like your opinion on the leaseLto-own option. We have a doublewide mobile home that we are looking to sell; however, we Will have nothing to put down on the pur- chase of a house. Would lease-to- own be an ideal situation for someone in our shoes? We are in our early 50s and feel it is better to own something than to contin- ue renting. - M.B. Dear M.B.: Every lease-option arrangement is different, depend- ing on what is agreed upon be- tween landlord/seller, and the ten- ant/buyer. So there's not much I can tell you, except that you should have input from your own lawyer before you sign anything. But you know, FHA mortgages are available with almost nothing down, assuming you have good credit and sufficient income. If you planned to buy outright with that kind of mortgage, my guess is you'd have many more houses to choose from. Editor's note: Edith Lank is a past director of the National Asso- ciation of Real Estate Editors and the Real Estate Educators Associ- ation. She will personally respond to any questions sent to her at 240 Hemingway Dr., Rochester, N.Y. 14620. Include a stamped return envelope. She also accepts email at Millsboro, DE 302-945-7431 302-228-8164 WE'RE FULL LINE BUILDERS Custom Homes Additions Porches Decks Garages Sunrooms Test Drive One of our New or Used Loan Rates The Bank Of Pelican Square 302-226-8900 www,