Q & A with Dottie Herman

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Q1 - Can you still get a no doc loan?

A - Today there are no more true "No Doc" loans available.  What is available is a "stated income/full asset" check loan program available for self-employed borrowers who can put 35% down on a home up to a loan amount of $750K.  The borrower(s) must be self-employed for at least 2 years, have at least 50% of their stated income in "liquid" assets, and have a good credit rating.

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Q2 - What are the costs to refinancing? I bought my house a few years ago and my rate is about 5%- but I think I can get a better rate now. How do I know if it makes sense for me to refinance?

A - In general, the cost to refinance is approximately 3% to 4% of the loan amount.  A good indication to see if it will be worth the cost of refinancing is to take the actual costs to refinance (less any taxes and insurance), and divide this number by the difference in the new monthly payment vs. your current monthly payment.  The answer will give you the number of months it will take to "break even" on the transaction.  It is generally not a good idea to refinance your mortgage if you are thinking of moving in the next 2 to 3 years. 

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Q3 - Are there steps I can take to avoid foreclosure? If I call my lender, will they try to help me stay in my home if I am proactive?

A - It depends on the lender.  If your lender has a "loan workout" or "loan modification" program, you may be eligible to participate if you meet certain criteria.  Each lender is different in how they handle these situations.  You would most likely have to show a "financial hardship" that took place after you originally closed on the loan.  If your lender does not participate in these types of programs, then you may want to consult with a real estate attorney for advice.
 

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Q4 - Can I still purchase a property with 5% down? I want to buy a condo, but I don't have much liquid cash to put toward the down payment? I am a student and I have a steady income as well.

A - You can still get an FHA loan with as little as 3 1/2% down, as long as the condo is "FHA approved".  If you want a conventional loan to purchase a condo, you would need to put at least 10% down.

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If you have a real estate question for Dottie, please send it to; Reporters@WorldPropertyChannel.com

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