Q & A with Barbara Corcoran

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Q1 - I'm a single man earning $70k per year and I save between $800 and $1000 every month. I'd like to buy a house now, but there are no programs out there to help first-time home buyers earning my kind of salary. Being that I'm single, Uncle Sam taxes me like crazy and I'm afraid that by the time I'm able to save $15 - $20k for my down payment and closing costs, home prices will have risen again. Right now, I have about $5000 in my war chest. I don't want a co-op or condo because I never want to live in an apartment again. What's out there for me?

A - You have a lot of options starting with President Obama's $8,000 tax credit for first-time homebuyers if you purchase a place by year-end. FHA loans require as little as 3.5 percent down so if you're able to save $10,000 by year end, it's enough cash to put down on a $300,000 home. The loan size may be smaller than you need depending on home prices in your area. You can also think about buying a two-family home and qualify for a larger mortgage and generate income from your investment. You might consider buying a two-bedroom house instead and taking a roommate to help defray costs, at least for the first couple of years.

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Q2 - We are senior citizens and have owned our home for about 32 years. We don't have a certificate of occupancy. We have the deed and there was a title search done when we bought it. If we sell our house, will we need a CO? And if so, how do we go about getting one?

A - Chances are you wouldn't have gotten a mortgage when you bought the house in 1977 if the property didn't have a CO. According to Al Fazio of Capuder Fazio Giacoia, LLP, you should contact an attorney who will run a search of city records. If he finds a CO is required, an architect can quickly and cheaply determine what you will need to do to get it.

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Q3 - I recently had a home that was foreclosed and purchased back by the bank in a Sheriff sale in PA. Although my name was not on the mortgage it was on the deed. What is my responsibility, and will the foreclosure show up on my credit report since my name is on the deed? Also, can the bank possibly force us to pay back the balance?

A - While you personally don't have an obligation to the bank, your spouse or whoever signed the loan is responsible for the bank's loss. According to Al Fazio of Capuder Fazio Giacoia, LLP, even though your name would not be reported to the credit reporting agencies, it could still affect your chance of getting a loan in the future.

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Q4 - What do I do if I have a deposit on new construction that has lost a lot of its value?

A - Call your broker or the developer and try to renegotiate. Check out the sale prices of the other comparable units that have closed and if they've sold for less than yours, ask them to reduce the contract price by the same percentage.  You should also ask them to throw in upgrades or extras like a storage unit or parking spot. But remember you have signed a binding purchase contract, so you may not have a lot of options unless you're willing to forfeit your deposit. You should also check with your lender. Many banks have stopped making loans on new construction with less than 70% units in contract and if your contract is contingent on financing, it could give you an out in your contract and the leverage you'll need.

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Q5 - I have a five year, adjustable rate, interest only loan on my house that resets in September (it's now 4.35%).  Should I try to lock in a 30-year fixed rate loan now, or wait a bit longer, as interest rates look like they may be falling again?

A - Lock in your rate today and have a good night's sleep tonight. Nobody can predict rates. Rates have gone up 1% in the last 3 weeks and could well go up more. If you wait, you will likely miss an opportunity and it could cost you a lot of money. If rates drop before your closing, you can always try to renegotiate with the lender and about half the time they'll say yes.

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Q6 - My husband and I have saved enough money to remodel our unfinished basement in Littleton, Colorado. The plan is to add a bedroom and bathroom, making ours a 5 bedroom, 3.5 bath house as many of our neighbors have done.  We have no debt other than a first mortgage and a second mortgage we took out to cover our down payment 5 years ago.  We have no trouble paying our bills, we live well within our means, and we have no immediate plans to sell our house.  Should we invest in the basement, pay off our second mortgage, or invest the money?

A - If you could afford it, go for the new basement. As long as your home's size is comparable with other houses in the area, the extra bedroom and bath will boost its value when it comes time to sell.

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Q7 - My new neighbor is thinking of opening a day care center for toddlers in her home.  I'd very much like to support my new neighbor but have mixed feelings. I already have a school within walking distance and at times the kids get out of control.  Does my neighbor need permission from the community board or a certain amount of signatures from neighbors?  Are there zoning regulations governing day care centers? Most importantly, how will this affect the value of my home? 

A - It may not console you, but this issue is out of your control. Your city's zoning code dictates whether or not your neighbor can run this type of business from her home, and it usually depends on how many children she plans to have there. Your neighbor will have to go through some red tape as day care centers are generally regulated by the county or state and care providers typically must be licensed. You can call the National Resource Center for Health and Safety in Child Care and Early Education at (800) 598-KIDS, or visit their website at https://nrckids.org/STATES/states.htm to check the specific requirements. But once she meets them, you better get used to the sound of laughing and crying kids! So far as the value of your home goes, it will surely fall if the house next door looks and sounds like a romper room.

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