Try to find alternative to walking away
Q: In layman's terms, can someone explain the repercussions of walking away from my present mortgage? It is higher than my home is worth and the banks don't help. Since the government keeps on bailing them out, I want to walk away.
A: If you walked, your credit record would take a bad hit, making it nearly impossible to get another mortgage loan for years. A low credit score can sometimes raise your insurance premiums, make it difficult to rent or hurt future employment prospects. In addition, in some cases and in some states, the lender may seek a judgment against you personally for the portion of the mortgage debt that wasn't repaid.
Your best bet is to contact your lender to find out if any mortgage modification help is available. New programs do come out from time to time. But if you can afford to pay your monthly mortgage charges and you don't need to move, it doesn't really matter how much you could sell the house for. You're still in the same position you were when you bought it. Just hold tight.
Don't buy retirement home too early
Q: We are interested in buying a house with all cash for our retirement home. We'd live there after five years. In the meantime, our daughter will live in the house and rent one room out. Is it a good plan to buy with all cash, no mortgage?
A: I'm not a financial planner and I don't know enough about your overall circumstances (or your daughter's), so I can't say if all cash is a good plan for you or not. I do feel, though, that it's not wise to buy retirement property much before you expect to occupy it. A lot can change in five years.
Contact bar association about unresponsive attorney
Q: After selling our townhouse, we found the payoff had been applied to the wrong mortgage. The mortgage company is trying to clear up the problem. The closing attorney is uncooperative and will not answer the mortgage lender so that the error can be corrected. What can be done?
A: You can file a complaint with the county bar association.
Change of heart in selling house
Q: We have an offer on our house. We've countered, but we haven't heard back. They have 48 hours to respond. Now, we'd like to pull our house off the market due to financial reasons. Can we? We've listed with an agent until Oct. 1.
A: You're not bound by that offer, unless it is accepted in writing exactly as it stands before those 48 hours are up. As for the listing contract: You always have the right to withdraw an agency. You might be asked to reimburse the brokerage for some expenses, like advertising, and your contract may have other provisions. It may state, for instance, that you would owe a commission if within a certain length of time you sold to someone who saw the property when it was listed.
Loan offer's rate isn't fixed if it can rise
Q: My 69-year-old husband and I have a mortgage on our house with about eight years to go on our fixed loan, at 5.375 percent interest. Our lender has offered a new loan with a 10-year fixed rate of 3.675 percent, which would give us a monthly savings of $113. In the offer, they state the rate may change without notice subject to market conditions. With the offer, there is a $500 credit at closing. Is this a good deal or not? We could use the extra $113 a month.
A: Yes, but you certainly wouldn't have that extra money coming in for the next 10 years. The rate is not fixed if it can change with market conditions, and it certainly will. Interest rates haven't been this low for half a century. They're bound to go up. When your new low rate disappears, so does your $113 a month advantage. And you'd be making payments for two extra years.
Don't haggle if small fixes would help sale go through
Q: I have a buyer for my condo that had an inspection for mechanicals, plumbing, electric, etc. Within two days, he submitted a letter regarding what he wants done. He is asking that I upgrade existing thermostats to the programmable type. This seems to be a stretch. He is also asking me to fix a slow drain, a bath faucet and a doorbell. Please let me know if I should do these repairs.
A: Of course, like every seller you're under some stress, and you sound angry. But frankly, it can't cost all that much to meet those requests. I don't know what it says in your contract and whether you're obligated to make repairs, and I don't know if you'd just as soon lose the deal and start over if it worked out that way. In your shoes, though, I'd have the work done and be pleasant about it.
Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at [email protected]