Current service in the Armed Forces could help forestall foreclosureHOUSE CALLS

Q: Five years ago my grandson thought he was in love and bought a house with his girlfriend, only to find out she did not want him but just the house, so he moved back with me. I asked her to refinance or whatever to get his name off, but no go. She called recently to say the house is in foreclosure and she moved out.

Now what? A sheriff came to the door and I accepted papers on my grandson's behalf for a notice from the mortgage company. Meanwhile, he is in the military about to deploy for Iraq at any moment. If he calls me, should I even tell him all this? I don't want him going there with this on his mind. What is the truth about foreclosures? She says if the house is sheriffed and sold, my grandson will have to pay the balance because she is not working and has no money. Could they attach his wages in the military? It's such a mess and I don't know what to do. Please answer quickly; the papers said he had 20 days to respond. -- D.D.W.

A: There are some restrictions on foreclosing a mortgage when the borrower is in the armed forces. Your grandson should talk this over immediately with an attorney. A local real estate broker can advise you whether there seems to be any equity in the property. Depending on the value of the house and the amount of the debt, your grandson may want to try holding up foreclosure and legally forcing his co-owner to sell, or he may prefer just to walk away from the whole thing.

Selling to neighbors,

mixing business with friendship

Q: We are planning to sell our home later this year. Our neighbors recently told us that they would like to purchase our home and sell theirs. We had been planning to list with a local Realtor, but now we wonder if it is necessary when we may have a buyer. How do we find out if they qualify to buy our home? Please give us your recommendations on how to handle this situation and make the transaction a smooth and uncomplicated one, if possible. -- K.L.C.

A: You shouldn't have trouble finding an agent who will list your home with the provision that "no commission will be due if property is sold to Mr. and Mrs. Neighbor." Many agents are willing to do that. They know that when push comes to shove, the neighbors often turn out to be financially unqualified, half-hearted about going through with it or unable to sell their present house. Meanwhile, the agent has nothing to lose except time invested and advertising expense.

You might want, though, to promise a reduced commission or a flat fee if the neighbors do buy, because as you've already realized, finding the buyer is only a part (sometimes a small part) of the broker's services. You can still use help in negotiation and bringing the transaction to a successful closing.

If, on the other hand, you do want to go ahead without a broker, I'd suggest you start at the library and read all you can on home selling. You can get rid of the broker, but you can't get rid of the broker's work. Spend some time on the Internet investigating fair housing laws and seller disclosure requirements -- state and federal. And if you're really willing to accept an offer that's dependent on the sale of the neighbors' house, consult your lawyer about contract provisions to protect yourselves from future complications.

Considering New Mortgage

Q: We have 75 percent equity in our house. My wife is to transfer to a better job in another state. She needs a place to stay a few nights a week. We plan to buy a smaller house or a condo there. We can buy with 20 percent down and another mortgage, or refinance our current house to buy with all cash. Which is a better way, given all financing and tax considerations? -- M.Z.

A: Consider your present mortgage's interest rate -- if it's high, it may pay to refinance. Analyze the closing costs you're quoted on a refinance versus a new loan.

Decide whether your monthly budget would work better paying for a shorter time on two loans or longer on a larger one.

Those considerations aside, it doesn't make much difference which house you borrow on. Either way, all your interest will be income tax deductible.

The only IRS limitations start way on past $1 million worth of borrowing, which doesn't concern most of us.

Edith Lank will personally respond to any questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com. Please visit her Web site at www.askedith.com.