Dear Edith: My husband and I own our home in a small village. We have just renovated our kitchen and now want to move on to do our master bath. At the time we built the home (2000) my husband insisted we put a tub/shower combo in for resale value. He has never used the tub once and I perhaps a handful of times.
I would like to renovate and replace the current tub with just an upscale shower. What option would be better for resale if we decide to sell in the future? — B. and B. C.
Answer: Here we go again! It's been some years since we've asked readers to weigh in on this important question, so let's do it for the Cs. Please let's hear your advice:
Would you buy their house if the master bath had a fancy shower but no tub?
Warns of Unexpected Tax Consequences
Dear Mrs. Lank: You recently published some reader responses about how a woman could prevent her name and new address being published in her newspaper. Readers suggested using LLCs or trusts to purchase the real estate.
Readers should also consult a CPA or enrolled agent to discuss tax consequences before establishing an LLC or trust to hold their primary residence. This could have implications for their ability to sell later without taxable gain on the sale as well as other tax implications. — askedith.com
Answer: Yes, one could lose the chance for tax-free profit when a principal residence is sold. Other homeowner tax breaks might also be lost when a home is owned by some other legal entity. Let's hope the lawyer or CPA who helped set up an LLC or trust would explain possible tax drawbacks.
And thanks to attorney P. M. G., who adds to last week's article about private mortgage insurance dropping off FHA mortgages when they've been paid down to 80 percent of original value, or 78 percent of current higher value as determined by a new appraisal. Attorney G. points out that for newer FHA mortgages, those originated after June 3, 2013, PMI coverage must remain for the whole life of the loan.
About Bi-Weekly Payments
Dear Edith: When that reader complained that her bank was deducting automatic mortgage payments but had stopped forwarding them to the lender, I suspect a middleman — one of those "service" companies that take 26 bi-weekly payments and make an extra annual payment on your behalf while in the meantime they get free use of your money they're holding.
She still needs to follow your advice, call and tell her story to anyone that will listen. Another good call would be to the best investigative reporter or problem solver reporter at a local TV station. Get the media involved. -B. K.
Answer: That reader wrote to this column, so she is trying media involvement.
She didn't mention any bi-weekly payment arrangement, but it is an Interesting possibility. You don't think much of those service companies, but they do have some value for homeowners who want to make extra mortgage payments and don't have the discipline to do it on their own.
With interest rates as low as they are these days, that "float" — having temporary custody of someone else's money — isn't as valuable as in the past. That's probably why we don't hear so many offers, lately, to set up that "magic" way to pay off a mortgage ahead of time.
For those who haven't heard of it — half a payment every two weeks, bi-weekly, adds up to 13 monthly payment a year. It's that annual extra payment, clearly labeled "apply to principal only." that works the magic and pays off a mortgage years early.
Transaction Fee Plus Commission
Dear Ms. Lank: Is it legal for a real estate company to charge a transaction fee in addition to the commission on sale of a house? — askedith.com
Answer: As it happens, I'm familiar with the rules about real estate fees because I've written a licensing textbook that's now in its 12th edition. I know of no laws governing the way brokers may charge for their services. We're all used to commissions based on a percentage of sale price, but flat fees, limited services and hourly charges are perfectly permissible.
If a proposed arrangement makes you uncomfortable, just don't go with that firm. If, on the other hand, an additional fee is submitted as a later surprise, that would be a different matter and it'd be interesting to hear the details.
A bit off-topic: The Federal Justice Department is particularly concerned about any attempt by competing firms or Realtor organizations to agree on standard fees. Commission rates may tend to end up pretty much the same in a given community, but that's just the way an open market works.
Edith Lank will respond personally to any question sent to www.askedith.com, to [email protected], or to 240 Hemingway Drive, Rochester NY 14620