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Refinancing? Be patient

Comment: You are mistaken when you say a mortgage refinance should take no longer than 30 days. That is true in normal times. But we are in the midst of an unprecedented refinance boom. I work for a large, reputable national lender. We have a backlog of about 65,000 loan applications. Some closings take two to three weeks. Last week I finally closed my final September application. The holdups are usually due to lack of cooperation by the borrower's current mortgage company supplying the payoff demand. Borrowers should be patient.

Response: Thank you for sharing your insider knowledge. The home loan refinance boom has existed for more than a year. By now, mortgage lenders should be able to handle the volume. Of course, a refinance may take longer in an unusual situation, such as when the old mortgage lender refuses to promptly send the payoff demand via fax.

Trust in a living trust

Question: You write often about the benefits of living trusts. My wife and I are 63 and 67. We asked our lawyer whether we should have a living trust to avoid probate costs for our heirs, two adult sons. He said we didn't need a living trust because our estate is worth less than $2-million. He also said that when one spouse dies, the surviving spouse will owe no estate tax. Do you agree?

Answer: No. Everyone should have a living trust to avoid probate costs and delays and provide for the possibility the asset owner will develop Alzheimer's or another serious illness.

Consider the hypothetical case of a husband and wife: Let's call them Nancy and Ronnie. Suppose Ronnie develops Alzheimer's and becomes incompetent. They own all their major assets, including their home, as joint tenants with right of survivorship. But their money runs out. Nancy realizes they must sell the house to pay for Ronnie's care. How can she sell it if co-owner Ronnie is incompetent and unable to sign a deed?

If Nancy and Ronnie have a living trust, there's no problem. Nancy can take over as successor trustee and sell the house. She also can make other decisions affecting the living trust assets.

More details are in my special report, "Pros and Cons of Revocable Living Trusts to Avoid Probate Costs and Delays for Your Heirs," available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at (800) 736-1736 or www.bobbruss.com.

Apply for mortgage without spouse

Question: My husband and I earn about equal income. We want to buy a first house or condo. But he has very bad credit (from before we were married, when I straightened him out!). We talked with a mortgage broker about being pre-approved for a mortgage, as you often recommend. But the broker just laughed. She said there is no way we can qualify for a mortgage. I work as a nurse supervisor, earning excellent income. Is there some way I could buy the home in my name alone?

Answer: Yes. The situation you describe occurs every day among thousands of home buyers,when one spouse has bad credit. The lender simply qualifies you alone for the mortgage.

When you buy the home, your husband might be asked to sign a quit-claim deed giving up his marital rights in the home. However, nothing would prevent you later on from quit-claiming a half interest in the house to him, assuming he continues to perform responsibly financially.

Readers can send questions to Robert J. Bruss at 251 Park Road, Burlingame, CA 94010, or e-mail him at robertjbrussaol.com.

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