Q & A with Dottie Herman

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Q1 - I just put my apartment on the market; however, my wife is very against holding open houses. Do you think that will hinder the sale of our home? Should I try to convince her to have a few of them?

A - The Open House is the best way to expose your property to the most prospective purchasers. Prepping the house is key and may allay some of your wife's concerns. Start with putting away valuables and anything that may break easily. If you are not working with a real estate professional, be sure that you and your wife are both there to escort buyers through the house. Additionally, put yourself in the buyer's shoes and get rid of the clutter and organize your closets so that buyers feel comfortable to open closet doors and navigating your home. Good luck!

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Q2 - I am thinking about selling my home as our family has outgrown our current residence. I need to find a new house, and sell my house. How should I begin? Should I start to look for a new home first? Put ours up for sale? I can not move until I get the money from the sale of my current house- I am unsure how to coordinate this process.

A - As a Seller and a Buyer, it is important for you to familiarize yourself with the current market conditions so you have a realistic idea of what your house will fetch and what you can budget to spend on a new home. A real estate professional in your area will be able to furnish you with all the up-to-date data, including recently sold homes and what is currently on the market. Once you've established a price, it is best to list your property as soon as possible as the selling process may take some time. You can begin your search at the same time, as you don't want to miss out on current market opportunities and favorable mortgage interest rates.

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Q3 - I recently started a new job. I get paid on commissions and I am not a salaried employee. Although my wife is currently employed, I just started working after being unemployed for a few months. How long do I have to wait to qualify for a mortgage?
 
A - Lenders require a minimum of two years' history for variable income such as commission, bonus, and overtime. In addition they average the last two years to determine the allowable income for qualifying. This means that if you make $50,000 one year and $100,000 the next year the lender will use the average of $75,000 as your income. You must also be careful if the income goes down year over year as a lender will not include or reduce the allowable income further if they see it maybe less in the future. The exception to this is if you have changed jobs in the same field doing the same work and have a prior history of working on commission - in this case most lenders will consider this consistent and use the income from the prior employment as well. So this is a challenge if you have just started your job on commission. Let me remind you of one last item that often impacts those on commission when applying for a mortgage. Commission income often has expenses or "write offs" against it for business expenses, so please keep in mind that your income will be determined as the net amount listed as adjusted gross income on your income tax form - the average for two years. Unless your wife's' income is enough to qualify for the mortgage, you may need to wait until you have enough "usable" income from your job.

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Q4 - My parents are thinking about a reverse mortgage - would they still pay taxes and insurance on their residence?

A - Yes, with a reverse mortgage the homeowner is still required to pay property taxes and insurance on the property.  In fact, these are the only items that can allow a reverse mortgage property to be foreclosed. Most who take a reverse mortgage will include these expenses as part of the decision, and in fact many seniors who take a reverse mortgage plan it so they have no mortgage payments, and the proceeds from the reverse mortgage pay at least the taxes and insurance - therefore putting them in a situation where they have no out of pocket expense for the home.  Have your parents explore the reverse mortgage as it can be a wonderful financial tool for many elderly homeowners.

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

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