Q & A: How to Handle a Lien on a Property

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I am getting ready to close on a house I purchased. We had a closing date set for next week. I just found out today that we can't close because the current owners have a lien on the property. Shouldn't they have known about this before we set a closing date? They said it has something to do with their mortgage. Do you have any idea what this could be?

 No, but it should be available on the title report, which lists all liens and judgments affecting the property. While it is a little late in the process to first be looking at title, there's little question that's where it likely came from. There may not be much you can do about it as it's the seller's issue.  You need to work with the seller's side to see what it is and whether it is something that can be resolved as a part of the closing, or if it needs to be taken care of beforehand.

My husband and I are looking to move to a new home. We have our current home on the market, however, we have very bad credit as we got into some financial trouble a few years ago. I do not want to move if I can't get a new mortgage to purchase a new home. How will I know what we would qualify for? 

You should do two things: pull a copy of your credit report with a score to figure out what the report looks like just to be certain, then speak to a recommended mortgage professional. He or she can take a look at the credit report you have without necessarily running another credit report to figure out what may be possible. The thing is, credit can dictate whether you qualify or not, irrespective of how much you may be able to get. Make sure you do this right away.

Are interest rates on the rise? Trying to decide if now is the time to buy a second home. 

Interest rates have gone up substantially since May 1.  Overall, rates have risen by over 1 percent.  The thing is, if you are thinking you would like to buy a second home, it looks like a very good time to do so.  Trying to play the interest rate market will probably get you in trouble as rates can be very volatile and you don't want to miss the boat.  You can't start looking for a house when you hear that rates are going up because they might be way up by the time you are ready to lock an interest rate and you've missed the market. While rates have gone up, they are still very attractive. Furthermore, the expectation of rates dropping down to where they were previously is very low as the economy continues to show improvement.

My husband and I have excellent credit. We have never been late on our mortgage payment. We currently have a mortgage and a home equity line that we haven't used fully. If we needed more financing or a second mortgage is that possible? How would we go about that?

It sounds like you already have two mortgages as a line of credit is considered a second mortgage. What you need to do is take a look at how much you have for total financing between the first mortgage and the limit on the line of credit. Then take a look at what kind of value your house has (this may be a little tough as the only true measure is an appraisal which you can't use to get a mortgage, which is generally ordered by the bank) and see if you have equity. If you have more than 10-20 percent equity in the house, you MIGHT be able to get a larger line of credit as long as you qualify for it.  This will depend on your location and credit characteristics (credit score, income, assets and debt).

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