Q & A with Dottie Herman

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Q1 - What type of loan (equity line of credit or loan) would be better to take out to pay off credit cards and do minor home improvements on an investment property? My total debt is $87,000 and have 2 credit scores over 710.

A - There are a few ways to use equity from your home to pay off debt and make home improvements. A home equity line of credit is a variable rate, and is tied to the Prime Index Rate. Or, a conventional loan with an equity refinance would provide a fixed rate. There are many mortgage options available depending on the product that will best fit your needs. It would be best to complete a complimentary consultation, which would involve a mortgage pre-approval to determine which product makes the most sense for your situation.

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Q2 - I'm getting conflicting answers from my brother and my father about paying points to refinance my mortgage.  What are points?

A - It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., "2 points" means a charge equal to 2% of the loan balance

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Q3 - I spoke with a loan officer to find out if I would qualify for a mortgage.  He told me that he wanted to prequalify me over the phone.  What is a pre-qualification?

A - This is the process of determining whether a customer has enough cash and sufficient income to meet the qualification requirements set by the lender on a requested loan. A pre-qualification is subject to verification of the information provided by the applicant. A pre-qualification is short of approval because it does not take account of the credit history of the borrower.

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Q4 - Is there a cutoff that landlords look for in scores in renting in the Manhattan market?

A - It's subjective to the individual landlord or property, but a 650 FICO credit score is a good median to use as a guide for what most landlords would consider "OK" or a threshold score.
Some landlords may consider extra security or advanced rent as compensation for a lower score. A renter who has a low score can review why at www.annualcreditreport.com and address the reasons with the appropriate creditor in order to raise their score.

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