Q & A with Dottie Herman

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Q1 - How long will it take to process my loan application?

A - The answer will depend on a number of variables. When the loan business is brisk, underwriters get backed up, verification takes longer, appraisals move slower and other bottlenecks develop along the loan pipeline. Lenders may say two weeks, but 45-60 days is probably more realistic in most cases.

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Q2 - What is an APR, and how does it differ from the interest rate?

A - The APR (annual percentage rate) is the true cost of your loan on an annual basis.  It takes into account all of the bank fees, and calculates it into a percentage rate.  The APR will always be slightly higher than the actual stated interest rate.  The interest rate is the percentage rate calculated for the loan amount, which gives you the monthly payment.  

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Q3 - I'm trying to sell my house, but my home is worth less than my mortgage balance.  What can I do?

A - You should ask your realtor to recommend a good attorney who specializes in bank "short sales", where the attorney negotiates with the lender, who holds the mortgage on the home being sold, to accept whatever the home sells for, less real estate commissions, and any outstanding liens that may be attached to the property.  The lender, in effect, receives "less" than the outstanding balance of the loan, therefore being "short" of the balance due.

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Q4 - How do Renovation loans work?

A - Renovation loans are FHA loans whereby the borrower hires a contractor, approved by the lender, to renovate/improve the property.  The lender will lend 96.5% of the future "improved" value, as determined by the bank's appraiser, after reviewing the plans and specs from the contractor/architect.

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

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