Q & A with Dottie Herman

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Q1 - What is the difference between a confirming and non-conforming loan?
 
A - Conforming loans are those that fit the requirements and underwriting guidelines for "Fannie Mae" and "Freddie Mac" the two US government sponsored mortgage entities. Loan amounts above the current Conforming maximum of $729,000 are considered non-conforming or jumbo.

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Q2 - I want to re-finance my home as my current rate is 6.25%- do I need to re-qualify for a new loan?
 
A - When you refinance your mortgage you are required to submit a new application and provide all of your current financial information to the lender for a new approval. There are some programs that may be available only through your current Mortgage lender that does not require full processing of this information.  These are often referred to as "Streamline" refinances.  Call your current mortgage lender and inquire if they offer these programs and whether they are available to you.
 

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Q3 - My husband and I just found our dream home- we are already pre-approved, however, the rate we are getting is still kind of high. Someone mentioned to us that we should buy discount points. How do we know if this pays for us, or if we are better off with the higher rate?   

A - Discount points are pre-paid interest and are calculated as 1 percent of the mortgage amount for each "point".  Paying these points upfront will reduce your mortgage rate and therefore your payment. The trade off is that you are paying substantial money upfront that will be returned to you over time in the lower payments.  As a general rule of thumb each 1 discount point will reduce your rate by ¼ % and you will recoup this back between 4 and 5 years in the lower payments.
 

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Q4 - My husband and I are moving out of NYC and looking to move to the suburbs and buy a home- we are working with a broker, however, we are starting to see that what we thought we wanted we really do not like. Is this common? We are now looking at homes that are nothing like what we thought we wanted. Should we go into the homes with a wish-list? Or check-list? We are just feeling overwhelmed.

A - Yes!  This happens all the time.  I can't tell you how many buyers start off thinking of X and end up with Y. Buying a home is a process and it can yield surprising results.  Wish-lists and check-lists can be helpful, however, it sounds like you had some established preconceptions about what you wanted in your new home.  If you go in with those preconceptions you may stay on this treadmill instead of moving forward.  I would recommend focusing on the homes that you have liked so far.  What about those homes has appealed to you?  Then let that, and not your initial feeling, guide you during your search.

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Q5 - As we are coming into Spring I see a lot more homes in my area for sale- as many people say spring is the best time to sell. We are very motivated sellers and now think we made a mistake by waiting for spring, since there is so much more inventory. Should we just price it under the market- but we really can't take that much of a hit financially. How do we make our home stand out?

A - Regardless of the season it is always critical to be priced right.  This also means not pricing too low either.  By working with an experienced agent in your community, you can find a happy medium - one in which you price it low enough to bring buyers to your home, but not rock bottom low that you may miss out on some buyers. Just as important is making your home stand out.  Here you want to emphasize whatever is great about your home.  For example if you have large rooms, make sure they aren't cluttered and that buyers could walk through the home unobstructed by objects such as furniture.  If your home has some wear and tear you may want to consider simple upgrades like new coats of paint. 

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Q6 - My husband and I are moving as he was relocated for his job- however, we haven't sold our home yet. Do you think we should also try to rent it? We just don't want to carry two residences and we don't know how much effort our realtor will put into selling this home while we are thousands of miles away.

A - It sounds to me as if you may have trust issues with your agent.  That's never a good thing.  You need to be confident that your realtor is working tenaciously on your behalf - even if you are hundreds of miles away. If you are not comfortable with your agent, then its time to find a new one.  I would be happy to make any recommendations if you need them.  From what you describe, ideally you would sell this home, since carrying two is not attractive to you.  Focus on that first.  Once you have someone working diligently to get you a qualified buyer, you should see far better results.

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If you have a real estate question for Dottie, please send it to; Dottie@RealEstateChannel.com.
 
NOTE: Due to high volume of questions, not everyone can be answered, but she'll do her best. 

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