Q & A with Dottie: FSBOs and Jumbo Mortgages

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Q: I am interested in a house which is FSBO.  Is there any info you can give me about bidding on a FSBO house, knowing that the seller will not be paying a brokerage commission? 

A: Knowing the comparables in the neighborhood of on-the-market properties, as well as recently sold properties, will give you a current perspective on the market. By not having a real estate professional to assist in pricing the house, you will need to determine that it is priced correctly. In addition, you'll want to ascertain the condition of the important structural features of the house so that you know first-hand from the seller, what you are buying into. You may want to make your offer subject to an inspection by a professional Home Inspector. Finally, and equally as important, is making your offer with pre-approval from a Lender in place, or if you are paying all cash, to include that information in the terms and conditions of your offer. Good Luck! Please let me know the outcome and do not hesitate to contact me if there is anything further we can assist you with in the future.

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Q: My husband and I have a jumbo mortgage. We want to refinance, and our loan officer told us to take a conforming loan and then a home equity to finish the loan, and then we can also take some cash out of that which we need for some home renovation. How does this work?

A: That is a possibility depending on what the house appraises for. You need to have enough equity to cover the new first mortgage, as well as whatever you want on the home equity loan as well. You are basically applying for two loans at the same time.  Some banks have the ability to do this as part of 1 process, some separate it a little.  The reason for the suggestion is that a home equity allows you flexibility to write checks for the renovation as it moves forwards.  With a mortgage you get a lump sum of money.  This allows you to pay interest only on the money outstanding.  It's a common and effective way people pay for renovations.

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Q: I went to contract on a home, locked in a mortgage rate, and now the seller is dragging his feet and I think my lock-in date may expire. The rate has gone up since I locked in my loan. Is there any exception or flexibility with this?

A: This really varies bank to bank. There should be an extension policy at your lender but there may be a cost to it.  Depending on the terms of the contract, you may want to talk to your attorney to see if there's a way to get the seller to pay for it.  That's somewhat difficult to do but certainly worth the question.

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