ABOUT REAL ESTATE: Builder can't dictate where buyer obtains financing

Federal law prohibits builders and other home sellers from dictating where a buyer gets a mortgage.

DEAR DAVE: We are planning to purchase a home in a new tract. The builder's sales representative is pressuring us to use the company's own mortgage lender, but we think we can get better financing elsewhere. Can the builder refuse to sell to us if we choose a different bank?

ANSWER: No, the home builder cannot nix the sale simply because you choose your own bank. The federal Real Estate Settlement Procedures Act prohibits a builder or any other home seller from insisting that a buyer work with a specific lender.

Builders routinely offer special financing packages, either through their own company or a local bank. Terms of the loans are often very good, so they're certainly worth checking out. Compare the builder's terms with those quoted by at least three other lenders and independent mortgage brokers. Internet sites such as www.bankrate.com and www.hsh.com can provide average rates quoted by lenders in your particular area for free, while the site operated by credit-scoring innovator Fair Isaac will tell you what other borrowers with similar FICO scores are being charged for mortgages.

Also remember that home builders sometimes are more willing to bargain toward the end of the month than the beginning, especially if their sales in the previous few weeks were lower than originally projected. So even if the developer can't provide cut-rate financing, its sales rep might be able to go down a bit on the home's purchase price, reduce your closing costs or provide free upgrades of your carpeting or other items.

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DEAR DAVE: I have purchased a small in-home safe to store my jewelry. Will this make me eligible for a discount on my homeowners insurance?

ANSWER: Some insurers offer small discounts to policyholders who have in-home safes, although only certain types of safes qualify. If you wear the jewelry only a few times each year, you will probably save even more money on your insurance if you instead keep the items in a bank safe-deposit box rather than in a small personal safe at your home. Contact your insurance company or agent for more information.

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DEAR DAVE: You once wrote that a landlord who had an $800 security deposit could sue his former tenants in small claims court for the additional $1,200 in damages they caused when they moved out. I recently found myself in a similar situation with a former tenant, but I did all the repair work myself instead of hiring professional tradesmen. If I sue, can the judge order the tenants to reimburse me for all the hours I spent putting the property back into shape?

ANSWER: Unfortunately, the answer is no. Judges in small claims court generally aren't allowed to reimburse landlords or other plaintiffs for their unpaid work, because it's impossible to put a dollar value on an individual's time.

Let's say you earn $12 an hour as a full-time office worker but that you're also a part-time landlord who had to spend 60 minutes fixing a toilet that a tenant intentionally broke. Should the judge reimburse you at the $85 hourly rate a professional plumber might charge, the $30 a local handyman might want, or the $12 you normally earn? And what happens when the tenant you're suing claims he could have gotten his brother-in-law to do the work for a mere six-pack of beer?

Had you instead hired someone to make the repairs, the judge could order the tenant to reimburse you for the cost of the work. Although you won't be able to get any money for the time you personally spent to put the property back in shape, you can still ask to be repaid for any materials that you bought — but be prepared to provide receipts or other documentation to support your request.

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DEAR DAVE: I co-signed for my son's new mortgage. Will I be able to deduct any of the mortgage interest charges?

ANSWER: The Internal Revenue Service will allow mortgage interest deductions to be taken only by the person who actually makes the payments. If your son makes all of the payments, only he can take the deductions, even though you co-signed for his loan.

Conversely, if you make half the payments and he makes the other half, you can each write off 50% of the total interest paid. Or, if he makes nine of the monthly payments in a given year and you make the other three, he'll get two-thirds of the deductions, and you will be entitled to the remaining one-third. A good Internet site that answers such questions is www.hrblock.com, operated by tax-preparation giant H&R Block.

EDITOR'S NOTE: This is the final release of About Real Estate.