Past bankruptcy need not prevent buyers from purchasing new home

Q: Three years ago, we declared bankruptcy. Are there programs that can help us be homeowners? -- G.

A: Some mortgage lenders will consider you for a new loan when four years have passed since the discharge, not the filing, of your bankruptcy. Some programs are even possible after two years, particularly if you had a good credit record until one major problem.

Talk with a mortgage broker to find out where you stand (Avoid any broker who asks for an upfront fee). Meanwhile, pay all your bills on time to start building a good new record.

Earnest money in escrow

can be returned to buyers

Q: I had a contract on the sale of my home that included a definite mortgage commitment date and a closing date, both of which were for August. Since then, I have extended the closing date numerous times, but not the commitment date. Now we are in December, and the buyers cannot get a mortgage. Do I have a right to the earnest deposit that is in escrow? -- W.W.C.

A: There are at least three reasons why I shouldn't answer your question: I haven't seen the wording of your sales contract, I am not a lawyer and I don't know all the circumstances.

That won't stop me, of course. If the buyers have failed to secure financing after making good faith efforts, they probably are entitled to the return of their earnest money.

Two different tax breaks

leave reader mixed up

Q: I recently read one of your articles that I thought said capital gains on the sale of a private home are not taxable if your income is less than $31,000. We were in the process of moving, and the article was tossed. Could I receive a copy of that article? -- via e-mail

A: I think you've mixed up two different tax breaks. Anyone can take up to $250,000 capital gain (actual profit) on the sale of a principal residence ($500,000 for a married couple filing jointly) if they've owned and occupied the house for at least two of the five years before the sale. Their income has nothing to do with it -- neither does their age and neither does what they do with the proceeds. And it doesn't matter if they've taken that tax break years before on the sale of another home.

You may have read that from 2008 through 2010, people in the lowest tax brackets may take some long-term capital gains free of federal taxes, but that's another matter.

Don't accept payment

while evicting tenant

Q: If I accept a partial rent payment while I'm going through an eviction with a tenant, does the eviction become null and void? I say yes, but my wife says no. -- J.W.

A: Yes.

Highway construction

must be disclosed

Q: I am taking my real estate license test, and my question is: If I were to sell a home knowing a highway is going to be built close to or through the backyard, must I tell the potential buyer? -- via e-mail

A: Yes, absolutely. Good luck with your real estate career.

If house sells, previous

lease still binding

Q: If I rent a house that has a reduced rent because it is for sale, what will happen when someone buys it? Will I have to move out? Will the rent increase? I'm only 23 so I want to know what I am getting into. -- via e-mail

A: If you have a lease, it will be binding on the next owner of the property. More likely, you are a month-to-month tenant. In that case, either the present owner or the next one simply owes you proper notice about increased rent or that you must leave. In most places, the owner must give a full month's notice from before the first of the month (or whenever your rent is due).

Replacing countertop

can't be taken for granite

Q: Our house is old. The countertop is from the '50s and is very "used." Can you give an estimate of how much we would gain by installing a new kitchen countertop? We can't afford granite, though. -- via e-mail

A: No matter what you read in home improvement magazines, there's no rule for how much any given improvement adds to the probable sale price, which is, I assume, what you're asking about.

As so often, it all depends -- on price levels in your neighborhood, how your home compares with its neighbors and what those nongranite countertops would cost. My guess, though, is that replacing countertops after a half-century is warranted. You even can buy '50s-type boomerang-pattern Formica these days.

If you're going to remain for some years, make the change for your own enjoyment. If you're planning to move soon, ask for the opinions of local real estate brokers.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.