Question: My fiance and I are looking for our first home. We have been approved for financing, we have good credit plus we have cash for closing. We see that there ways to avoid paying higher monthly payments and higher rates. One way we keep hearing about is "assumption of title." I have researched what it means and basically it sounds that when the owner is distressed, he/she can transfer the title to people like us and we take over the current payments without "assuming" a new mortgage which is more costly. Is this correct or are there other implications involved with this process?

Answer: When lenders make a loan they have a clause in standard mortgage documents which says either that the loan is not assumable or may only be assumed by a "qualified" borrower -- that is, someone of whom they approve (perhaps in exchange for a fee or higher interest rate if the market allows).

If title to a property changes then lenders typically have a right to "accelerate" the mortgage with a due-on-sale clause. It is difficult to believe that lenders -- who have some experience with such matters -- would allow their loans to effectively be continued without their approval by an "assumption of title".

Let's say that lenders allowed an assumption of title -- which is just another way of saying that the property has been sold -- would that be good for buyers?

Ask yourself: Who is paying the mortgage? It's not the buyer's loan. What if the seller is supposed to pay the mortgage with money from the buyers each month and doesn't? Who will be foreclosed? Who will be homeless?

Is the mortgage amount the same as the purchase price? If the mortgage amount is less than the purchase price than a buyer must pay cash or finance the balance. However, even if the mortgage balance and the purchase price are the same, there are still costs for closing.

Who is paying taxes on this property? Who is paying the insurance?

Please go no further with this until you have spoken with a local real estate attorney.

Question: I live in a new development of single-family homes. The builder turned over the HOA to the homeowners about a half year ago. We have a community pool and other common areas. In the six months since we've had our own board, no new committees have been formed. The only committee we have was formed by the builder many months ago and is the architecture committee. The board's meetings are never announced and parliamentary rules are not observed. The board doesn't ever record minutes.

It seems like very little ever gets done and I fear the board is digging itself into a hole. What can we do?

Answer: What is it that needs to be done?

The HOA should certainly provide proper meeting announcements and appropriate records should be kept, but there is no need for an assortment of committees and actions unless they are actually needed or required. To paraphrase Thomas Jefferson, the HOA that governs best governs least.

Question: How often should a real estate broker be in contact with the sellers he is representing? Today's housing market is very slow so everyone knows it is taking much longer to sell homes. My parents' broker has had their house on the market for a month and they have not heard anything from him in that period. Even if there is no one to show the house to, shouldn't brokers talk to their clients at least once a week to assure them of what is being done to market their house, what's going on in their area and market or answer any questions they have?

Answer: I don't like the idea of a numerical communication formula, say required contact once a week or once every 10 days. I think a different standard is required, one which says clients and brokers should touch base with some regularity and when there is any news or market change to report. As to your parents, they can put in a call or send email to their broker at any time -- and they should receive a prompt, informed and courteous response in return.

Question: I live and work in the Seattle area. Our area is a little ahead of the county as far as our market is concerned. I'm a broker and I work with a lot of referral clients that are nervous about purchasing. I am looking for any piece of information that would be helpful i.e.: Rent versus buying guide, or predictions for the '07-'08 market in the NW.

I would like to present the facts of our local economy and stability in the greater Seattle area. I understand there is no crystal ball, but statistically we have some good news to convey about real estate ownership in Seattle.

Answer: Real estate trends are localized. You correctly point out that the Seattle market has generally been strong even as other local markets have stalled. Figures from the National Association of Realtors confirm your view: In the first quarter of 2006, of 145 metropolitan statistical areas, "82 metros had price increases from a year ago, including 11 areas with double-digit annual gains; 62 had price declines, and one was unchanged."

While metro prices nationwide were down 1.8 percent in the first quarter according to NAR, the Seattle-Tacoma-Bellevue area had price gains of 12.3 percent.

As to what will happen in the future, no one knows. Past performance does not guarantee future results.

