Q & A with Dottie Herman

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Q1 - I am the seller. What can I ask for from a buyer before contract, besides a pre-approval? Can I ask for the loan officer number or for a contact at the bank? Or, can my lawyer request that they have a commitment within 45 days or else the buyer will be liable for $5-10 thousand of their $80k down payment?

A -  A pre-approval is only as good as the information that the buyer supplies to the loan officer, and how thoroughly the loan officer executed the process. You should by all means contact the bank and loan officer who issued the pre-approval and ask specific questions. Was credit pulled? Was the bank provided with complete income information (2 years of filed federal tax returns and current pay stubs, etc.)? Were all assets needed to close the loan identified and sourced with current statements?

You should also ask what assumptions were used when preparing the pre-approval. What was the purchase price, down payment, RE taxes, maintenance, and common charges used for the pre-approval? Was the buyer required to sell a current residence? These are all significant in gaining confidence in the value of the pre-approval.

Note that it will likely be necessary for the buyer to authorize the loan officer to speak with you or your attorney, so you may want to discuss this up front. If you wish, we can introduce you to someone who can assist you.

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Q2 - I haven't paid my mortgage in over 12 months. They haven't sent us any foreclosure notices yet, but when they do, I was wondering how I should respond and what to do to get loan modification.

A - As a point of reference, recent federal legislation may provide certain borrowers who have been adversely affected by the economy and who qualify, with more options to reduce their borrowing expenses.  At this point, it is advisable for you to contact a legal and/or mortgage specialist who can review the specifics of your situation and advise you whether the new HARP programs or other options are available to you.

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Q3 - I keep hearing the terms "earnest money" and down payment?  What is the difference and how much should i set aside?

A - Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary). If your offer is accepted, the earnest money becomes part of your down payment, which is more substantial (upon the signing a contract of sale) or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.

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Q4 - How can i find information on the current property taxes on a home i'm looking to buy?

A -  The total amount of the previous year's property taxes is usually included in the listing information. If it's not, ask the seller for a tax receipt or contact the local assessor's office. Tax rates can change from year to year, so these figures may be approximate.

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