Buyer should wait out current mortgage loan
Q. I bought a new construction home four years ago when the market was high. The house is OK, but the value has dropped to less than the mortgage. I don't think I will qualify for a short sale. What are the options of getting out of the house and losing as little as possible?
A. If you wouldn't qualify for a short sale, you can still meet the payments. It sounds as if you're in a house you like and can afford, just as you have been all along. Assuming you don't need to move, what's the problem? It's different for homeowners who have lost jobs or been relocated; they're the ones in a bind. You can just count your blessings and stay put.
Q. In a recent column, you were answering a gentleman who was inquiring about paying off his mother's $30,000 mortgage. Your answer was an option of her acquiring a reverse mortgage, which would give her enough money to pay off her mortgage. I have always been under the impression that the property needed to be free and clear of any debt to secure a reverse mortgage. Would you please clarify that for me?
A. Yes, the reverse mortgage would end up the only one on the house. But that senior doesn't owe all that much on her old loan, and she is allowed to use the reverse mortgage proceeds to pay it off same as with any refinance loan. Then she could decide whether to take the rest of the new loan immediately or to receive monthly checks. As with all reverse mortgages, she wouldn't owe any payback as long as she lived in the house.
These days, a reverse mortgage can even be used to purchase a new home. The AARP's website has an excellent page for calculating the amount available on a reverse mortgage. The only factors that matter are the homeowner's age and the approximate value of the house.
Q. We are looking to buy in a certain neighborhood. If we find a house before it goes on the market, is there any downside to forgoing an agent? Could we ask the sellers to do the same to make the offer price more affordable to us and keep the agent commission off their expenses? What do we need to look out for? And whom would we hire to do the closing, if both parties agreed?
A. If you and the sellers agreed on a sale price, you'd still want help with drawing up a binding contract that protected both parties, obtaining financing, arranging necessary inspections and disclosure statements, and performing other services that lead to a satisfactory transfer of ownership.
Perhaps, you could hire a real estate broker for a flat fee or by the hour to perform those services. You and the sellers could rely on your own attorneys, except for drawing up the contract, which might be expensive overkill.
I can't tell where you're writing from. Around here, each party usually retains a lawyer, and you could get guidance there. In other areas, real estate closings are handled by settlement firms, escrow companies or even by real estate brokers. It's best to follow local custom.
Q. Hypothetically A neighbor next door puts a home on the market. At the direction of the broker, the neighbor calls and requests that I remove a temporary garden fence, since they felt it would reduce the value of the neighbor's home. If I fail to do so, the broker then calls and again requests that I take down the fence to prevent any “undesirables from purchasing in our neighborhood (the broker lives in the neighborhood, too). In a sense implying the type of fence would attract “certain types of people, would the broker have overstepped any ethical bounds? Should this behavior be reported to the Real Estate Board?
A. That certainly sounds like unethical behavior. I don't think it's an actual violation of fair housing laws, which cover treatment of customers and the wording of advertisements. That agent has a supervising broker, who will want to hear about the agent's improper conversation. If it's acted out as subtle discrimination in writing ads or dealing with prospective buyers, both the agent and the firm could be in real trouble.
If that real estate company belongs to a Board or Association of Realtors (a private trade organization), the organization has a procedure set up for filing complaints. I must say I'm curious just what kind of fence would be considered a magnet for “undesirable buyers?
Ÿ 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.
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