On homes and real estate: Good credit won’t help her borrow more than house value

Q. I have really good credit, but no equity. I have a good and secure job as a teacher — with seven more years of salary increase, ending around $80,000.

I am considering buying a home at a cheap price as an investment to sell in two to four years. Is it possible to get a mortgage that includes enough to pay off existing debt and home improvement costs?

A. The whole point of a mortgage is that the real estate is pledged as security for the loan. If the debt isn’t repaid, the property can be sold at auction to recover the money. It would make no sense for a lender to give you more than the place is worth. Quite the opposite, they lend less than that, in case the place couldn’t be resold for enough to cover the debt.

There is, however, one exception. An FHA mortgage plan known as No. 203k allows you to borrow enough to buy a place that needs substantial rehabilitation and also the money to fix it up.

You just have to find a lender who handles that program, which is, by the way, intended for an owner who is going to live in the house. A mortgage broker would know if that loan is locally available. Your excellent credit record will help, but you’ll need some cash for even a minimal FHA down payment and other closing costs.

Beyond that, there’s no guarantee you’d make any money selling after just a few years — given the costs of buying and selling and the current uncertainty of the market. If you want to be a real estate investor, better do some studying. The library has excellent books on the subject.

Q. I own some land with four cousins. They camp there, but I live thousands of miles away. If I stop paying my share of the taxes, will it hurt my credit record?

A. The bad news is that each owner is legally responsible for the entire tax bill. The good news is that in a tax foreclosure, action is usually taken against the property, and not personally against the landowner(s). If you don’t pay, your relationship with your cousins might take a hit, but I don’t think your credit record would.

I’m not a lawyer, though, and you’d better double-check with an attorney in that state.

Q. My son recently got divorced, so his income was cut in half. He is now very house poor. I have read about a program that helps people in his situation. He is not behind in his payments, so there is no foreclosure looming. Do you know anything about this program? How you can qualify for it? Or is there another way to possibly get his home loan reduced?

A. If any programs are available to help your son, the place to set them up is with his own lender, and they’re the ones to consult. He may also want to talk to a nonprofit HUD housing counselor. The names of local agencies are available at HUD.gov.

Q. What should be my checklist for revisiting a property that I’m interested in? People have told me to go at different times of the day. But what else should I be looking at/for?

A. That’s an interesting question, and something I’ve never been asked before. Going at a different time of day is certainly a good idea. You can get a feeling for the neighborhood when children are out of school, on a good lawn-mowing day, or at Saturday-night party time.

Since everyone’s wants and needs are different, I’m afraid I can’t furnish you with any checklist.

Q. My brother and I bought a house to rent out in another state. Both of our names are on the deed as tenants in common. He got divorced. He says the judge awarded her the house.

Do I have to turn over the deed to her lawyer because she said so, or can I keep it and collect the rent? She has been receiving the rent for the past couple of years. Also, can I keep the house for my brother?

A. It sounds as if you and your ex-sister-in-law own the house together. If so, you could be paying your share of the expenses and receiving your share of the rental income. You would also have the right to force a sale. Better consult a lawyer.

Ÿ Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through askedith.com.

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