Advantage of FHA loan is lower down payment required

Q. Who can qualify for FHA home loans? What exactly is necessary, moneywise, closing costs, credit? How do I contact them? Do I consult a Realtor to do this?

A. There's nothing complicated or difficult about FHA-insured mortgages. They come from regular lending institutions like banks, savings and loans, and credit unions. The only requirements are the usual ones: good credit and sufficient dependable income to carry payments.

With FHA loans, the government administers mortgage insurance that protects the lender against loss. You pay the premiums, but with that safeguard, lenders require only 3 percent down, sometimes even less. That's the main attraction of FHA.

Real estate brokers help you find and negotiate for the house you want. They often help with obtaining financing also. Mortgage brokers specialize in bringing borrowers and lenders together. Or you can call local banks yourself to find out which ones handle FHA.

Q. Would you buy a house right across the street from a middle school? It's a great house at a pretty good price, but the front door looks straight across at the main entrance, with all the bus parking too. I'm worried about resale value and whether living across from a school full of rabid teenagers would drive me crazy. It's our first house, so I'm kind of freaking out.

Has anybody lived near a school? Was it a problem?

A. I'm pretty sure somebody has lived near a school. Some people couldn't stand it (which may explain the "pretty good price") but others would regard it as a plus. It's a matter of personal taste and family needs.

I don't understand, though, why you're even considering a house that freaks you out and might drive you crazy. There are plenty of others to choose from.

Q. My boyfriend Dan and I are buying our first home. I have only been in my career for a year so Dan's finances are the only ones being considered, hence his name going on the mortgage. What are the pros and cons to my name on the title and/or mortgage? I was thinking if not on either I could buy our next home (in five years or so) as a first-time buyer, is that possible?

We both have good credit. Also we plan to get married in a year or two.

A. For this year's tax break, no one can qualify as a first-time buyer if they're married to someone who has owned a home in the past three years. There's no telling whether there will be any such program five years from now.

If you're putting any of your own money into the purchase, ask for guidance from a real estate lawyer about both the title and mortgage, and do it promptly. To head off possible problems, the two of you should ask the lawyer's help in drawing up a partnership agreement. That's important when property is bought by not-yet-married couples.

Q. What color and type of carpet and toilets make a house more salable?

A. First off, if the floors are hardwood, many buyers these days prefer that. Refinishing, where needed, would serve as a doll-up.

Otherwise, stick with carpet that won't clash with the furniture that prospective buyers may already own. In builders' model homes you'll usually see beige or light gray carpeting.

As for toilets, that would depend on the rest of the bathroom décor. I was about to recommend a quiet neutral color again, white or ivory. But I have seen some spectacular bathrooms in vivid colors, so perhaps I'll just pass on that. One selling point, though, would be a chair-height "comfort" toilet in a master bath.

Q. I am about to go through a divorce and unsure about what to do about the house. In this market it's going to be hard to sell. With the mortgage, utilities, child care and monthly expenses, I would be at least $1,000 short each month. My soon to be ex can't afford the house on his own either. What are my options?

A. If neither of you can afford the house, trying to keep it is just asking for ruined credit- for both of you.

No matter how bad the market, anything will sell if the price is right. A real estate broker can tell you how much you're likely to get for the house. If it's enough to pay off the mortgage, put the place on the market at a discount for a prompt sale. If you can't get enough to pay off the loan, contact your lender to see if they have any suggestions. New possibilities keep opening up.

• Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

2009, Creators Syndicate Inc.