For Loan Seekers, Preparation Is More Important Than Ever

No. You're done for the moment. Every time you apply for credit and are denied, you hurt your credit history and your credit score goes down. The lower your credit score, the less likely you will be approved by another lender.

If you've been turned down for a loan, you're entitled to see a copy of your credit history and credit score to find out why. However, it sounds as though you're trying to get blood from a stone.

If you don't have any equity in your property, you cannot refinance to consolidate debt. Mortgage lenders are getting picky about how much cash you can borrow against your equity. These days, they're not doing 100 percent loans or anything close to that. If you're in a declining market where home prices are falling, they might not refinance if you have less than 5 or even 10 percent equity in your home.

Because you're out of refinancing options for the time being, if you want to get your debt under control, you'll have to do it the old-fashioned way: Stop spending and find a way to bring in more income each month, even if it means taking a second or third job.

I am purchasing a home with a seller-financed contract. The seller still has a mortgage through the bank. I received a notice in the mail addressed to the seller that he is behind in payments and to contact them to avoid foreclosure. I left him a phone message regarding this notice but have not had a response.

It has been two months, and now a notice was left on my door from a field inspector for the mortgage company. It appears the house is in foreclosure. Should I stop making my payments to him (I am completely current), or should I file some type of lawsuit? Please tell me what to do.

Get to a lawyer as quickly as possible. It appears your seller is taking your money but has stopped paying his lender. If the lender forecloses on the property, you may stand to lose everything you have put down so far.

When you buy real estate on contract, you need to make sure that any lender on the property receives prompt payment of any amounts owed under the mortgage, that the insurance on the home is paid and that the real estate taxes are paid on time. Failure to have any of these taken care of can be a disaster for both the contract seller and the contract buyer.

Your purchase contract may have language to guide you. You may be able to make your payments to the lender instead of to the seller. But if the property is in foreclosure, you first need to find out how many months your seller is behind on the mortgage. It may be worth it to you to pay what is owed to protect your own interests in the property.

You need a lot more information and will need to do some investigation. If you know that what your seller pays on his mortgage is less than your payment to him, you might be able to make those payments. If his payments are way higher than your payments to him, you may be in a difficult spot.

You may come out fine if you have caught this early enough. Depending on the circumstances, you may be able to negotiate with the lender, and if you are prepared to buy the home now, you may be able to exercise your rights under the installment contract and close on the house early. Because installment contracts can have varying terms and provisions, it is difficult to tell you what path to take.

I own a condo unit. I paid my association fee late by one day, so I was charged the late fee of $50. The following month, I paid my association fee on time but forgot to pay the $50 fee. The only thing unpaid was the $50 late fee, but I was still charged $50 every month after the first month. I read and reread the governing documents, and there is only the statement about a $50 late fee if the payment is late. It says nothing at all concerning fines for missing a "late fee." Can they charge a late fee for an unpaid late fee when all regular payments are on time?

You have fallen into the late fee trap. A payment will be considered paid on time when it is paid in full. When you were late on that first payment, your account had an obligation due equal to the amount of your monthly payment plus $50. The following month you paid your monthly payment, but your account was still short by $50. Because the account was short and not paid in full, you did not pay the full amount owed on time. In some circumstances, you can get the association to waive that second late fee, and you certainly should try. They would not be obligated to waive the second fee, but they might.

Otherwise, you need to pay down your condominium bill in full so that the account falls to zero.

Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is "100 Questions Every First-Time Home Buyer Should Ask." Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through Glink's Web sites,http://www.thinkglink.comandhttp://www.expertrealestatetips.net.

© 2008 Ilyce R. Glink and Samuel J. Tamkin

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