More of Your Real Estate Questions Answered

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Question: My mortgage broker tells me there are many mortgage options. How do I know which to choose?

Answer: In recent years there has been an explosion in the number of mortgage types available. You must work with a lender or mortgage broker to determine the loan that is best for you; however, there are some general pointers to keep in mind. Loans come in many varieties: fixed rates (for 15, 30 or sometimes now 40 years) or adjustable, where the rate is often low for a few years then can change, going up or down. If you choose an adjustable loan, be sure that you can afford to make payments if the interest rate rises. One popular loan these days is the interest-only loan, where you defer payment of your principal for a set period of time. Do know, however, that when that period expires, you typically will pay both the regular and the deferred principal, upping your monthly fee substantially. Some lenders tell you you do not need to put up any money to get the loan; this may be true, but in my experience, underwriters sometimes balk at these deals, and your closing could be in jeopardy, which is why I often tell my seller clients to beware of buyers with little cash. Watch, too, for prepayment penalties in your prospective loan; if you have one and refinance your home (and in some cases, even sell it), you will have to pay a hefty surcharge to the lender. Finally, lenders vary widely in their fees and closing costs. Ask any lender for a “good faith estimate” before you sign on, which will document their expected charges.

Question: My wife and I moved to Florida and bought a home in November. I heard we are eligible for a Homestead exemption. How do we get one?

Answer: Homestead exemptions are a reduction in your property taxes for a primary residence. If you bought your home in 2013, you must file for an exemption by March 1, 2014. To qualify, you will need a Florida driver’s license with your new address, plus other documents. For details, check out the Broward County Property Appraiser’s office at bcpa.net. You can also call them at 954-357-6830, but it is often difficult to get through.

Question: I fell behind in my maintenance payments and found a person willing to lend me the money in a complex transaction. Now that person says he owns my house. I think I have been the victim of a scam.

Answer: There are a number of scams out there that homeowners must be wary of, or you can indeed lose your house even if you owe only a relatively small amount of money. In one scam, the “lender” agrees to pay your back maintenance and current monthly mortgage and fees for a certain time-period if you write the monthly check to them by a specific date each month. Miss that date even by a minute, and they take the title to your house that they are holding as collateral for the loan. If you are indeed behind on your monthly maintenance payments, try to work out a plan with your association or contact only a reputable lender.

Real Estate Questions Answered by Gary Landau

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Question: My real estate agent is urging me to use the title company she recommends. Is there a benefit – or a risk – in doing so?

Answer:  Sometimes real estate agents push buyers to use a specific title company to handle the closing. Buyers often don’t know that many of these title companies are actually owned by or have a financial relationship with the Realtor’s office. A recent article in Money magazine reported that buyers often pay more for their closing than they have to, because they go with the company recommended by the Realtor without shopping around. The firms of these real estate agents “frequently get a cut of premiums,” the article warns. Money’s advice: “Don’t just use your broker’s in-house title agent…who has little incentive to compete on price (and may get undisclosed commissions).” Know, too, that in Florida, buyers have the choice between using a title company or an attorney who writes title.  While both can handle the paperwork and create a title policy, only an attorney represents your interests in the deal.

Question: I want to add my son to my deed so when I die he will already have the condo. Are there any implications that I am not aware of?

Answer: Putting a child on your deed can be a good form of estate planning – one that I do sometimes recommend to my clients. But there are some things you need to be aware of: First, you need to check the documents of your condo association. Although many exempt immediate family members, others require that anyone added to the deed go through an approval process – which requires time and money. Second, be aware that any financial judgments against your son, now or in the future, can become a lien on your condo, and that later, should you decide to sell, he will likely need to sign all documents. (If he is skiing in Switzerland, that could hold up your closing.) If you do add him, one probate avoidance way is to add him as “a joint tenant with rights of survivorship.” That way the condo will automatically go to him upon your death as you desire.

Question:  I have an adjustable rate mortgage. Should I consider refinancing to a fixed rate?

Answer: This is an individual decision, but in these times when fixed rate mortgages aren’t carrying much higher rates than adjustables (known as ARMs), it may be worth looking into, especially if you plan to stay in your home for at least a few years and your loan rate has already or will soon start adjusting upward. Crunch the numbers to see if it makes sense for you at Bankrate.com. Be sure to shop around for the best loan terms, and also for the attorney or closing agent who will handle the closing.