 Dear George: I have a tenant in my home who would like to renew his lease with an option to own the property. Are lease-to-own options legal in Texas? Why can't I find a REALTOR® to draft a lease-to-own document?
Answer: Real estate licensees are precluded from practicing law without a license and are therefore not permitted to draft legal documents. Hire an attorney to draft your lease-to-own form.
Dear George: I received my federal tax refund and applied all of it ($4,500) toward principal balance of my mortgage. I did this so my mortgage balance can be paid off more than 20%, and the $35 PMI insurance will be no longer be needed to be paid. The mortgage company states my previous monthly payment of $897 will increase to $925. The mortgage company states an escrow analysis has been done, and my escrow will be short $500. The value of my four-month-old home has dropped $3,000, and my PMI has been deleted. Why is my mortgage payment higher after pumping $4,500 toward the principal and eliminating the PMI?
Answer: Payment on the principal amount of a mortgage loan does not change the amount of the monthly mortgage payment, but will change the number of payments it will take to pay off the mortgage. Your payment of the $4,500 principal to reduce the amount collected by the mortgage company allocated to PMI was a sound move, especially if you intend to remain in the home for a long period of time. It appears that your new mortgage payment probably did take the elimination of PMI into account. Your previous mortgage payment was $897. If you reduced it by $35, the amount the mortgage company would no longer be required to collect for PMI, it should have reduced your monthly mortgage payment to $862. However, the mortgage company probably had an actual tax bill for your property in hand and paid out property taxes and insurance (if that was included in your escrow amount) that were $63 more per month even after eliminating the $35 PMI. The mortgage company would increase the total amount it escrowed by $63 per month for 12 months to make sure it had enough in the escrow account to pay the next annual tax bill.
Another way to look at this is to take the difference between your old mortgage payment of $897 and your new mortgage payment of $925: $28 per month. Add back the $35 in PMI that will no longer need to be paid by the escrow company, and the monthly shortfall the mortgage had was $28 plus $35, or $63 per month. An escrow account is designed to take the amount estimated as the amount that will most likely be due to the various taxing authorities when the next annual tax bill is received so that the amount can be paid without the mortgage company having to "loan" the homeowner the money to pay it. When a previously occupied home is sold, a letter agreement between buyer and seller is typically drawn up that states that the party who benefits from a variance agrees to pay the other party the amount of the variance. Often, however, this does not happen with new construction. There are a number of variables that occur when a new-construction home is sold that can and will affect the amount of property taxes escrowed by a mortgage company. The builder will do his very best to provide a reasonably accurate amount that typically will be due, but in the final analysis any amount due either to the owner or to the mortgage company due to an escrow analysis are between the mortgage company and the owner.
|
Dear George: Is there a Code of Ethics a licensed REALTOR® must follow when processing a real estate deal?
Answer: Before becoming a REALTOR®, a person must first become licensed by the state in which he wishes to practice real estate. In this case, the state is Texas and licensure is governed by the Texas Real Estate Commission. If the real estate licensee wishes to join the National Association of REALTORS®, he must join the local REALTOR® association which carries with it state and national memberships. In order to join, the licensee must agree to abide by the NAR Code of Ethics. While the NAR Code of Ethics is a tool that may be used to file ethics complaints and even arbitration proceedings when REALTORS® are involved in a real estate transaction, the real estate licensee's ability to maintain licensure in Texas depends upon the licensee's compliance with the TREC Rules and with Chapter 1101 of the Texas Occupations Code.
If you believe the REALTOR® acted unethically or perhaps violated the law, you have some choices. Call the Texas Association of REALTORS® at 800/873-9155 and ask to speak with someone regarding the association's Ombudsman Program. This program is designed to handle situations such as the one described. Or you can bypass TAR and file a complaint with the Texas Real Estate Commission.
| 
