Q & A with Dottie Herman

» Featured Columnists | By Dottie Herman | January 28, 2011 9:08 AM ET

Q1 - I bought a house in Florida right before the market declined. I am losing money each month as I can't sell the property. I have a 6.25 mortgage rate. I can't afford to do this much longer as I have a primary residence in New York. What are my options? 

A - Unfortunately your options are very limited. Your first step is to call your lender and ask if they have any programs that will allow you to refinance.  After that you need to consider selling the home in a short sale, and worst case, should you find yourself not able to make the payments, give up the home to the bank. This will have a negative impact on your credit and ability to purchase another home for sometime. The best option possible is to use it, rent it, and try to carry it until the market hopefully recovers in the years ahead. Your situation is all too common and does not always allow for an easy solution. I wish you the best and make sure whichever path you take you have a knowledgeable professional such as an attorney and/or realtor help you. 

Q2 - What are the costs associated with refinancing?

A - Depending on the state the costs can change, but they will all fall into the following categories:. Bank Fees- the cost of credit reports, appraisal, processing and underwriting, and flood certificate are the most common charges and normally are between $1500 and $2000. Next are the title and recording charges-these can be the bulk of the cost on a refinance. Title insurance, searches, and government recording fees and taxes all fall into this area. Escrow- this not really an expense, but is an item that may require monies at the closing;, escrows are held by the bank for the payment of taxes and insurance. Many times these accounts need to be funded at closing so they have enough cash available for the next tax payment. Again, these change from state to state and even vary from county to county. The good thing is that a lender is required to estimate most of these fees within 10% and must present them in writing at application. So call a lender and you will get very accurate information.

Q3 - I recently started a new job and I have had some hardship in the past so I don't have the best credit. I want to get my own place. What do I need to show in order to get my own place to rent?

A - The criteria to rent is much less stringent than being approved for a mortgage.  Landlords may have varying criteria, but in most markets there are rental options available. The biggest concern is that you pay your bills on time as that is what the landlord looks at when determining if you can pay your rent. For rentals it is important to have a good credit history and show you are responsible.  If you had poor credit that can be explained, and if you have a valid reason for that occurrence, a landlord will normally take that into consideration as well.  So keep your credit profile in order, as, it truly is an asset.

Q4 - I have been living in my house for 18 years and I've always paid my mortgage on time. I recently lost my job and I am having a hard time finding another one and making those payments. What should I do?

A - Call your lender and let them know the situation. Most lenders have forbearance programs available for homeowners with temporary situations that present a hardship.  Although this may show on your credit report, it is not a long term impact and is often interpreted as a positive move on your part to be proactive in averting a worse situation. So ask for some help and hopefully things will get better!

If you have a real estate question for Dottie, please send it to;

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