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Ask Realty Times
Question: My girlfriend and I just bought a house. Since I have a better credit score than her, I was the one who applied for the loan and was put on the title alone. My girlfriend pays half of the mortgage. How can I add my girlfriend to the title of the house? Answer: Marry her. Really. And add her name to the title in exchange for "good" consideration -- love and affection. This way you can keep the current financing under the Garn-St. Germain Act. It says a lender cannot call a loan when there is "a transfer where the spouse or children of the borrower become an owner of the property." Other than marriage, if you add her name to the title you have effectively "sold" the property which means the lender can call the loan, you"ll need to refinance and big transfer taxes may be due. For details, speak with a local attorney. Question: I"m facing foreclosure. A guy is offering to buy my house for the "senior loan" and I would simply have to repay the junior loan on my own. Is this real? Can this happen? Wouldn"t the junior loan be able to foreclose if I don"t pay it? Wouldn"t that put my buyer at a huge risk? Why would he do this? The fair market value of the property is from $125,000 to $145,000. The first loan has a remaining balance of $110,000. The lender says it will not agree to this plan. Answer: The offer may be real but how would you benefit? If the buyer is willing to pay off the first loan, then the lender has no grounds for complaint. But is that what"s happening in this case? Or, is the "buyer" only willing to assume the debt? The lender can block an assumption because the loan was made to you and not the would-be buyer. If the property is worth as much as $145,000 then why sell for $110,000? That"s what you would be doing since you would remain responsible for the second loan. As to paying off the second loan, how would you do that? On what schedule? What does the second lender think about this since the security for the loan -- your home -- will no longer belong to you? If you give up title by "selling" the house, then is the second loan automatically due and payable in full at closing? Usually the answer is yes. The betting here is that you can do better. Much better. You need to speak with the lender and -- if there is one -- the mortgage insurer. You need to speak with local community groups or housing organizations and a lawyer or legal clinic. You need to do these things, now, today, this moment. See if there"s a way to reduce the interest rate, increase the loan term or otherwise reduce the monthly payments. See if the lender will hold off on a foreclosure if you agree to list the property for sale with a licensed broker. Question: Imagine that a buyer is unable to go to closing because they must move out of state due to employment reasons and therefore can not move forward with building the house? Deposit money was put down on a lot where the developer sold lots and is building 12 months out. As it goes, people have situations that can change in that period. Can the builder keep the deposit? Answer: Unless the agreement says otherwise, yes. Let"s say you wanted the home and the builder said he could not construct the house because he found employment in another state. Would you want the house built even though the builder"s plans changed? The purpose of a deposit is to assure that a purchaser completes a transaction. That money belongs to a seller unless the buyer withdraws from the deal within terms specified by the agreement. Although it"s not likely, there may be reasons within the purchase contract which would allow you to walk away without losing your deposit. At least have an attorney look through the documentation. Also, if the value of the property has increased and the builder has not physically begun construction it may be possible to work out a compromise where you get back your deposit and the builder gets back the right to re-sell the property. Question: I have had a house listed with a broker for the past five months and only one showing. Three months went by and I had no phone calls from my listing agent I so decided to call her. I asked what was going on. She told me that the market is slow now and that brokers are only showing the homes that gives seller agent X commission. I raised the seller commission to X and reduced my price by $10,000. I have a problem with the fact that this practice is going on and it took my agent almost three months to tell me about it. What more can I do? Answer: A market may well be slow and that could account for the lack of showings and buyer calls. In a slow market sellers may have to reduce listing prices to better attract purchasers. However, the matter of communication and the listing fee are different. When a broker agrees to list your property he agrees to become your agent. As your "agent" the broker has specific obligations regardless of the fee amount. You have a right to expect a broker to keep in touch under the usual obligations expected of an agent: Care, obedience, accountability and loyalty (COAL). In a slow market a listing broker might well suggest a higher fee. If the listing broker is suggesting that you raise her fee so she can pay more to buyer broker (and not just herself), in the context of a slow market that may be reasonable. Question: I have owned my present house for just about one year but found another that I really like. I can"t afford both, and I don"t know how fast I can sell my house or if I even can due to only owning for such a short time. What should I do? Answer: Real estate is a commodity best held for several years. The odds are overwhelming that you will take a beating on the first house because it has only been owned for "about one year." Home sales have slowed in many markets. If you"re in a slowing market you may not be able to get any more than you originally paid for the property. However, you paid more than the original sale price, because you also paid money to close. Also, when you sell you will have expenses to market and settle your home. If you get less than your purchase price the situation will be even worse. The new house sounds very attractive but the economics are unlikely to be in your favor. Can you accept a loss? How much? For specifics, speak with local brokers. Question: We"re looking at buying a home with an assumable loan. The seller has owned the house for a long time (not sure how long). He recently took out a $50,000 home equity loan and did some repairs on the house. I don"t think he owes anything else on the home except for the $50,000 home equity loan. He wants us to just assume the $50,000 home equity loan. Can we do this? If not what are some other options. Can we have a non-qualifying assumable mortgage? Answer: The home equity loan was made on the basis of the owner"s credit, not yours. It must be repaid from the proceeds of settlement when the home is sold. It is not assumable without permission of the lender. Is this home worth more than $50,000? If yes, won"t you need additional financing? If the $50,000 home equity loan was somehow assumable, then any additional financing would be a second loan with higher rates. The last freely-assumable FHA and VA loans were made in the 1980s. Few conventional loans since then have been freely assumable. Home equity loans, by their nature, are not assumable. If the real issue here is your ability to finance a home, speak with several lenders and ask to see what programs might work in your situation. Question: Is there anything that can be done about an inaccurate appraisal? I have finally gotten to the bottom of why I have not been able to re-fi for about a year: The current lender pointed out to me various discrepancies on my appraisal such as an incorrect address, a map describing my property is nowhere near accurate, etc. I am told that this should have been reviewed by my first lender. What can I do? Answer: Let"s say the old appraisal was wrong from one end to the other. Why does that impact your current effort to get a new loan? The first appraisal is too old to be of use to any current lender. A new lender will simply get a new appraisal. Please see other lenders before going further. Question: We"re wondering if it"s okay to buy a house with an insurable title? I"m in the process of finding out why it needs an insurable title, but I would like to know the risks if any in doing this? Answer: It"s not only okay, it"s in your best interest. Your purchase offer should require that the seller provide good, marketable and insurable title as a condition of the purchase. A lender will not make a loan unless the ownership of the property is good, marketable and insurable. In other words, you"re purchasing a home without title defects, that has a clear chain of ownership. The status of the seller"s title will be determined by a search of the title records and protected with the use of title insurance in case there is a defect in the chain of title. For specifics, please speak with your lender or settlement agent. Question: Can you take advantage of the real estate tax gain exemption of $250,000 more than once? Say, you bought in 1998 and then sold in 2001 for a $100,000 profit. And then you bought again in 2003 and sold in 2006 for another $100,000 profit. Answer: Yes. You can use the residential capital gains write-off -- $250,000 for singles, $500,000 for married couples -- more than once. However, you cannot use the write-off more than once every two years. As the IRS says: "To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The ownership and use periods need not be concurrent. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use, but longer breaks, such as a one-year sabbatical, do not. The taxpayer also must not have excluded gainPages: [1] 2