Home Forum: Real-estate writer Elizabeth Rhodes addresses readers' questions on buying a second home with a small down payment, and getting a landlord to make or agree to repairs.
Q: We’d like to buy a home in a better school district and keep our paid-off home as a rental. Our problem: We don’t have enough cash for a large down payment. Will a lender OK a small down payment because we have paid-off property?
A: The deciding issue isn’t your paid-off home. It’s your creditworthiness, says Deb Toepfer, mortgage-production manager for BECU (formerly called Boeing Employees Credit Union).
Due to the current credit crunch, very low down-payment requirements are pretty much kaput. Now you’ll need 10 percent down, plus closing costs, Toepfer says.
However, if your credit is strong — we’re talking a FICO credit score of at least 720 out of 800 — a lender may give you two mortgages, a primary one for 90 percent of the home’s value, and a second for up to 10 percent, allowing you in essence to buy the house with nothing down.
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But you’ll still need cash for closing costs.
A lesser credit score means you must have your own down-payment money, Toepfer says. Loan availability isn’t what it was a couple of years ago, but lenders say mortgage money still is available to creditworthy borrowers. Rates and programs change frequently, so it pays to shop around to see what you can get.
Q: After moving into our rental house, we discovered the dishwasher didn’t work. Several months later, the landlord has done nothing about this.
We also discovered mold, which the landlord will neither get removed nor allow us to remove and then deduct the work from our rent. What are our options?
A: Read your lease to see whether it gives your landlord the option of not repairing (or replacing) broken appliances. It very likely doesn’t, which means your landlord must provide you with a working dishwasher — not because rentals must have dishwashers, but because you leased your house with the understanding you had one.
If your landlord won’t repair yours, the state’s Landlord Tenant Act allows you to do repairs, then deduct the cost from your next month’s rent.
It’s important to note that you must follow the law exactly, says Kirkland attorney John Rongerude, or risk being evicted for not paying the full rent.
The Tenants Union Web site, www.tenantsunion.org, explains the steps involved in repair and deductions, and gives other options for renters in your situation.
As for the mold, Rongerude says this is “a hard issue because it’s something that develops inside the building with common use.
Mold that grows in bathrooms and kitchens is just a cleaning issue. It’s not something that’s the landlord’s fault.”
Most molds are cosmetically unappealing, but not dangerous to the home’s inhabitants, he adds. The few that pose a health threat are expensive to remove “and nothing you’ll be able to do on your own in a practical sense.”
If you think mold is making you sick, consider getting it tested to see what strain it is. Then, if the results alarm you, talk to your landlord about breaking your lease. Should the landlord decline to work with you, contact an attorney to explore your options.
Elizabeth Rhodes: firstname.lastname@example.org