Posts Tagged ‘appraisal’

Tales of a Home Buyer – part 4

May 26, 2011

Written by Shawn DeVries

After getting the purchase agreement signed I again pulled the needed documents for my Loan Officer.  (Yes, all 4,000 pages because 3 months had passed and updated information was needed.  We really do understand what buyers are feeling.) My information was entered into that program again that analyzes the data and based on preset criteria makes a decision on whether or not to approve my loan.  This “little” program can really freak you out sometimes, and all for no apparent reason.  

Ironically the same feelings can occur when you are refinancing your home.  These transactions are big deals and are a significant portion of your personal financial status.  It is no surprise that a borrower will feel some angst that is in direct proportion to their emotional investment to the home.  Highly emotional people will be highly invested into the process.  (I would like to say at this point that in case you have not guessed, I am a passionate person.  My mom will probably describe me in other words, but let’s not get her anymore involved than she already is, okay?)  Fortunately, these results came back just fine too on my loan.   

The next part was to develop my case in order for my Loan Officer to submit my file to an underwriter.  At this point in the home buying process your lender has gotten to know you fairly well.  They understand your financial situation and know what your goals and dreams are.  At least your lender should want this home for you as badly as you do.  If not, find out why.  The underwriter however does not know you.  All they have in front of them are numbers to compare and analyze.  The documents you submit need to tell your story for you.  Share what you need to support their decision so they see you as a low credit risk. 

Shortly after my offer was accepted and the paperwork fun began, I had a full inspection of the home done.  I was relieved to know there were no major issues to resolve or problems to fix.  For a home that was over 45 years old it was in amazing condition.  Getting an inspection is a crucial step in buying a home.  You want an expert without emotional ties to give you an unbiased opinion of what you are buying.  Follow them on the inspection.  Look at what they are looking at, poke where they poke and ask lots of questions.  A good inspector will tell you what needs attention and what is good with the house.  They should be able to also tell you how serious an issue is.  Telling you your furnace is getting old isn’t very helpful.  Letting you know the average life expectancy of a furnace and verifying the age of your unit is helpful.  Letting you know where your unit is beginning to show signs of wear is also beneficial.  Take good notes while on the inspection, but also get their findings and recommendations in writing.

Title work is another major piece in the process.  The title agent confirms that there are no liens against the property that would prevent the house from being sold.  It also confirms who the rightful owner(s) currently is (are), that property taxes are current, and prepares the paperwork so that there is a smooth transfer of ownership (among many other steps).  Title agents are also a great partner to have when buying a home from a trust (like I did), out of a foreclosure or short sale or any other transaction that may involve a bit more documentation.

The third significant step that happens at this point is having your home appraised.  Your lender wants to know the true market value of the home you are buying.  This doesn’t mean they are checking on how well you negotiated and if you got a good deal.  They are looking to protect their investment in you.  This house will be the collateral on the loan.  A lender does not want to lend more than what the property is worth.

After a slow start in finding my dream home, the loan process went very smoothly.  Supporting financial documents?  Check.  Good inspection?  Check.  Appropriately appraised home?  Check.  Title clear and without liens?  Check and check again.

We Should Talk

October 19, 2010

Unless you have been living under a rock for the past 18 months you know that interest rates on home loans have been at historically low levels.  The bad news is that you also know the effects the market has had on the value of your home.  Many homeowners feel they have few options available.  How can you refinance your home to take advantage of these great rates when your home’s value is less than before?  Well before you decide that living under a rock now sounds appealing, we should talk.

If you have taken care of your credit by paying your bills on time, watching your credit card balances and not overextending yourself there are options.  No, these are not crazy loan programs set to self-destruct in 3 years time.  We are Awareness Home Funding, we only offer solid loan programs that actually make sense and benefit you.  These are programs with exactly you in mind – designed to reward you for your efforts and good behavior.

We have programs to refinance Conventional, FHA and RD loans that allow borrowers to take advantage of the historically low interest rates without the need for a new appraisal of your home to be completed.

Here are the basics:

  • You need to live in the home you are refinancing. 
  • This cannot be a second home or an investment property.
  • You need to be current on your mortgage right now.
  • Your personal credit needs to be in good shape.  (We can help you get a complete credit report and score at no charge.)

If this sounds like you, we should talk.  We can help you determine the specific qualifications so you can make an informed decision without pressure, confusion or cost. 

Call us today at 866-982-9273.

Ever wonder why you need an Appraisal for your Refinance Loan?

May 6, 2010

It is known that when you purchase a home you will have an appraisal conducted to determine the value.  More specifically an appraiser analyzes the value of your home and property compared to surrounding homes of similar size and style that have sold in the past 6 months.  So why is another appraisal required when you are refinancing your home?

The end result of the appraisal report is a dollar value that is used to determine the maximum amount a lender is willing to loan you.  A refinance pays off your existing home loan and establishes a new loan.  Criteria used to establish a loan for a purchase are much the same for establishing a refinance loan.  Therefore the value of your home and property needs to be confirmed.

Also consider that in the time you have owned your home so far, you have most likely made some changes.  Those changes can add value to your home and property.  Market conditions can also affect your home’s worth.  Are housing prices increasing or decreasing?  An appraisal done for a refinance loan will let you know the amount of equity you now have in the home.  The point is, anytime a loan is established the value of the collateral involved must be determined.

What’s the Difference? (Part 3)

January 8, 2010

(Part 3 of 3 posts on terminology that can often create confusion)

What’s the difference between an “inspection” and an “appraisal”?

These terms can often get confused because they happen relatively close together in the loan process and because, at first glance, they seem to cover the same thing.  Obviously they are different (or this wouldn’t have been a topic of a blog) in what the purpose of each one is and even in when each is used.

An inspection is used for a home purchase and usually takes place shortly after the purchase agreement has been signed.  The intent is to allow the buyer to closely ‘inspect’ all areas of the home for quality and/or potential problems.  In many cases your purchase offer can be dependant upon your satisfaction with the results of the inspection.  Therefore, an inspection is usually required to happen within 7-10 days of the purchase offer being accepted by the seller.

A state licensed inspector will carefully review all areas of your home including the plumbing, electrical and heating/cooling systems; roof, windows and foundation; drainage of the property; and even potential pest problems.    Even though you will be issued a complete written report of the findings, it is a good idea to tag along and learn the in and outs of your new home.  While not required, home inspections are now strongly recommended.  (A side note here.  Despite inspections not being mandatory, make sure that any inspector you do use is actually licensed by the state.  Oddly enough, not all of them are.)

An appraisal is a review of your home that analyzes the value of your home and property compared to surrounding homes of similar size and style that have sold in the past 6 months.  The end result is a dollar value used to determine your maximum home loan amount.  Appraisals are now completed on all home loan transactions including refinance loans.

So in review, an inspection critiques the quality and safety of your home; an appraisal judges the value of your home compared to those in the neighborhood.

Hopefully you found all three of these posts helpful to you.  In case you missed one, here they are again:

Part 1 – What’s the difference between a pre-qualification and a pre-approval?

Part 2 – What’s the difference between a closing cost and a prepaid expense?

If you have specific questions relating to home loans, the mortgage industry or maybe just a thought, leave us a comment.  We’d love to hear from you.