Show Standard-Examin- Sunday October 23 1988 er 3E BusinessReal Estate Market value not the best measure for insurance DEAR EDITH Every year about this time I receive my annual homeowner’s premium and every year I have an argument with my agent The house is insured way above its actual value The agent’s explanation: market value has nothing to do with it replacement cost is so much per square foot — Mr DD A: Your insurance agent is right Appraisers know there are several kinds of value market value is one replacement value is another and the two figures are often different Some houses would cost more to rebuild than they could bring on the open market In other areas where land is particularly valuable you may need insurance coverage for less than the house would sell for to be used as a principal residence and the other to be a rental can the cost of both houses be used to defer the payment of tax on profit from the first house? 2 If one sells a principal The person who owed on the mortgage is now dead and someone else owns that other property I don’t even know who My attorney advises against foreclosure because there are probably larger claims against that property and I would lose out completely or incur considern able cost or get a house I am disappointed that a legally drawn signed and notarized mortgage purchased in good faith DEAR EDITH: We bought a can be ignored by the mortgagor house 30 years ago and finished — Mr KN A: And I am disappointed that paying our mortgage last January It was a GI mortgage you saved your inquiries until afI know I have a refund coming ter you had bought the mortgage to me from my insurance premi- Before lending a total stranger ums but I do not know how to $1200 (which is what you did) go about receiving it — Mr BV you should have investigated the A: You don’t have any refund credit of the borrower current coming to you because on a GI payment record and the amount (VA) mortgage you didn’t pay already lent against that other any insurance premiums The house There’s nothing magic about government’s guarantee of your loan was a gift to you as veteran legally drawn and notarized paThe insurance refund you’re pers people who don’t pay their thinking about applies only to bills ignore them all the time Of certain paid-u- p FHA mortgages course you are in the right but if the borrower and the property are DEAR EDITH: In 1985 the buyboth overburdened with debt it er of my house was short $1200 may be not practical to do anyat closing so I took instead a thing at this point $1500 mortgage someone owed DEAR EDITH: Two questions: her on another house Soon thereafter I began making inquiries diIf one sells a principal residence and buys two houses one rectly and through my attorney debt-lade- You don’t have to be rich to buy investment properties In fact under current law you’re likely to get the best tax advantage from such investments if your annual income is less than $100000 If the idea of real estate investment appeals to you but you don’t know where to start rest assured there are knowledgeable people willing to help Almost anywhere in the country you can find both lawyers and real estate agents who specialize in investment properties Agents ' can guide you to a good rental property perhaps a town house to start The seller pays the real estate agent’s commission A lawyer can help you determine if the financial arrangements make sense What makes a good rental prop- erty? Mark Waldman a certified financial planner and real estate agent in the Washington DC market says he looks for town houses — end — units selling for $100000 to $200000 of brick construction with 2 12 baths and finished basements and close to public transportation These units rent well particularly to young fami“three-bedroo- m lies" Waldman writing in the trade publication Real Estate Today says he also looks for properties with an assumable first mortgage that is at least 70 percent of the selling price Most sellers who have assumable mortgages advertise that fact when they put the house on the market A telephone call can tell you how big the mortgage is Using Waldman’s formula you would seek an assumable mort- gage of at least $70000 on a house selling for $100000 You rarely find a conventional —mortgage that can be assumed 0 627-311- 1025 175 pt 15 pt 2125 pt 9875 20 pt Call for quote 75 pt 100 85 20 pt 475 pt 10 pt 202 pt 100 20 pt 20 pt 10375 100 275 pt 1025 275 pt 1025 Not available 95 1025 105 10 pt 1021 152 pt 1016 100 100 5 394-384- 2 476-129-1 626-284-5 Average rates Not available 10 pt 15 pt 105 2125 pt 100 2 Zions Mortgage Co 1 101 15 775 25 pt 30 pt 225 pt 30 pt 695 375 pt 725 75 10 pt 20 pt 759 9375 100 994 pt 245 pt Home equity loan rates: Lender America First CU The first seems unlikely but the second seems likely — BN A: And you’re right both times First question no Second question yes if the second house is one’s residence and the improvements are made within 24 months of the first sale 621-205- Valley Bank & Trust Interest rate Loan fee Rate cap Index 100 $7500 180 Internal 210 Chase Manhattan prime 1 