Q & A With Barbara Corcoran

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Q1 - I bought my first home two years ago and got my mortgage through my credit union. I have good credit and thought I was getting a good rate of 7.125% for a 30 year fixed mortgage. Now I'd like to refinance to take advantage of today's lower rates, but I owe more than my town home is worth. My credit union told me that I could do a rate conversion of 1%, but I'm frustrated that there's no better way even though I have such good credit. Is that the only option for me?

A - While your house value remains low, that really is your only option. Take the 1% cheaper money, and if you're able to pay down your mortgage to 97% of its current value, you can then get a cheaper FHA-insured mortgage instead.

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Q2 - We live in a nice development in Michigan. We paid $400,000 for our home when it was a seller's market. The kitchen has Formica counter tops. They look nice, but I am wondering if paying the price to replace the counters with some type of hard surface will provide a payback. If so, can you suggest a hard counter surface that gets the job done most economically?

A - The newest counter surface most fashionable for the moment is Cesar Stone. It doesn't chip, burn, stain or crack, is easy to install and comes in a million colors. It's also inexpensive. And you might want to do more than just replace your countertops. If you're smart, you'll go out this weekend to look at the new house developments in your area, particularly the more expensive ones. If you copy the colors and details the developers are putting in, you'll be able to make the smart changes that will give you the best payback.

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Q3 - I've been having a debate with my wife for the last six months about buying a house. We're currently renting in New Orleans where we moved four years ago. She's a teacher in the second year of a five year contract, and I'm a loan officer. I think we should buy a house now while prices are low and rates are still extremely favorable. My wife is not very happy with the school system here and thinks that at the she might want to move back to the Midwest at the end of her contract so we can start a family.

A - Shop around New Orleans and see what you could get for how much. If you can buy a nice house cheaper than you can rent it, snap it up. Although your wife might not be agreeing with you now, she'll be kissing your butt later.

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Q4 - I'll soon be buying my first home and will apply for a mortgage. If I turn in a car that I'm making payments on, would that lower my credit score and hurt my chances of getting a good rate?

A - Probably not. But if you have no other credit history apart from your car loan, the worst it could do is lower your score by a few points.

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Q5 - I am trying to sell my home and the real estate agent is asking a 6% commission. How much lower can I negotiate this commission? My home is $350K and I owe $324K with a few miscellaneous expenses on flooring. With the big 6% commission and other selling expenses I'll be losing about $5,000.

A - Like most things, you get what you pay for. If you pay a reduced commission, you'll usually get reduced services. If you offer an extra percent or two over the norm as an incentive, you'll own your broker heart and soul. But before you start throwing any money around, make sure you're working with a broker who ranks in the top 10% of their field, as they are the ones who are selling 80% of the houses out there. Once you take the hit on this house, think seriously about buying another while the market remains low because if you move fast enough, you'll recoup your loss on the next house you buy.

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Q6 - My husband and I, both in our early 40s, are currently renting a two bedroom at the bargain price of $900/month. We're thinking about buying a home in Virginia or West Virginia now and retiring there in a few years. Do you think this is a good idea?

A - Nothing's wrong with planning a move to Virginia, but you should try it out first. Take advantage of your bargain basement rent and spend your extra cash for a few fun vacations in Virginia where you can see how much you really like it. More than 50% of retirees return to their original home sooner than five years after moving and the most often quoted reason is they didn't check it out.

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Q7 - Do you think New York house prices will fall a lot? Within half year? Longer? According to current conditions, do you think it's time to buy a house or not? Or would it be best to wait till prices have bottomed? We're really frustrated and afraid to buy a house now if it'll be worth a lot less later.

A - Who the heck knows what the future holds? Not me, and I've been doing this for a lot of years. What I do know is New York City is taking the real estate hit better than most of the country and prices have not come down much. But the number of units listed for sale in the past few months has mushroomed and I expect sale prices here to get worse before they get better. The smartest thing for you to do is to keep shopping the market and put in a low bid on the homes you like. Don't try to sharp shoot the market. Even the smartest people in the business can't, and the best you can do is buy within the low, and we're certainly within the low now.

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