Q & A with Dottie Herman

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Q1 - My wife and I had some financial hardship about two years ago and- we recently moved in with family. However, we are looking for a place to rent. Are we going to have difficulty since we do not have good credit scores currently? Can you secure a rental with poor credit?  

A - Landlords want to know you will be able to pay the rent, and your credit score is an indication of your past history, so it will most likely be a factor in the landlord's decisions.  How much of a factor depends on the landlord and your overall profile. If you have good rental history and can prove you have the income to pay the rent this will help. Having financial trouble will not necessarily cause a landlord not to rent a property to you, unless it was due to irresponsible actions on your part. If you had some hardship that forced you into financial difficulty you can explain this and show that it is behind you, and that you have taken the actions to get back on your feet. My advice to you would be to try to provide as much information as possible and not let the credit score be the only factor considered.

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Q2 - My husband and I went to contract on a condo that was being built. We were told it would be finished in the beginning of 2010; however, the unit is still not complete. We entered into this agreement when sale prices were a bit higher, but the developer will not give us a break on our price that we agreed to pay. Is there a way we can get out of this purchase since our mortgage lock- in has clearly expired and the unit was not completed when they said it would be done?   

A - Your obligations will be defined by the contract that you signed and any possible reason to be released will be defined within that document. Purchase contracts often do have a condition that states if you are not able to obtain financing within a specified time you may be released from obligations under the contract. All purchase contracts are very similar but at the same time each is unique to the purchase scenario and seller. Your best course of action would be to consult an attorney and review the contract so you can learn what your options are. Good Luck.

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Q3 - I recently sold my home and moved to a lovely rental property. At the closing I was told that I would receive the money in escrow in 12-18 months. Is that customary? I declared bankruptcy a few months ago so I am not sure if that has anything to do with it, but I was under the impression escrow was generally released right after a closing.
  
A - Something sounds wrong with the 12-18 months for your escrow monies to be returned to you. Once you have paid off the mortgage loan and the escrow accounts are no longer needed, those monies should be returned to you. Many lenders will actually reduce the payoff amount of your loan with a credit for the amount of Escrow so you receive it immediately. Otherwise, 30-60 days would be the norm with 90 days acceptable.

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Q4 - We made a bad investment in Florida and we recently we closed on a short sale.  How do we now go about repairing our credit, or can we? We have no credit card debt and previous to this investment our credit score was excellent.  

A - The short sale will impact your credit for a period of time.  But do understand that doing a short sale is often a necessity and lenders understand that you have been cooperative and acted to avoid foreclosure. If the rest of your credit is in good standing and you have been paying all your bills on time then your credit score will begin to improve right away, although slowly. It is important that you continue to pay all your obligations on time and do so moving forward.  Mortgage lending rules allow for someone who has had a short sale to apply for a new mortgage after 2 years from the date of the short sale. If you had no other credit issue you may find that your credit score does not decrease that much, and recovers pretty fast.

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

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