621-865- None 100 0 Adjustable rate mortgage terms and rate caps vary from lender to lender Each point equals 1 percent of the loan amount and is required as part of closing costs This Information is current as of Oct 21 1 988 and is provided by Mortgage Data Inc (M Dt) It is provided for the general information r and is not to be reprinted or used commercially without wntten consent of MDI MDI does of the readers of the not warrant or guarantee the accuracy of the information All listed institutions have paid a fee to MDI for inclusion in this chart 2 Publication information: Standard-Examine- 544-054- Standard Examiner graphic Frankly were pretty Our customers are people who want personalized financial counselling based on our 72 years of experience May be you should be one of our customers To find out call one of our investment counselors today We’d love to serve you Our savings products are investment opportunities that are insured safe and profitable So we may not be for everyone But then we don’t try to be We deal with rather specialized products and services tailored to the individual needs of our conservative depositors Serving the Intermountain West Since 1916 1 15 South Mam Salt Lake City UT 841 14 022-220- 107 East 3300 South Salt Lake City UT 84115 North University Ave Provo UT 374-934- 0 0 2661 Washington Blvd Ogden UT 84601 lESLICi 466-170- 0 jiUMWiWWiy— IJLW ii'iYiiiitiuniiiinir Radio haeli if COMPUTER CENTER Lowest Price Ever! o 0 !L ONE WEEK ONLY! m c H LJ Portable PC-Compati- ble ar Easy-to-Reaa Backlit Display! 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You can easily hire a management firm to do this for you but most small investors can’t afford this luxury Owning rental property is not for everyone But many people find that owning a couple of rental houses can be a profitable sideline Some get so interested they e make it a job You never know until you try MS® Was 149900 in Cat Software Faster Runs One 5V4” Disk Drive 51 2K MS-DO- OS2 Ready ATXT" Complete System With VM-- 5 Monochrome Monitor and Display Adapter Rad'O Shack revolving credit Payment may vary depending upon eccount balance RSC-1- 9 Low As $50 Per Month Compatible IBM and ATReo TM Only and XTTM S 119900 IBM Corp MS and Reg Separate Items 174890 TM Mcrosott Local Computer Centers Serve You Better full-tim- LAdvertise With Classified 394-167- 1 544-C09- 10 pL 10 pt ARM 15-ye- ar 30-ye- ar 105 105 Northern Utah: in & Prudential Federal Savings today but assumable mortgages backed by the Veterans Administration and Federal Housing Administration abound You may be able to find one with an interest rate of 85 percent or 95 percent Once you find an assumable mortgage you have to figure out how to pay the seller the rest of the sales price Most investors don’t put more than 10 percent down because they don’t like to tie up a lot of cash — it brings down the rate of return Going back to the $100000 house with a $70000 assumable 'mortgage you could put down 10 percent — $10000 — and get a second mortgage for the remaining $20000 Sometimes the seller is willing note for to take back a short-terthe second mortgage say a balloon note at 12 percent interest If the seller does not want to hold a second mortgage your lawyer or real estate agent can find somebody who will Real estate investment is often highly profitable But like other investments it has drawbacks and risks Some questions to ask: What is the local market? You can make a lot of money in a “hot" market where prices are rising fast but you can get in trouble if the local economy worsens and prices plummet Remember what happened in Houston Can you handle the monthly mortgage payments? Ideally the rent will cover the mortgage and taxes but that isn’t always possible especially at first You might consider buying a brand new house if the builder is ofTcring a n which reduces the mortgage payments in the early years A new house usually eliminates any need for repairs Rising five-ye- American Savings 621-851- 1 ' Statewide Funding er Town house fairly safe investment quickly 621-205- 1st Fed of America resi- Rental property often profitable With the stock market in the doldrums and the economic outlook uncertain people looking for a relatively safe profitable investment might want to consider real estate Real estate sales are slow in many areas right now which tends to hold down prices Sellers in a slow market are more likely to make a deal than those who know they can sell their homes America First CU Moore Financial house? 1 Scnpps Howard News Service 30-ye- ar Bank of Utah can dence and buys a you include the money to fix up the second house as part of its cost in order to defer income taxes on profit from the original fixer-upp- Mortgage rates and points (including loan origination fees) for financing offered by lenders FHA Conventional Conventional fixed fixed fixed Lender Shop Ctr 3672 Wall Ave Murray 6051 S State Ave Sail Lake City 301 S State St Ogden A DIVISION Um K-M- art OF TANDY CORPORATION PRICES APPLY AT PARTICIPATING i 394-166- 6 268-897- 8 322-489- 3 STORES AND DEALERS mti |