Q & A with Dottie Herman

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Q1 - I currently have a mortgage rate of 5% percent and I was wondering - is it feasible for me to refinance it? Or is that rate pretty good? I'm hearing mixed things.

A - First you want to ask yourself how long you will stay in the property and how many years have you already been in the loan today. Over a long period of time you will make up the closing costs, so there may be an advantage to refinancing under those circumstances. You have a rate that is historically low, but not absolutely the lowest.

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Q2 - What are points?

A - Discount points may be purchased by the borrower in exchange for a lower interest rate. One point is equivalent to 1% of the loan amount. Points may or may not make financial sense, depending on how long you plan to stay in the property and how you plan to service the debt.　

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Q3 - What is PMI?

A - Private mortgage insurance is required on any loan where the loan-to-value exceeds 80%. PMI insures the lender, not the borrower, against a borrower's default.

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Q4 -  I put my house on the market and had a buyer immediately. Now I've been waiting for them to get a mortgage for a few months. What should I do?

A - In your sales contract there should be a clause that says how long the buyer has to get a mortgage.  It could be 30 days, 60 days, or 90 days. If that person is over the time limit, determine whether you want to let them try to get a mortgage or not. You have to move on and get a buyer that can really get financing secured. You want to make sure the buyer is working with a good, reputable banker like DE Capital who can assure you of their ability to get financing. Otherwise, you are taking your property off the market, betting on a buyer who  may not be able to get their financing. If they've been to two different banks, three different banks and they've gotten rejected, the chance of them getting accepted by a fourth is  unlikely to happen. If somebody gets rejected by a bank, generally it's the same reason that another bank is going to reject them also.

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Q5 - I just closed on my house and I want to ensure we are not late on any payments. When are my payments due?

A - They are due on the 1st of every month and you usually have up to the 15th of every month before you are late on you mortgage payment.

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

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