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Author Question: You own a home that has a market value of 145,000. There is a first mortgage on the property in the ... (Read 60 times)

daltonest1984

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on: Jun 24, 2018
You own a home that has a market value of 145,000. There is a first mortgage on the property in the amount of 80,000. Interest rates are currently 7 and the rate on your loan is 4.5. You wish to sell the property, but are curious about how the sale can be financed. What suggestions?

Question 2

Explain why a married couple would want to leave their property in life estate form to their surviving spouse.


lorealeza77

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Reply #1 on: Jun 24, 2018
Answer to Question 1

Students should consider the pros and cons of the following:
Assumption (cash to mortgage)

Wraparound

Carryback

Installment contract

Second mortgage

Refinancing

Interest only mortgage

Pick-a-pay mortgages

Answer to Question 2

The benefit of this type of arrangement is that the spouse does not pay estate tax on the full estate. The spouse does not inherit the property, only the right to use the property for life. The children would pay the estate tax, but the estate is not taxed twice using this method.


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