Question: My wife and I are trying to buy a house. We were locked in at a certain rate with a specific lender (A) and wanted to approach another lender (B) to if we can save money. However, I was told by the 1st lender (A) that we could not use another lender and that we had to use them since the lock-in was a binding agreement.

Can we still use another lender for the loan?

Answer: Yes. The lock-in obligates the lender to provide financing under certain terms, however it does not require a borrower to accept a loan. In some cases a lender will want a fee in exchange for locking-in a loan, a fee that will be lost if the borrower finances elsewhere. However, losing a lock-in fee may be cheap when compared to the savings from a better loan. For details, have an attorney review all loan papers.

Question: I have an investment home that I'm selling. Is it possible to take the commission and add it to the cost basis of the property or is there another way to take a tax write on the commission?

Answer: Yes. When you sell you will have certain costs to market and settle the transaction. All of these expenses are costs which reduce the proceeds from the sale.

As well, the settlement sheet (the HUD 1) from when you purchased the property will likely show that you paid more than the acquisition price because you also had closing costs at the time you bought. In effect, you had costs both when you bought and when you sold and both reduce your profit. Speak with a tax attorney, CPA or enrolled agent for specific tax advice.

Question: I heard that the capital gains rule was to eventually increase to $500,000 for single person selling a principal residence and the write-off for a married couple was to increase to $1 million. Has that been changed? Is there a timeframe where those increases would take effect? After the last few years with the real estate market, $250k and $500k isn't much of a break.

Answer: There is no movement to increase the residential capital gain. Given massive federal budget deficits, if it were politically possible the amount of profit that can be sheltered from the sale of a prime residence would be reduced.

The typical existing house sold for $215,000 in November, according to the National Association of Realtors . While prices in many metro areas are plainly higher, there is nothing small or shabby about write-offs of as much as $500,000. If you have more profit, pay the tax, keep the rest and be grateful for your good fortune.

Question: I am about to enter the market to purchase a home but have nothing pushing my schedule. I would like to start of by spending some time looking through the foreclosure market. How do I sift through all the garbage and get real information? There are so many internet sites and cheap newspaper ads: Where is the right place to get information?

Answer: Why limit yourself to foreclosures? They are a small part of the market and by the time you're done with repairs and other hassles such properties may not be a bargain.

However, if foreclosures seem interesting, then speak first with local brokers. Online, try such foreclosure sites as:

• Hud Homes
  
• General Services Administration
  
• Small Business Administration
  
• VA, HUD & Agriculture Department

Question: My husband and I are teetering on the fence. We're renting a two-bedroom house for $2,350 a month. We have been able to save $150,000 to put down but most of the houses in our area are going for more than $600,000.

We have been living abroad for the last three years and are shocked to come back to these prices. Do YOU think prices will ever go down?

Answer: Yes. In some markets and at some times home prices will plainly fall. In some cases home values will increase less than the rate of inflation and so there will be the illusion of rising prices buy buying power will actually be reduced.

But, generally, over the long-run I see home prices rising in most areas if only because the population is increasing and new construction is limited.

Question: What is an interest-only loan?

Answer: An interest-only loan is a form of financing where -- typically -- in the first three, five or ten years of the loan term the monthly payment is not more than the interest required to carry the loan.

Example: A fixed-rate $250,000 mortgage at 6.5 percent over 30 years would have a monthly cost for principal and interest of $1,580.17. On an interest-only basis the cost would be $1,354.17 a month. At the end of the interest-only period, say 10 years, the loan would then be repaid on a self-amortizing basis. If one had to repay $250,000 over 20 years at 6.5 percent interest the monthly payment for principal and interest would be $1,863.93. Of course, if the remaining interest period is adjustable it's possible that the monthly cost could be far higher.

Interest-only loans should be seen as needlessly risky for most borrowers because it is possible in several years that interest rates will rise and that home values in some communities will fall.

Question: I'm about to purchase a brand new home. The house was finished recently and hasn't been on the market long. How do I know how much room a builder has to come down off the asking price of a brand new home?

Answer: Sellers are remarkably firm -- when homes first go on the market. When homes remain unsold for weeks and months prices then get to be more, er, flexible.

Certainly check past sales with the local property records office. Also see if you can get a discount in the form of upgrades, improvements, interest-rate reductions and settlement discounts -- this allows the builder to maintain the appearance of pricing without a discount.

Question: We recently made on offer on a home, the owner counter-offered, we turned down the counter-offer. A few days later we e-mailed the broker that we would like to make the same offer again. A couple of days later the broker called and said the owner was considering our offer. A few more days passed, we heard nothing from the broker, but we decided to go with the owner's counter-offer if the seller turned us down again.

The call never came from the broker. Instead an e-mail was sent saying the owner didn't accept our original offer and that the home was now under contract. Now we think we should have been given the first chance to accept the owner's terms instead of it being sold to someone else. The home had been on the market for more than a year so it wasn't like there was a great demand for it. What do you think?

Answer: You were given any number of chances to buy the property. First you made an offer that was not accepted. Then the owners made a counter-offer that you could have instantly accepted -- but did not. Then you re-submitted your original offer and it was not accepted by the sellers. Lastly, you want another chance at the counter-offer you first rejected but by this time the owners had accepted a bid from other purchasers.

The bottom line: You had your chance. There are many players in the marketplace. The fact that the home did no quickly sell does not mean the owners are required to sell on your terms. Lastly, an offer or counter-offer once rejected is dead and need not be re-considered.

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.