Q & A with Dottie Herman

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Q1 - I recently put an offer in on a house. Since then my husband lost his job and we are not sure if we can still get a mortgage based on my income. We have a lot of money in the bank and we can still afford the home, however, we are not sure if we can still take as large of a mortgage from our lender. If the seller offered us a second mortgage, would that be an option? What are some things we should think about before taking a second from the seller?  

A - The first thing to consider is whether or not you can afford the house without your husband's income.  If you are comfortable, you can consider a mortgage from the seller, however this may not solve the issue of qualifying since the mortgage lender will require all of the information on the seller's mortgage to be considered and documented as part of your approval.  There is no real negative to having a mortgage with the seller and in most cases there are fewer closing fees involved.  Do make sure your have an attorney handle the details and paperwork for the mortgage with the seller.

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Q2 - My husband and I were on vacation and completely forgot to pay our mortgage. We are now 10 days late and just paid it online. This is the first time this has ever happened to us. Do you think that the bank will penalize us? What can we do to not incur any fees or delinquencies? 

A - You should be fine since the standard grace period is 15 days. This means as long as your payment is POSTED TO THE ACCOUNT by the 15th you are not considered late.  Posted means the date they credit the payment. It is smart to pay you mortgage on time as one late payment can lower your credit score 100 points or more.

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Q3 - Once a week I receive a phone call at my home with people offering to repair my credit score. My score is average, but could definitely use some improvement. How do I know if these are a scam?  

A - There are many companies that offer these services and like many things some are great and some are not.  You need to do some homework, shop prices and look for some references.  Keep in mind if you do not need your credit score improved immediately, then you may not need these services. You can increase you own score by not opening new debt and paying on time. Older accounts are great for your credit score so do not close any accounts. Try not to exceed 50% of the any credit limit.  There is plenty of information available on the subject so go research it until you feel comfortable.

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Q4 - I am looking to purchase a home- my husband and I will likely live there for 5-7 years and then have to move for his job. What type of mortgage should we be looking at for this type of situation?   

A - The best loans for this type of time frame are called "Intermediate Adjustable rate mortgages".  These loans have a fixed rate for a set amount of time in the first years of the loan.  After that they become an adjustable rate loans.  The benefit is that the initial rate is much lower than a 30 year fixed rate, you have a set payment for the initial period, and you pay off your loan the same as if it was a fixed rate.  In your case look for what will be called a 7-1 ARM it is readily available in most markets.

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Q5 - How do I decide if I should buy a coop or condo in Manhattan? What are the main differences?

A - When buying a condo, you're purchasing real property and will own a deed to your home, plus a share of common spaces used by other residents. When purchasing in a cooperative, in essence you become a shareholder in a corporation that owns the building and you carry a leasehold interest in your unit. Each type of ownership imposes different restrictions and rules of governance.  In terms of what is best for you, I would highly recommend you speak with a real estate agent in your area.  Many factors can come into play that will determine which is better and with the right guidance I'm sure you'll make the right choice.

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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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