Question: Last summer we refinanced our home loan with the same bank that serviced our previous mortgage. We noticed the bank deducted several days of overlapping interest. When I contacted the bank, I was told the charge occurred because the loans were from two offices of the bank, one in New York and the other in Kentucky. I don't think the double charge was justified since the two loans were from the same bank. What should I do?
Answer: I wish you had given the amount of the double interest in dispute. If it was less than $100, I advise you to forget it. If it is over that amount, send a demand letter requesting refund of the double interest within 15 business days.
If you don't receive a prompt refund, your local small claims court is the best place to go, to let the judge settle your dispute. If I were the judge, I would rule the bank owes you the double interest and their excuse is the weakest I've ever heard.
Bad credit no end
to home dreams
Comment: Last winter my wife saw an item in your column about how to buy a home if you have bad credit. That's us! We followed your suggestion of checking our credit and FICO score on the Internet.
To our surprise, we weren't as bad as we thought (we've had some unemployment and health problems).
Following your next suggestion, we applied with a mortgage broker. She "shopped" our application among several lenders and was able to get us preapproved for a 90 percent mortgage at 7.75 percent interest.
Thanks to your encouragement, in late April, we closed the purchase of our first home. We know it's not our ultimate dream home. But it's a nice starter house. I just wrote to thank you and to let other readers know that buying a home with bad credit really isn't so difficult.
Response: Congratulations on your persistence to buy your first home and start building equity. Readers can get their credit report and FICO (Fair, Isaac and Co.) credit score at the Web site www.myfico.com. The cost is $12.95. A few readers report difficulty with that site, but I've tried it several times with no problems. Keep trying.
As for your 7.75 percent interest rate, that's quite good considering you have less-than-perfect credit and you obtained a 90 percent mortgage.
My suggestion is to make your monthly mortgage payments on time each month without fail for the next 24 months. Then, if interest rates are still low, apply to refinance at a lower interest rate to reduce your monthly payments.
Try seller financing
to sell condo
Question: We bought our condo about 14 years ago in what was then a very nice condo complex. It has gone downhill since then. Now, more than 50 percent of the condos are occupied by renters. The result is that no mortgage company will make loans, and our condo has become virtually unsaleable. There have been no sales in our complex for more than six months. My wife and I want to get out. But we own our condo with no mortgage, so we have large equity tied up. Any suggestions?
Answer: One idea is to obtain a home equity credit line. Lenders usually aren't as tough on approving home equity credit lines (especially if there is no first mortgage) as they are with conventional first mortgages.
Another idea is to offer your condo for sale with "seller financing." That means you carry back a first mortgage for your buyer. I realize it won't get your equity completely out in cash, but you'll get some equity out from the buyer's cash down payment, and you will be creating a nice mortgage investment for income in future years.
FHA not responsible
for home defects
Question: Last summer we bought our first home, thanks to the help of an FHA mortgage. Since then, we discovered (1) the house has no foundation, (2) our garage encroaches on a neighbor's property and he demands we move it and (3) the house has extensive dry rot. When we contacted the FHA mortgage company, we were told FHA has no responsibility to us. We thought FHA inspected the house before we bought it. Doesn't FHA have any responsibility to us?
Answer: No. Don't expect your mortgage lender to guarantee the quality of your home. FHA appraisers are required to note on their report the need for any obvious repairs, but they aren't professional home inspectors.
Years ago I sold a house to a buyer who got an FHA mortgage. The FHA appraiser required the front of the house to be painted. But he didn't require the back to be painted, although the back was in worse condition.
When you purchased the house, did the seller and/or real estate agent provide a written disclosure form? If the seller or realty agent were aware of the problems you describe, they should have disclosed them.
There might be seller and/or realty agent liability to you for nondisclosure of the alleged defects. Please consult a local real estate attorney to discuss your probability of success if you sue the seller and/or realty agent for nondisclosure of serious defects.
On-time mortgage payment a boon
Question: We bought our house a number of years ago with an 8.75 percent interest rate mortgage. Our mortgage payment is always made on time. We applied to refinance at a lower interest rate. Either a fixed or an adjustable rate is acceptable to us. But we were turned down because now we are retired and don't have as much income as when we bought the house. We pay an extra $250 per month to reduce the principal. Why can't we refinance with our current lender?
Answer: Some mortgage lenders aren't very smart. Your situation would be profitable for your current lender, who would earn loan fees and keep a satisfied customer.
My suggestion is to shop around among other lenders. Presuming you have adequate equity, a local mortgage broker should be eager to place your mortgage with a flexible lender.
Your on-time payment record is a major qualification advantage. Don't give up.
Send questions to Robert J. Bruss at 251 Park Road, Burlingame, CA 94010. You can e-mail him at robertjbrussaol.com.