Q & A With Dottie: Is My Appraisal Too Low?

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Question: We are trying to refinance our home and we think the appraisal value is too low.  How can I tell?

Answer: While the Internet provides a lot of information at your fingertips, being objective about the value of your home can be difficult because you are so close to it. You might ask a local real estate agent you have worked with in the past to look at the sales used by the bank appraiser to see if they are appropriate.  Have a conversation with them about homes you both think are most similar and why they sold for more or less than what you think your home is worth.  Second opinions are often insightful.  You might even consider getting your own appraisal, but remember that the bank can't rely on that report.  In today's market, banks rarely disagree with their appraiser's results.  If you are confident there has been an error that you can't get corrected, you might consider going to another bank.
 
Question: I own a business and would like to rent an apartment under my corporation. Is this possible?

Answer: Provided your corporation's by-laws permit the leasing of real estate (typically by-laws do) then renting under a corporate name is possible.  But not all landlords are willing to do this without assurances about who will reside in the unit, and confirmation that no business activities will be conducted out of the residential unit.  In addition, the landlord will likely need some personal guarantee regarding payment on the rent.
 
Question: What is an interest only loan? Are they still lending with that type of loan?

Answer: That is a mortgage where the lender requires only an interest payment to be paid monthly for a certain period of time, i.e. 5, 7 or 10 years.  The loan then requires the repayment of principal upon the expiration of the loan term. There are still lenders that offer this type of loan.  Such a loan generally requires a larger down payment (30%), higher credit scores (720+), and more money left in reserves after closing (24+ months of PITI payments).
 
Question: I recently lost my job and my husband is a salesman, so his income isn't as stable as mine was. If I know we are going to have trouble paying our mortgage for a few months while I find a new job should I alert my lender? Is there any forgiveness if I speak with them about a short-term financial hardship?

Answer: It's a good idea to let them know; they may work out a forbearance agreement and add those payments to the end of the loan.  You can ask the lender about forgiveness, but most likely the only option is a forbearance.
 
Question: I bought a home a few years ago with a 7 year ARM. It has been almost 7 years, so now I am unsure what to do moving forward.

Answer: You need to evaluate what the rate will adjust to (based on the index and the margin) and take into account about how much longer you plan to be in the home to see if you need to refinance.  You can call your lender to see what they might be able do for you as far as refinancing.  A new 7 year ARM has rates in the low to mid 3's for great credit.
 
Question: I originally had a home loan with Bank of America. I recently started getting paperwork from another lender with a name I don't recognize. Is it possible they sold my loan? How does that work and how do I make sure this is not some fraudulent paperwork?

Answer: It is possible that your loan was sold.  Reach out to Bank of America to see if they have sold your loan- the terms and conditions of the loan will remain the same even if it has been transferred to another lender.  Bank of America should have sent you a letter notifying you that they have sold your loan to another lender.


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