Q & A with Dottie Herman

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Q1 - Is there anyway for me to remove a co-borrowers name from a mortgage?

A - This process will be set by the terms of the mortgage and the documents signed.  In the majority of cases you must refinance or modify the loan documents.  If you already have a co-signer you need to call your lender and ask what needs to be done.  The first item will be to determine if you are able to qualify for the payments yourself. If you are looking for a loan now then inquire with the lender as to the process.  If you can arrange to have your loan modified and not refinanced you may save both time, money and not be subject to current interest rates.

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Q2 - Do I need to be in contract on a home in order to lock in a mortgage rate?
   
A - Lenders vary on this, but many will allow you to lock in your rate once you have an accepted offer.  The thing to consider is that if you lock in very early you may not be able to close on your home within the lock period.  Often contract negations can take a bit longer, or the seller decides they need more time, so before you commit to the lock-in just make sure your contract closing date is before the lock-in period expires.  You may want to negotiate with the seller that if they need more time they will agree to pay the expense of extending your rate if needed.  Continue this conversation with your attorney or real estate agent.  Good luck.

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Q3 - Can gifted money be used toward a down payment? Can't I give my children money toward their purchase without having to pay tax?

A - Money is commonly gifted for down payments.  Most lenders do also require that the borrower have their own monies in addition to any gifts, so check this as well.  As far as taxes, there are rules that limit the amount of a gift that can be given without tax liability. There are variables that should be discussed with a tax professional to determine how this would impact the gift giver.

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Q4 - I have a 30 year fixed rate mortgage- my bank sent a letter that my rate my increase and I have 12 years left on the loan. Is that possible?

A - If you really do have a fixed rate mortgage, the rate cannot change. What can change are the monies to be paid into escrow. In each of your payments the lender may be collecting your property taxes and insurance so that they can be paid by the lender when due. If your taxes or insurance increase, then they will increase your payment.  The law requires that you receive a statement and reconciliation of these escrow accounts at least once a year, and each time they make a change to the payments.  Your lender should be able to explain what has happened to your payment.

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

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