Question: We have the option to a buy a smaller house on a larger piece of property.

We also could afford an interest-only loan on our current property and a mortgage payment on the new property.

We would do this to ensure we get the house we want and move into it at our leisure. Once we were settled in the new house, we would put our existing home up for sale.

Do you see anything wrong with buying and selling this way?

Answer: There's not so much a question of right or wrong, but there is a question of marketplace realities.

You want to finance house #1 to acquire house #2. When house #1 is sold its financing will then go away and you will then have a smaller payment for the replacement property.

Two thoughts: First, why not look into a "bridge" loan for the first property? Second, if the first property does not sell how long can you make payments on both homes before financing becomes a burden?

Question: We are a moderately-successful property development company that has operated in the commercial market for more than a decade. We have a building that's currently vacant that we have been trying to sell or lease for over a year. During this time we have literally shown the building hundreds of times and everyone that sees it says that it's perfect for their needs and are very interested in either a lease or purchase -- and then we never hear from them again. When we try to follow up we get the standard run around but no concrete answers. The building has been listed with two brokers who have produced zero results. We know that the building would have been sold or leased several times if we had a parking lot with the property, but unfortunately there is nothing available for private parking.

I have done everything I know that can be done to find a buyer or tenant and am fresh out of ideas. What would you suggest?

Answer: You have very polite prospects -- they are socially gracious and not willing to point out the property's obvious flaw: Unless the property is located in a metro setting where everyone walks, you need to accept that in a mobile society the building doesn't work. Just ask yourself: How are employees and customers supposed to get to a structure without parking on site or nearby?

You need to find a unique usage for the property which does not require parking -- or you need to lease nearby parking for tenants.

Question: Every year my school tax increases. This year it went from $174 to $297. Due to a shortage on the escrow account, my mortgage increased by $421. I am on a fixed income and this really hurts the pocket book.

Since I am 61, live alone, don't have any school-aged children and have never had any children that have attended the local school system, why do I have to pay so much? I don't mind paying the tax; however, I think it should be at a lower rate due to not having any children who have attended this school district. Is there any remedy to this situation?

Answer: Being members of a community means supporting a wide range of services that we may not personally use as part of the social compact. My area, for example, has a dog park. If you have cats, fish or birds your tax dollars still support a canine facility.

In your situation you may not use the school system, but there may be other community services and facilities that you do use and others don't. In the end, everyone gets something from the system.

As to your mortgage, the school tax went from $174 to $297 -- that's an annual increase of $123. Meanwhile, your mortgage cost grew to $421. Add $297 plus $123 and you get $420, an increase of $10.25 per month. What the lender is doing seems well within the bounds of reason.

Question: Our home in San Diego was recently foreclosed. We had a $487,000 first mortgage and a $115,000 home equity mortgage. The first lender foreclosed and the second did not. The second lender is still sending us monthly statements. We paid our interest-only mortgage for two years and could not re-finance to help us get lower payments. and it was an interest only loan. In two years our payments went from $4,000 a month to $5,500. Do we owe anything to the second lender?

Answer: California has several interesting mortgage rules. In general terms, a "purchase money" mortgage for a prime residence is a "non-recourse" loan, meaning that the lender cannot pursue the borrower for any deficiency. Also in California, with a non-judicial foreclosure -- a foreclosure on the courthouse steps as opposed to a trial before a judge -- borrowers are again protected from deficiency judgments.

With a foreclosure, all money from the sale of the property must be paid to the first lender before any money is paid to the second. It may be that the second lender in this case received little if any money from the foreclosure.

Please speak with a local real estate attorney to determine if you have any obligation to pay the second lender. Was there a judicial foreclosure? Was the second loan a purchase money mortgage?

And now, the bonus round....

When you bought this property two years ago did you not realize that the monthly payment could increase 38 percent? Did you purchase with any money down? Are there any conditions under which $5,500 a month would be an acceptable cost within the limits of your finances? What would happen if your income declined?

Also, did you fully document your loan or did you borrow with a stated-income mortgage application? Did the lender fully explain how much monthly costs could increase with this loan -- and how quickly?

Question: I have a neighbor whose downspout has a plastic extension that's directed at my house. The houses are only about ten feet apart and the ground is a bit higher on his side. I have asked him to reroute the extension to no avail. Do I have any other options?

Answer: Yes. Given that the homes are 10-feet apart I suspect you're in a new community with a homeowners association. If we assume that no one has the right to devalue your property by flooding, you could ask your HOA for help or you might ask the local building inspector for assistance.

If the slope was created by a builder, if it was man-made, then one could imagine a suit against the builder, the HOA and the neighbor for the damage done to your property. Hopefully, cooler heads will prevail before costs for litigation reach flood stage.

Question: What's a "good" credit score for a mortgage borrower?

Answer: There are a number of ways to determine a "good" credit score. I have three definitions:

First, high enough so that you qualify for something better than subprime financing.

Second, high enough so you can get the loan you want with a fully documented loan application.

Third, high enough so you can qualify for "prime" financing, the best mortgages. While standards among lenders differ, on a scale of 350 to 850 you'll generally do well above 660 to 680 while 720 and beyond places you within the promised land of credit scoring. For more information take a look at MyFICO.com.

Question: It is possible to have more than one mortgage for an owner-occupied property at a time?

Answer: It is not only possible, it's entirely common. For example, a home equity line of credit (HELOC) is nothing more than a second mortgage or trust. Also, homes in recent years have often been bought with two loans -- an 80-percent first lien, a second loan for 10 percent, 15 percent or 20 percent of the balance and cash for any part of the purchase price which has not been financed. Such "piggyback" loans allow buyers to finance real estate with little or nothing down and thus avoid the need to pay for private mortgage insurance. Unfortunately, buying real estate with little down can often lead to big affordability problems if interest rates go up and monthly payments soar.

Question: How can I tell how much my home has appreciated in value?

Answer: Basically you want to compare the purchase price with today's fair market value. However, if you want a more precise answer, get a copy of IRS Publication 523, Selling Your Home.

Question: Can you give me a couple of home staging tips?

Answer: Sure. Paint the front door. Clean out closets, basements and attics. Trim, mow and landscape -- and don't allow pets, children or owners to remain at open houses.

The idea is to make the home seem as welcoming, spacious and alluring as possible. For this reason you want to complete all repairs, cleaning and fix-ups before placing the home on the market.

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: April 25, 2008

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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.