Question: My wife and I are over 65 and interested in a reverse mortgage. Our house is paid for and we want to move. Can we get a reverse mortgage to pay our monthly payments on another house and rent the one we now have? Will this work for us and are there any risks in doing this?

Answer: You can get a reverse mortgage if you are both age 62 or above, have equity and reside in the property which secures the reverse mortgage.

Reverse mortgages are extremely expensive and I'm not sure you need one. Consider buying a second property with 100 percent financing -- and tell the lender you intend to rent your current home. Rent from the current property will hopefully cover some or all of your mortgage payment on home #2. Local brokers can provide information regarding the rental market in your area.

You could also refinance your current home and then buy the second property. A concern here is that you do not intend to remain in the current property as an owner-occupant, something that may concern lenders.

Before going further, speak with several reverse mortgage lenders and have them prepare a "total annual loan cost rate" statement. Notice that this statement will NOT show an annual percentage rate (APR) or the cost of the loan after one year. Still, you will be stunned by the high costs.

Also speak with several lenders regarding a plain vanilla mortgage for the second property.

Sign nothing related to a reverse mortgage until you have reviewed the matter with an attorney who specializes in elder law. Also, make certain that both you and your wife each have a will and a living will.

Question: Do you recommend subleasing as a safe and stable housing option? If so what precautions should one take? What research should be done and how do you go about it before signing a lease?

Answer: If by "subleasing" you mean having a lease, moving out and then re-letting the property to someone else you need to consider two central issues: First, does your lease give you the right to sublease with the owner's written permission? Most leases do not. Second, if someone moves in with a sublease, damages the property or does not pay rent you are still responsible.

It is entirely common to sublet, but make sure you know the sub-tenant, get a credit check, speak with past landlords, have a written sublease, require a deposit to be held in escrow, etc. For details in your community, speak with a local broker.

Question: My income is about $110,000 gross per year. I would like to buy a townhouse northern Virginia. I believe prices are going down. Can I wait for prices to go down more or is it better to buy now? I think the prices are still to high. I would like to wait but I'm afraid I may wait to long. Will next summer will be okay and safe?

Answer: No one knows what will happen in the future. The best you can do is look at local population growth, economic trends, job creation, new home construction, existing home sales and inventories and go from there. Interest rates -- which are not localized -- are simply a wild card.

In addition, what about your needs and preferences? Maybe there's a special house that you would really enjoy.

Question: I own a townhome, which I am currently renting out. I have a standard 30-year mortgage, in my name for the home. How would I execute a real estate contract on this home? Would the mortgage remain in my name? How would this work?

Answer: Go no further. You do not have enough information to lease the property.

When you buy a home and obtain a mortgage, the lender asks if you intend to occupy the property within 30 days. A "yes" means you will be an owner-occupant and entitled to a homebuyer's mortgage, a "no" mean you're an investor and likely to pay a touch more interest and be required to meet other standards.

If you have lived in a property for some time it may happen that you want to move and rent it out. In such situations, the existing mortgage stays in place and you continue to make payments.

Before you lease anything to anyone you have to know the rules for your community, you need proper paperwork, you need to qualify would-be tenants on the basis of credit, etc. Please get help from a local broker.

Question: I'm going to convey a vacant parcel of land to an individual. This will be a private sale. What party is responsible for preparing and paying the sales agreement? What party is responsible for the title search?

Answer: If I was the seller I would want to use my sale agreement because I would then be certain it was not filled with "gotcha" clauses. A local real estate attorney can provide a proper form that protects your interests.

As to title insurance, the lender will require the borrower to obtain such coverage. Who pays for title insurance, transfer taxes, settlement services, etc., is something determined in the sale agreement -- that is, it is a matter of negotiation.

Have a real estate question? Send your inquiry to Ask Realty Times. Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here. For past columns, please press Ask Realty Times.

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Published: August 10, 2007

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Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.