Q & A with Barbara Corcoran

---

Q1 - Concerned that by shopping around I could affect my credit rating because there will be multiple credit checks.  Where should I go to know that I have shopped around for the best rate possible?

A - You can either go directly to the lenders for your mortgage, or you can shop through a mortgage broker who will do the legwork for you.  Either way, you'll pay the same price for the same loan.  If you decide to go direct, you can apply online with almost every major lender out there.  And if you use a mortgage broker, the best way to find a good one is to get a referral from a friend.  But don't worry about the multiple credit checks affecting your credit score.  When you're looking for a loan, typically three lenders pull your credit report within a short window and the reporting system is programmed to allow for this.  If you're planning to get bids from more than three lenders, just ask one of them for your credit score and use that number when you call other lenders.  Only allow them to pull your credit report if you like what they have to say.

---

Q2 - I have a three family house in the Bronx that I've lived in all my life and it's valued at over $500,000. I'd like to give it to my wife. We're both senior citizens.  Does she have to pay gift taxes on it?

A - As long as your wife is a U.S. citizen, the IRS won't be looking for gift taxes.

---

Q3 - I'm dying to get into the housing market.  But even with the current low prices, I think the only way I'll really be able to afford a home is to buy a foreclosure, and I'm just too nervous about buying a bank-owned property where I might not even be able to inspect the house.  Are there any options for someone like me?

A - All the best deals today aren't on only foreclosures.  Lots of individual homeowners are under duress and willing to short sell long before the bank grows worried.  All you need to do is locate the local broker who specializes in short sales to get the early scoop on who needs to sell fast and cheap.  And if you really want to get in early, you can spend a Sunday afternoon riding around your own neighborhood.  It's easy to spot the worst house on the best block because the lawn's not mowed, the trim needs painting and behind the door the homeowner's having a hard time making the mortgage payment.  You can leave a note saying you love the house and are interested in buying it.

---

Q4 - Is it illegal to not pay your mortgage, save the money and then negotiate a cheaper price with your bank? I know two people who have done this but I can't believe it's legal.

A - Your instinct is right, it's not legal, and it's called bank fraud.  Should it be investigated, the FBI can slam you with a huge fine and you'll be spending your next ten years in prison.

---

Q5 - Do you think it's wise to buy in an area that has the potential to be great but isn't right now?  I'm looking at a development by Suassy Burbank near Charlotte, North Carolina, and the home plans are beautiful but the area's a bit sketchy.

A - It's always smarter to buy a not-so-nice house in the better part of town than the nicest house in the not-so-nice part of town.  It's the neighborhood that ultimately determines the value of all homes there.  The value of the worst house on the block rides on the coattails of its more prosperous neighbors, but the best house gets pulled down by mediocre neighbors.  So you'd better make sure the area you're thinking of buying in is really up-and-coming and not just down-and-out.  Look beyond the one development to see what else is changing, and if your development is the only new thing in the neighborhood, steer clear. 

---

Q6 - My husband and I are first-time buyers and want to buy a new two-family house in the Bronx. Where do we start?

A - First figure out how much you can afford.  The general rule of thumb is to limit your housing expenses to no more than 30% of income - that includes the mortgage, the homeowner's insurance and the real estate taxes combined.  Once you have that ballpark figure, use one of the many online mortgage calculators to figure out how much of a mortgage you can actually afford.  To narrow your location search, try visiting nytimes.com and streeteasy.com to determine which Bronx neighborhoods fall in your price range.  Last, think of yourself as a tourist, jump into your sneakers, and hit the pavement for the next six weekends.  Visit a different section of the Bronx each time.  Six weeks from now you'll know exactly which neighborhood you like best and then you're ready to contact the best broker on that beat.

---

Q7 - I'm leaving for college and found a cheap foreclosed home.  The payments would be cheaper than renting an apartment.  Should I go ahead and buy the home or rent the apartment?

A - You're smart to take advantage of the foreclosure market!  You have nothing to lose and four years from now your house will be worth a lot more than you paid.  Then you'll be able to either sell it or hold onto it and rent it out to other college students.  The great thing about buying in a college town is that there is always a steady stream of students who need housing and the college itself never moves out.  My niece did the same thing when she started college in New Jersey and actually turned a profit every month because she rented her spare bedroom to two other college kids.  When she graduated from college and sold the place, she reinvested her profit in a studio in New York City and has since sold that and bought a big house in Denver.  None of that would have been possible without taking the chance on her first small house.

---