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Jewish World Review August 19, 1999 /7 Elul, 5759

Bruce Williams

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Econophone

100 percent financing is a scam


http://www.jewishworldreview.com -- DEAR BRUCE: We operated a nonprofit organization and are buying a large commercial property from another similar organization. We have operated a halfway house in the black for two years. We have been renting and now want to own within the city. We have between $800-$1,000 a month, but insufficient funds for a down payment. The purchase price is $121,000, which is below appraised value. The property is in good condition. The local lending institution believes they have a lock on the market and won't do 100 percent real-estate financing. There are ads on national television for 100 percent financing, but are they trustworthy? Should we choose by throwing darts in the newspaper? -- H.W., via e-mail

DEAR H.W.: With the exception of V.A. loans or other government-subsidized or -guaranteed loans, you will find that these 100 percent or 125 percent schemes are just that: schemes where you will pay as much as 16 percent to 20 percent interest, which is not in your best interest. The local lenders, notwithstanding your comments, are simply saying that a 100 percent loan gives them no guarantee of being paid. If things get tough, you may hand in the keys -- and then what? It is not unreasonable to look for a 20 percent down payment to ensure that the buyer will do everything in his or her power to be certain that the mortgage gets paid. In the event that you cannot afford the down payment, you might consider some kind of a fund-raising effort. No legitimate lender is going to allow you to buy at 100 percent without outside guarantees.

DEAR BRUCE: My father and his sister built a home. Since that time, my father, his parents and all of his siblings have died. Their names appear as owners of the home and property. My aunt passed away first. As far as I know, my mother, uncle, siblings and cousins now own the house. However, I am not certain. Do you know whose name the property is in once the original people have passed away? -- K.W., via e-mail

DEAR K.W.: This is another example of why it pays to have a properly drawn will to determine who gets what in the event of a death. The title is cloudy, and the only way I know of to handle this matter is to seek the services of a title company. This is what they do as a specialty, in contrast to a general-practice lawyer. You may have to pay a considerable amount of money to get this title cleared. Putting it off is even worse, since more people with interest may pass away and further complicate the circumstance. In other words, get moving!

DEAR BRUCE: I have always admired cars from the middle '60s, and now that I have reached the point in life where I can afford an adult toy or two, I purchased, through a national magazine's classified section, a 1965 Thunderbird convertible. You may know the kind -- the model with the metal roof that folds into the trunk. I traveled over a thousand miles to look at the car and was assured that there was no body damage, that the car had never been in a wreck, and that it was a "cream puff" waiting to be restored. The restoration process is now in its third year. I have come to find out that this car had been repaired with bastardized parts and there was in fact body filler. In short, it was not nearly worth what I paid for it. Is there anything I can do, either with the magazine or the owner or both? -- M.W., Orlando, Fla.

DEAR M.W.: I'm afraid not. Certainly after this length of time it would be very difficult to go after the owner, even though it would appear that fraud has been committed. As far as the magazine is concerned, they correctly allow the general public to advertise and state their case. Clearly, they are not obliged to check the accuracy of every listing. It is up to you, the buyer, to protect yourself. Having purchased a couple of antique cars, I can tell you that I have always had a pre-buy inspection done by a competent mechanic. This can run you $400-$500 on an older car, but it is money well spent. You failed to tell me how much you paid for that car. It's a pretty piece when fully restored, and I am sure it will give you a great deal of pleasure on the road.



Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).

Up

08/16/99:Will I have to pay a capital gains tax? 08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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