Q & A with Dottie Herman

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Q1 - I am retired and re-financed from 15 to 30 year fixed in order to lower my monthly payments. The interest rate was at 5.25 %. Is it worth to pay off the entire amount owed, which is $160,000 from my savings, or should I continue paying the lower monthly rate for the rest of my life? Or, a third option I am considering would be to refinance again at 4 %. My income is approximately $5,000/month, and comes from Social Security and pension. Financial advisors usually say to keep the mortgage and invest the money. What do you think? I tried to downsize and sell the house, but had it on the market for a year with no luck.

A - In your situation, your financial advisor is the best person to ask regarding paying off the mortgage loan from your savings. If you do intend to keep the loan outstanding for the long term, the savings to refinance to current rates of about 4.000% will save you $1,440 over 12 months, $7,200 over 5 years, $14,400 over 10 years, and $43,200 over the life of the loan.

If you are still interested in downsizing and would like to sell your home, we would be happy to pair you with the appropriate real estate professional who specializes in your area. He or she can help you analyze your previous strategy and formulate a better plan to ensure that you are successful your second time around.

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Q2 - I have about $90,000 I'm willing to put down on a home, I have great credit, and make about $250,000 a year. I'm thinking about buying a property, but also considering waiting a year to get another bonus and taking the down payment to $150,000 or so.

A - This is an excellent time with many opportunities to purchase. You are correct in that your work history and credit are very important factors. In addition, your total assets and net worth come into play in the purchase application process. Consulting with a real estate professional and your financial advisor will be helpful in deciding whether you should move forward now, or wait for your  potential bonus. It may also be important for you to begin the mortgage qualifying process, which is key to the purchase process.

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Q3 - My family and I moved 2 years ago and we are very unhappy where we ended up. We paid more for our house than it was worth, and have a very high mortgage, but both my husband and I are retired. We want out of our house; however, we purchased in 2008 and received an $8,000 tax credit and have read that we're obligated to repay it if we move out of the house before 3 years are up. How can we get out of this property?

A - You should consult with your tax advisor with respect to repayment of the tax credit, but generally, the new homebuyer credits did require that you live in the home as a primary residence for a minimum period of time, typically 3 years, but there may be exceptions. Doing a short sale might be the best option if you are in financial hardship, but it will affect your credit. Consult a local lawyer who  may advise and  help you structure a short sale and negotiate with the bank.

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Q4 - I live in Australia and want to purchase an apartment in NYC that my family can use when visiting, and that will then become part of a rental pool. What net return can I expect and, being an Australian citizen, can I borrow in the US?

A - Buying a pied-à-terre in New York is very popular amongst foreign purchasers, but there are a limited number of condominium opportunities in hotel-service buildings that rent out while the apartment is not in use. Each one of them charges a different fee, depending on the length of stay and the rent. In most traditional condominiums, short term rentals (anything under one year) are most often not permitted. That being said, there is no set formula for something like this-every board and every building is different, and will have a different policy regarding the matter, so you're best off coming to see multiple properties in multiple buildings.

There are also a limited number of lenders who will lend to non-US citizens. In preparation for the purchase process, it would be helpful to speak with a real estate professional and familiarize yourself with the options available to you and the various price points that you might want to consider. In addition, there are many excellent real estate attorneys who work with foreign buyers and can help you prepare for your potential purchase.

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