Dear Edith: I'm looking to retire in ten years. Should I buy my retirement home (12 hours away) with a mortgage now, or wait until I retire and pay cash? How do you figure the expenses compared with appreciation? -- L.S.

Answer: What would you do with that retirement home during the 10-year wait? You certainly wouldn't want the place vacant all that time, so do you plan to rent it out? It's not easy to be an absentee landlord, but it is easy to get into trouble that way.

Of course, the people who write to me are the ones for whom things didn't work out, but I do hear almost every day from someone whose retirement situation has changed and is now stuck with an out-of-town property.

A year ahead is plenty early to buy a retirement home. As for your question about appreciation -- it's a nice bonus and in the long run real estate values usually do rise. But that can't be calculated or relied upon anymore than stock market gains can.

In short, my advice is "don't do it."

Out More Than Two Years

Dear Edith: I co-own a house that my ex-wife is living in and I still pay half of the mortgage. I've been living elsewhere for the past four years.

If I sell the house now, will I have to pay capital gains tax on my profit, which will be about $250,000 my half? Would it pay for me to change my address for two years before I sell? -- P.R.

Answer: Just changing your address wouldn't do. You must actually occupy the house to qualify for the homesellers' tax exclusion.

But there's a special provision for divorced owners in your situation. If your ex qualifies for the exclusion on her half of the profit (which seems likely), then you can use that same exclusion on your share even though you don't live there and have been out for more than three years.

Job Switch and Qualifying

Dear Edith: Do mortgage lenders look on you less favorably if you switch jobs (same career -- teaching) just before trying to purchase a home? -- J.S.

Answer: Recent job switches -- not so good. But, in the same field -- no problem.

Selling on Their Own

Dear Edith: We are selling our home ourselves.

What time deadline should we allow for each thing to be done ... loan approval, inspection, appraisal, closing? -- R.

Answer: Some of those items will be stipulated in your buyer's written offer. Whether you accept their suggested dates depends on the buyer's particular needs, on your situation and on the mortgage market.

If you want help negotiating a sales contract, you could hire a local broker by the hour for that part of the transaction. Or -- more expensively -- do it through your lawyer. It's particularly helpful to have your own attorney anyway, when there's no broker involved.

Son Owns Half

Dear Edith: I purchased a house for my son to live in. Years later, I added him on the deed as co-owner. If he is sued for any reason, can they put a lien on the house, or is it protected since my name is also on the deed? -- M.H.

Answer: If a judgment is placed against your son, it can be recorded against his share of the property. It wouldn't threaten your ownership, but it could make a sale difficult.

Helping the Buyer Buy

Dear Edith: I want to aggressively sell a home that has no mortgage. I'm thinking of targeting a first-time buyer and paying the $10,000 down payment myself. Would this be a wise decision, and would it help sell this three-bedroom ranch in great condition? -- Via e-mail

Answer: "Seller may help with costs" would be an attractive phrase in an ad.

But I have no idea what price range you're talking about. Most mortgage plans have a limit on the percent of sale price that's acceptable for seller contributions. Banks are especially careful, these days, not to let buyers get in over their heads. And to avoid committing fraud, you must of course give the lender complete information about the financial arrangements.

Deed in Lieu

Dear Edith: Is "Deed in lieu of Foreclosure" a good option? -- Via e-mail

Answer: If the lender agrees to take the property in full payment for the defaulted mortgage loan, your credit rating won't take as bad a hit as if you'd let the place go to a foreclosure auction. In addition, the lender will give up the right to come after you for any unpaid balance.

It's not great, but it's a lot better than foreclosure, and you're lucky if your lender agrees to it.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.
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