Q & A with Dottie Herman

---

Q1 - I am currently renting my second home in order to cover some of the mortgage payments. My tenant hasn't paid in two months and they keep telling me the money is coming. What recourse do I have as a landlord if they default on their payments? How would I go about getting that money?  
    
A - The fFirst thing is that both tenants and landlords have specific rights under the law, and you should consult an attorney who is familiar with this area of the law in your county or municipality. As landlord, you have the right to evict them for non-payment of rent and possibly sue them for the payment of the back rent. This process can be lengthy and involve legal fees, as you will most likely need an attorney to pursue this action in court for you.  All you have at this time is the deposit presumably, and since they have not paid in two months this is already applied to the lost rent.  Waste no time as each month will cost you more.  If they pay up you can drop the eviction action. The notice of eviction may motivate them to pay up faster.  Good luck, I hope it works out well for you.

---

Q2 -  My husband and I are looking to buy our first home. We have decent credit but don't have a lot of money in our savings account. We keep hearing about FHA loans where we don't need to put a large amount of money down. Is that true? What are the guidelines? The house we are looking to purchase is 440,000.
 
A - FHA allows borrowers who are qualified to purchase a home with as little as 3.5% down payment. On a $440,000.00 home, as long as your income and credit qualify, your minimum down payment would be $15,400.00. You must have credit scores of 620 or better and have debt to income ratios that don't exceed 45% of your gross monthly salary.

---

 
Q3 - My brother and his wife went to contract but the deal fell through recently because he wasn't pre-approved but rather pre-qualified? What is the difference and will he get his deposit back that he gave at contract?
 
A - While the laws vary from state to state, it is generally a rule of thumb that until a contract is signed a deal is not consummated.  The seller's agent has an obligation to represent the interests of the seller.  That means if another offer comes in that is superior to your offer, that agent has a fiduciary responsibility with presenting the information to the seller.  Having an accepted offer is a step towards a deal, but it is by no means yet a done deal.  

---

Q4 - My house has been on the market for 15 months. At first, I admit I did price the home too high and finally reduced my price by $100,000, but I still haven't received any offers. Does this mean the price is still too high?

A - In all likelihood the answer is yes.  Talk with your agent and make sure your home is being marketed aggressively.  Find out what action steps your agent has taken and is currently taking to bring attention to your home.  Assuming your agent is doing everything possible, then yes, it is time to lower the price.  If your agent is just sitting on the listing and not working hard on your behalf, you may want to consider a change of agent as well as a possible price reduction.

---

Q5 - I recently received a good faith estimate, however, when we were going to contract on the home some of the prices changed including the down payment necessary and now we are unsure if we should go forward with the house as we do not want to bite off more than we can chew. Was that due to our credit score? What would make those figures change?

A - The Good Faith Estimate for a mortgage loan should be a very accurate document given after you apply for your loan.  In fact, it is required to be by law and can only change under specific conditions.  It sounds like your loan program is changing for some reason.  It is very possible that there are "valid change circumstances" that have occurred, and in turn have impacted the costs associated with your loan.  It is best that you speak with your lender and request the specific changes and exactly why they occurred.  They are required to explain and disclose this in writing to you.

---

If you have a real estate question for Dottie, please send it to; Dottie@RealEstateChannel.com

---