Q & A: Should I Pay Off My Second Mortgage Before Selling?

---

My husband and I have a 30 year mortgage and a 2nd home equity loan that holds part of our loan and then we can use the additional money which we have done. Before we would look to sell our home do we need to pay off the 2nd/home equity loan? Otherwise, how would that work?

No, you can, and should, pay off both mortgages/loans at the time of the closing.  Both are considered mortgages so there's no obligation to pay the second off early.  That said, home equity loans work a little differently.  What you should do is freeze the home equity before you close on your sale.  You should also request a payoff statement after you freeze the equity line.  The payoff date should be when you plan to close on the sale.  This way the bank holding the home equity is receiving the correct amount of money and closes the loan without question/issue.  You should also get a payoff statement for the first mortgage.

What are points? And what does it mean to pay with points? How do you know if that makes sense monetarily?

Points are a percentage of your mortgage amount.  1 "point" equals 1% of the mortgage amount.  This money is paid to lower your interest rate.  The only way to figure out if it makes sense monetarily is to work with your mortgage professional to determine how much in points you have to pay to lower the loan amount.  Once determined, figure out what the monthly savings would be and how long it will take for the monthly savings to equal the amount of money you are paying upfront in points.  If you plan on being in the home longer than the loan payoff period, paying points could make sense.  For reference, the traditional idea is that 1 point should lower your mortgage rate by approximately .25%.  The payoff is about 5 years.  However, it really comes down to whether the arrangement works for you.
 
My husband and I are trying to decide whether we should buy a co-op or a condo. Many of my friends talk about their maintenance fees in their co-op and how they are so high and always being increased. Is that true for a condo as well? How do people decide what is best for them?
 
The fixed costs of running a building whether Co-Op or Condo, go up. Cost of fuel and payroll are two of the biggest expenses that go up; as well as Real Estate Taxes. There are definite differences between these two types of ownership and you need to decide which works best for your needs. It would be wise to consult with a knowledgeable real estate attorney to discuss the differences.
 
I recently put an offer in on a home and the engineer came and found many issues with the house. There were not any major structural issues but the problems are very expensive to fix. How do we go about having the seller fix some of these? I can't purchase the home and then make all of these changes, but we love the property.

It will be helpful to your negotiation to get quotes from experts for the necessary repairs so that you have a clear idea of the costs and the scope of the work. Sellers are often reluctant to do the work, but may consider a price adjustment to accommodate these necessary repairs, especially since they are serious enough to not pass an Inspection. After you have the quotes in hand, you are in a good position to bring them to the negotiating table.


Dottie Herman is CEO of Douglas Elliman. If you have a real estate question for Dottie, please send it to: Reporters@WPCnews.com