Q & A with Dottie Herman

» Featured Columnists | By Dottie Herman | May 28, 2010 8:30 AM ET

Q1 - My daughter is trying to sell her condo in New Jersey - originally she was priced a bit too high, however, she has significantly come down in price, and is now the lowest unit in the building for sale, however it is still not selling. It has been on the market for 11 months- do you think I should take it off and then put it back on? It has a city view, which none of the others have, and is slightly larger- so why would they buy the more expensive smaller units? What can I do to make this sell faster?

A - You made a smart move by reducing the price.  Selling a home can become more difficult if it languishes on the market.  There are a few ways to look at this predicament.  First, are the other units in the building selling or are they also sitting on the market?  If they are not transacting it's possible that units in the building, including your daughters, are priced too high.  If they are selling, we need to take a good hard look at your listing.  Are you selling it by yourself or are you working with an experienced real estate agent who knows the building and the neighborhood?  If you are not yet working with an agent, now is the perfect time to stop and find one who can sell the condo.  If you do have an agent you need to find out what marketing has been done on the unit. From what you have described, this condo is different and should stand out from others on the market. Is that difference being conveyed in a clear and compelling way in the marketing? If not, now is a good time to re-write the description of the apartment and to re-market it with a focus on what makes it unique.

Q2 - I have lived in my home for 17 years - and we are currently going through a tough financial time. Can I refinance to take cash out of my house? We do not have a large loan amount yet, but we recently defaulted on two payments. 
A - Paying your mortgage late will be an issue when refinancing as it impacts your credit score and the bank will be concerned that if you are having challenges currently the same will be true with a new loan. That said, there are programs available to assist homeowners in economic distress during this recent recession. Your current lender may be willing to modify your loan terms to make the terms affordable for you now.  Check with your current lender to inquire if this is available to you. 

Q3 - If my fiancé and I both have secure jobs, but we do not have much money saved in the bank can we get a loan without putting 20% down. We saw a property we loved in New Jersey for 450,000 but there is no way we can put down more than 10%. What are our options?

A - Yes there are options that allow you to put less than 10% down and it is very common and acceptable. Conventional loans will lend up to 95% of the home's value and FHA loans will provide up to 96.5% so there are options available to you in the price range of the home you would like to purchase. You will need to show stable employment and income that covers the payments and excellent credit history to qualify. You will also need to pay for insurance to cover the risk associated with the lower down payment.

Q4 - How can I figure out of refinancing makes sense for me with the costs of refinancing vs. the change in my monthly payment. We have a 30 year fixed rate mortgage, and our current rate is 6.75%- we have been in the house for 7 years and have great credit and always pay on time. How do we know which one makes more sense?
A - If your loan is less than $ 729,000 it will make sense today as rates for a 30 year fixed are around 5%. The cost of refinancing can vary based on the location of your home due to government recording fees and taxes. For example, let's assume a $300,000 mortgage at 6.75% your payment is around $2383 and with a rate of 5% it would be $2087, or $296 less per month. Assuming fees of $5000 for the new loan, you would get this back in 17 months. So given your scenario it would make sense to investigate refinancing.  Call your local lender who will discuss this with you in detail and give you the exact closing costs.

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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