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Buying for retirement five years in advance not wise
By Edith Lank | Columnist
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Published: 8/22/2010 12:03 AM

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Q. We are interested in buying a house with all cash for our retirement home. We'd live there after five years. In the meantime, our daughter will live in the house and rent one room out. Is it a good plan to buy with all cash, no mortgage?

A. I'm not a financial planner and I don't know enough about your overall circumstances (our your daughter's), so I can't say if all cash is a good plan for you or not. I do feel, though, that it's not wise to buy retirement property much before you expect to occupy it. A lot can change in five years.

When you buy a home, I noticed that the contracts usually have something about the original owner retaining mineral rights. What does that mean, especially if the home has had a few different owners through the years? I thought that when you bought property, you owned everything, but this suggests otherwise.

A. You must be located in an area with a lot of mining, oil or gas wells. In many areas, it would be unusual to find such provisions when property is offered for sale.

In most cases, buying real estate does mean receiving ownership of the land (and anything permanently attached to it) in a wedge down to the center of the earth and upward to infinity. Mineral rights can be sold or leased separately, though, or held when the rest of the land is sold.

If sub-surface rights had been retained by the original owner, then whoever bought the property later wouldn't own them. You can only buy whatever the seller owns. So, an offer to sell the property would have to alert potential buyers if mineral rights were not included.

Even air rights can be sold separately. In Manhattan, for instance, air rights have sometimes been sold along with small strips of surface land for foundation pillars. That allows a different owner to construct a building above an existing one that doesn't change owners at all.

We have an offer on our house. We've countered, but we haven't heard back. They have 48 hours to respond. Now, we'd like to pull our house off the market due to financial reasons. Can we? We've listed with an agent until Oct. 1.

A. You're not bound by that offer, unless it is accepted in writing exactly as it stands before those 48 hours are up. As for the listing contract: You always have the right to withdraw an agency. You might be asked to reimburse the brokerage for any out-of-pocket expenses, like advertising. And of course your contract may have other provisions. It may state, for instance, that you'd owe a commission if within a certain length of time you sold to someone who saw the property when it was listed.

I have an opportunity to lease some of my property to investors that are looking at installing a solar farm on the property. I am trying to find out what a fair price would be for leasing the land to the investors. I have about 5 acres and my brother has about 10 acres. Any help or advice would be appreciated.

A. Take the question to the best-qualified real estate appraiser you can find. This is a new field and it will probably take some expert research to give you the best answer.

My 69-year-old husband and I have a mortgage on our house with about eight years to go on our fixed loan, at 5.375 percent interest. Our lender has made the following offer: a new loan, 10-year fixed rate of 3.675 percent, which would give us a monthly savings of $113. In the offer, they state the rate may change without notice subject to market conditions. With the offer, there is a $500 credit at closing. Is this a good deal or not? We could use the extra $113 a month.

A. Yes, but you certainly wouldn't have it for the next 10 years. That's not a fixed rate if it can change with market conditions, and it certainly will. Interest rates haven't been this low for half a century. They're bound to go up, though no one can say just when. When your new low rate disappears, so does your $113 a month advantage. And you'd be making payments for two extra years.

•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.

2010, Creators Syndicate Inc.