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Subject:  Re: Buying a condo: my head is spinning Date:  2/7/2007  12:25 AM
Author:  wondersab Number:  91808 of 131149

Thanks to everyone for sharing your thoughts and questions. I'll also post this to the Buying & Selling a Home board, but this is extremely helpful.

Is that "we" or "she" with sufficient funds? I ask because if she has the money in the bank I'm having trouble understanding why she can't get a loan on her own.

"She" has sufficient funds to pay off her existing mortgage and put 20% down in her IRA. "We" have about the same amount of money in a joint money market account.

What kind of Federal pension does she have that is tax-free?

She receives "Dependency and Indemnity Compensation" as the survivor of a military veteran.

Have you checked to see if the offset provisions of SS will reduce her SS benefit?

No...I'm not exactly sure what this means but when we applied for her SSA benefits, we were told that this other income would have no bearing on her benefit amount. We are applying for her to receive benefits on my dad's record as his disabled surviving spouse.

I'd advise putting your name on the title to her condo. If you inherit it you inherit it with a basis stepped up to its FMV at that time. If you're 50/50 owners you get the stepped-up basis on only the half you inherit.

If you truly meant "not" putting my name on the title to her condo, this is definitely something new for me to think about. I thought that by putting both names on the title, it would make things easier as we would avoid probate if something happened to one of us. I guess the 50/50 owners and 50% stepped-up basis would apply because I would not actually be a joint tenant?

The IRA avenue sounds promising if you do need to temporarily boost her monthly income.

Yes, I agree that this sounds promising. She will be 60 in July, so she is over 59.5 years old.

You should be able to cosign your mom's loan (so the house is in your mom's name only), or you can jointly own the house and jointly owe the mortgage.

I thought the same thing, but apparently the lender said that it would not make a difference in our situation. I will definitely check in with another lender or broker tomorrow to see if they have any ideas.

It's possible that a portion or all of the IRA is invested in an annuity that is subject to surrender charges. Perhaps additional riders were purchased, intentionally or inadvertently, and making withdrawals of a certain size may invalidate the riders. There's a chance that the IRA is held by TIAA-CREF that has something like a 10%/10 year distribution schedule.

The IRA funds were rolled over to an inherited IRA at Ameriprise Financial. About 10% of it is cash because I anticipated that we may need to get to it in the short term while we're working through all the real estate stuff.

How much do you have for the condo if you don't pay off her current mortgage? It seems reasonable to borrow less against the new residence than pay off a mortgage that will be cleared at sale.

We do not have enough to buy the condo outright if we do not pay off her existing mortgage. And the interest rate on the existing mortgage is approximately 1+ point higher than the new mortgage would be.

Have you checked if you could co-sign for a second on her existing home without being on the title? It would allow the title for the condo to be clean and the mortgage would be cleared at sale.

No, I haven't looked into this. I'm assuming this would be to take the equity out of her existing home to allow us to purchase her condo outright? I do not believe there is enough equity in her existing home for that. Her existing home is in the very, very affordable suburbs and the new condo is in the more expensive city.

I hope I've been able to answer your questions. I have to admit that some of the stuff you guys brought up is over my head, but it certainly gives me more to think about and investigate!
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