Q & A with Dottie Herman

» Featured Columnists | By Dottie Herman | April 30, 2010 9:00 AM ET

Q1 - My wife and I are looking to buy our first home. I have excellent credit but she has horrible credit and I know she will hinder our chances of getting a mortgage. She is working on fixing her score, but she had some problem making payments in the past. I have a very secure job and I make a very decent living- do you suggest I just put the home in my name to ensure we get financing? Or is there something she can do to rectify her score before we purchase a home?

A - You can certainly increase her credit score over time by reducing debt and always paying on time. In many cases it can improve significantly over a few months if there are no judgments or serious delinquencies. Most lenders require a minimum credit score of 640 assuming that job stability, income, down payment, and cash reserves after closing are strong. You can pursue a home purchase without your wife if you can qualify on your own and have the monies in your name. The best thing to do is contact a mortgage lender for a prequalification for both of you so you can best understand your options or what you need to plan for so you can make a home purchase together in the future.

Q2 - I am currently in the process of looking to buy a second home and in the process of leasing another car for our child. 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 - Adding debt will impact your credit score, but if it is not significant it will only be a small change and will move back up after a few payments.  Whenever your credit is checked it does create what is called an inquiry on your credit report and too many can have a real impact on your credit score. It is best to know your credit score and only allow someone to run your credit if you are serious about moving forward with the purchase. When you apply for a mortgage the lender will ask that you explain why you have the credit inquires and confirm to them that no new debt was incurred as result of it. 

Q3 - My wife and I want to move as we have a big house and all of our children are no longer at home. 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 - It sounds like you are trying to avoid the "heavy-lifting" of home renovation.  I think all of us who have done renovations can understand your position.  There are some lower cost options that can help to make your home shine.  A new coat of paint can go a long way to making a huge difference.  Over the years windows tend to accumulate dirt slowly, and cleaning each window will allow the home to appear brighter.  Now would be a good time to engage in spring cleaning.  If you have clutter or excess furniture that has been sitting around, this is the perfect time to throw it out or donate it.  

Q4 - I am being relocated to Florida for business so my wife and I need to sell our home in New Jersey. It is a nice home that needs some updating, but we just bought new furniture that doesn't really work with our new condo in Florida. Would it benefit us to try and sell the furniture with the home? Does that make it more desirable or less desirable?

A - Buyers like options.  I would recommend you offer the furniture to prospective buyers.  The danger in requiring a buyer purchase the furniture is that style choices vary from person to person.  If a buyer has a different furniture taste than you, they may pass on a home they would otherwise purchase. You can inoculate yourself from this hazard by making it optional.  Should the buyer elect to not purchase the furniture there are plenty of ways for you to either sell it in a store or online.  Donating furniture is also common these days, especially with the tax incentives that may come along with such a donation.

Q5 - We need to move as the size of our family no longer works in our current home. We found a home we love; however, we do not have a buyer for our current house. We don't want to lose this house but we can't support two payments. What do we do?

A - The situation you describe is surprisingly common.  Although the seller may not agree to this, you could enter into an agreement to purchase the other home that is contingent upon you selling your current home first.  If that doesn't work, it sounds like you need to put your home on the market for sale.  You should work with an experienced agent in your community who can list, market and sell your home in the shortest amount of time and for the most amount of money possible. Once you have a buyer under contract you can re-engage the seller and take steps to purchase your new home.

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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