Q & A with Dottie Herman

---

Q1 - My wife and I are looking to purchase our first home and we are going to begin to shop for a loan. Is there a difference between a pre-approval and a pre-qualification?

A - There is a big difference between pre-qualification and pre-approval. A pre-qualification means that the bank or mortgage broker has verified only your credit and has only verbal information regarding your assets and income. A true pre-approval means that the bank or mortgage broker has verified everything including your income via pay stubs, W2's and tax returns, and assets via bank statements. In addition a complete pre-approval has be review by an underwriter and is subject to only an appraisal and a contract of sale.

---

Q2 - I am a 26 year old college graduate with a masters in business administration. I have always been interested in real estate and with the current job market I thought I would enter the real estate business. How would I go about getting my real estate license? Is now a good time to enter the business?

A - In each state the requirements are different.  Assuming you live in NY State you must successfully complete a real estate education requirement of 75 hours from a state approved program, and pass a test issued by the State.  For more information on the requirements, visit the NYS Department of State online at: https://www.dos.state.ny.us/lcns/realestate/index.html

---

Q3 - My wife and I are relocating from New York City to West Virginia-- I have been transferred there for work for the next two years so we want to sell our condo. We already have a nice rental in West Virginia but we are going to need to ship most of our furniture from NYC-- we are trying to decide if we should wait to sell our house before we ship the furniture? Does it help to see an apartment furnished? Or does it not matter to buyers out there?

A - The vast majority of the time it helps to have apartments furnished that are being offered for sale.  In fact, sometimes we encourage owners of empty apartments to have them staged with furniture.  It is very helpful to buyers so they can see how to use the space.  If you have a certain date the furniture needs to ship by, perhaps you can at least have the apartment photographed by a professional so buyers can see what it looked like when it was furnished.  After you move out, you may also want to consider staging your apartment.

---

Q4 - What My husband and are currently in contract on a home. We are trying to lock in our mortgage rate but trying to decide if it pays for us to pay points? Can you explain exactly what that means and if it would be beneficial?

A - Points are like pre-paid interest. This is a personal decision, however the general rules on this are as follows. Do you have the extra money to pay points? Buying a home is expensive and a home will always need things so don't use up all your funds to accomplish this. Each point you pay (which is equal to 1% of the loan you are borrowing) will typically lower your rate by .25%. The savings, although it's not a lot per month, you will make this back in 5 years. In addition, the point or points you pay are tax deductible in the year that you purchase your home so this money will come back rather quickly with your tax return. So in summary if you have the extra money, plan to be in the house for at least 5 years and can utilize the tax deduction it may pay for you to pay points. However each case is different and you might feel better spending such monies on things for the home such as new window treatments, flooring and or furniture.

---

Q5 - My wife and I recently applied for a mortgage at our local bank- unfortunately we were denied. We are both very disappointed and we are not sure what to do now. What are the next steps?

A - All banks are not always the same. Some are more conservative than others. You have to inquire as to why you were denied. The bank has to supply you with a formal declination letter which will tell you what in your profile caused such an action. You should consider working with a banker or broker that works with a variety of lenders and programs. This professional will know where to place your loan and get you approved, provided there is a program that fits your profile.

---

Q6 - My husband and I have our home on the market-- and we are actively looking for a new home as our family has grown! We just got a wonderful offer on our home on the market and we don't want to give it up BUT we haven't found a home we love yet. What should we do? We don't want to miss out on this offer, but are unsure how to time the sale and purchase?

A - Congrats on receiving the wonderful offer!  Do not let that opportunity go.  First, engage the buyers and see if they would accept a longer closing date.  This will give you a longer time table to find a new home.  If the buyers love your home, they should be accommodating to your schedule.  Second, make sure you have a great agent working with you who can search high and low for your perfect home.  When you are buying and selling at the same time the timing can be tricky.  But you are in luck.  Often it is the exact opposite that happens - you find the home you want to buy but no one is putting offers down on the home you currently own.  Work with the buyers on the closing date; work with an agent for your new home and it should all work out. Good luck!

---