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Ask Realty Times - May 14, 2004
by Peter G. Miller
Question: I was wondering if having a bankruptcy ruins the chance of getting a VA loan? I'm a veteran, have steady employment, but had a bankruptcy about three years ago. I have saved $10,000. Previous mortgages (non-VA) were paid in full many years ago Answer: The VA mortgage program is a loan guarantee provided by the federal government to those who have completed certain forms of national service. That you have had a bankruptcy does not mean you are forever banned from future mortgage borrowing. People sometimes go bankrupt for reasons beyond their control -- an illness, the widespread loss of jobs in a community, etc. And even when bankruptcy is the fault of poor financial choices, it's still possible to re-build credit over time. Sit down with several lenders, explain your situation, find one you like and then look at your current credit standing. You want to show that you have re-established good credit with a solid history of full and timely payments. That you have accumulated savings is an excellent sign in your favor. Question: My grandfather is giving me his home. There is a $20,000 mortgage balance. The lender says that I cannot get a loan unless my grandfather sells the house to me for at least the $20,000 value. He says my grandfather can "give" me the equity. Do I have to do it this way? Answer: There are several issues here. Your grandfather has a mortgage for which he is responsible. You are not the borrower unless the loan is freely-assumable (you don't have to qualify to take over the loan) or the lender allows you to assume. In this situation, you and your grandfather should do nothing to disturb the current financing -- for the moment. Instead, arrange to buy the property from your grandfather by paying with financing from a new lender (or by paying off the old loan with cash). To do this you will need help with the title paperwork from an attorney or legal clinic, plus a new loan. As well, your grandfather should speak with a tax professional to assure that his gift does not create costly (and surprising) tax consequences. When you settle on the property you will get title and the new loan will pay off the current debt. Question: I purchased a new townhouse in October 2003. Within weeks I had leaks and other problems. Each time I complained the builder sent someone out to make repairs. My wood floor has been torn up four times and I paid an inspector to locate the problems and offer solutions. This month the builder agreed to buy back the property. His stipulation was that the brokers must surrender their commissions. He has now asked my broker and I to complete paperwork, however I am not planning on paying any closing costs and I don't think it's my place to run around and gather this information. I am not technically selling this property, am I? What is my responsibility? Answer: You are transferring title and your loan is being re-paid, that's equivalent to selling so a proper closing is required. As to who is responsible for what, that's a matter of negotiation. You need to have any paperwork from the builder reviewed by an attorney or legal clinic before you sign anything. As well, you need to ask some questions, including: - Do you have any liability to pay the broker's commission?
- Where does the agreement say you will not pay any closing costs or other expenses?
- Are you entitled to any compensation for moving? Finding a replacement property? Damage, if any, to personal property? Etc.
Question: I'm purchasing a new condo. Next week I have to select options. There are several "upgrade" options but the standard options are pretty high-end -- top-grade stainless steel appliances, wood floors and granite countertops. Upgrades include more color choices in wood and granite, a built-in stereo system, etc. What are the words of caution when choosing upgrades? Answer: If you visit open houses in a community with similar houses you can see that everyone has a different sense of good decor and enhancements. In looking at upgrades, I would consider the items which will contribute most to my enjoyment of the house, require the least work to maintain and may ultimately make the property more attractive when it's time to move.
This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought. | 
