Q & A with Dottie Herman

» Featured Columnists | By Dottie Herman | September 25, 2009 7:30 AM ET

Q1 - My husband and I bought our first home in four years ago. We both have good credit scores and we thought we were getting a good rate of 6.75 for a 30 year fixed mortgage. Since the rates have gone lower we want to refinance, but we are unsure as to our options!

A - Yes interest rate wise going from 6.75% to the current rate of 5.125% would make sense however, the main obstacle you may face it the fact that the values of homes have become challenged due to the recent sale prices. This could hamper your ability to acquire a new conventional mortgage. There are in some case FANNIE MAE and FREDDIE MAC streamline options. You should contact a qualified loan officer to see if you are eligible.

Q2 - I am currently in the process of looking to buy a home- my husband and I have been looking for about 8 months but haven't found anything we loved yet. We are also in the process of looking to lease a second car- when the dealers check your credit; does it affect your credit score? Would getting another car now bring down our credit score? Right now we both have very good credit around 740.

A - Anytime you acquire new debt such as a new car, there could be some movement in your credit initially, however this will settle down within a couple of months as you start paying the loan, however your score at 740 will not be impacted enough to effect your ability to purchase a new home, as long as the new payment which gets added to your debt to income ratio, will not exceed the required ratios. So my suggestion is keep the new car payment within reason.

Q3 - I am a single mom with three children renting in New Jersey. I want to buy my first home, but I have poor credit. I have a secure job; however, had some debt in the past. I am not sure if I should start looking until my credit improves, would I be able to get a loan?

A - It depends on your credit score. All mortgage providers rely on credit scores. If your score is under 620, it will be difficult in acquiring a mortgage with a good interest rate. FHA loans go down to as low as 620, there are some providers that will work with lower scores, however you rate will be very high. I suggest you contact a qualified loan officer to evaluate your buying ability, and if so recommended, you might be instructed to wait until your score is at a point to get you into a better program. We work with some very reputable credit repair companies that can assist credit impaired clients and work with them to increase their scores to an acceptable level to receive a good mortgage rate.

Q4 - My sister and I have been looking to purchase a home together as an investment, but we will live there for a few years. We are both first time homebuyers and we want to take advantage of the first time homebuyer tax credit. We found a home we love and we are going to contract this week, we are not sure if we will close in time. Will the first time homebuyer tax credit be extended? Are there any other incentives for first time buyers?

A - The 1st time home buyer tax credit is due to expire November 30th 2009. There is talk that this will be extended, however we don't know for sure. As it stand now, the tax credit is for combined annual salary of $150,000.00 to receive the total $8,000.00, and that it gets reduced to salaries combined up to $170,000.00, meaning its prorated. I really hope they extend it. It has cause great activity in the market this year.

Q5 - My wife and I are looking to move, I lost my job and she is currently working. We have not updated our home in years; however, we are going to have to sell our property. What are some quick and easy updates we can make that will help us in the process?

A - In today's tough economy, your situation is not uncommon.  Many people who are looking to sell their home want to maximize their return by presenting their home in the best possible light.  However, budgetary restraints make it difficult to do all that they hope to accomplish.  Here's a tip - keep it simple.  You home should look clean.  Remove extra clutter on bookshelves, tables or off the floor.  If you have funds to renovate, make it tasteful but don't feel the need to go over-the-top.  Your renovation should not be so specific as to turn off potential buyers.  Go through your home and prioritize what is in most need of upgrading and start there.  Remember, if you can't do everything that is ok.  Sometimes it's the small things, like the overall neatness of a home that buyers remember.

Q6 - I am being relocated to North Carolina for business. My wife and I are currently selling our home in Brooklyn, it is a nice townhouse that needs some updating, but we just bought new furniture that doesn't really work with our new townhome in NC. Would it benefit us to try and sell the furniture with the home? Does that make it more desirable or less desirable?

A - Great question, but one with no right answer.  Some people may love the furnishing and will want to buy it furnished, while others will want to make it a home of their own and use their own furniture.  Here's the best solution - give buyers the option of purchasing a home with or without the furniture.  This way it will work for the buyer either way.

like the overall neatness of a home that buyers remember.

If you have a real estate question for Dottie, please send it to;
NOTE: Due to high volume of questions, not everyone can be answered, but she'll do her best.

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