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CLOSING COSTS MAY BE KEY TO REFINANCE

Q: Does refinancing at lower rates make sense even if my monthly payment will change only by about $70? I have a 5.75 rate loan, have had it six years. Balance is $73,000. I can get a Fannie Mae refi for 3.62 for 24 years. With all the paperwork and having to build in closing costs, does it make sense?

A: You gave me lots of figures, but you left out the one that matters most. How much will you pay in closing costs on a refinance mortgage? Once you know, it's easy to calculate how long it will take you to recoup that expense, at a saving of $840 a year. Simple problem in long division.

Foreclosure query has many variables

Q: I want to buy a foreclosure property next month but am new to the experience. I have about $2,000 to work with outright, steady income and a "thin file" for my credit history. My fiance has a score of 581 (my mother kind of screwed him over because he co-signed when she needed him). I'm beginning to lose hope on our ability to move next month. Do you know if it is at all possible to get a house with our credit?

A: If you are asking about an advertised foreclosure auction, those require all cash. In my area, it's 10 percent immediately upon a winning bid and the rest within a month.

As for buying some other way: I have no idea what your income is or how it compares with real estate prices in your area. Nor do I know just what your "thin credit file" means, or what other monthly debt payments you may have. A mortgage broker or a real estate broker can analyze your situation and let you know whether you're likely to get a mortgage loan. That steady income is in your favor and sometimes special programs are available with little or no down payment. In any event, though, you'd never pull anything off in time to move next month.

Putting children's names on deed

Q: My husband and I are both in our 70s. Is it a good idea to have the names of our four children put on the deed to our house. It is all paid for, and we want to stay in the house as long as we can.

A: The answer is a firm "It all depends."

I know your ages, that you don't plan to retire elsewhere, and that the house is free and clear. All that is relevant, but a few more things should be considered:

Would there be a large profit if the house were sold? How solid are your kids' credit ratings? How good are their marriages? How much auto liability insurance do they carry? Do any of them live with you? Do you have long-term care insurance? What is the size of your estate? How's your health? Would you keep some co-ownership or turn over entire title? Would you retain life estate? Do you have wills, and what do they say? Who would pay the property taxes and how do your income tax brackets compare? Does your state offer seniors a break on property taxes? How do your kids feel about becoming co-owners? How do they all get along? Might you want to tap equity with a reverse mortgage some day? And most important: What are you trying to accomplish?

I've been taking a scolding from some readers lately because I keep saying, "See a lawyer." But you need advice from someone who can consider factors like those I've listed above, someone who knows the ins and outs of capital gains taxes, health insurance and estate taxes.

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