Tips on the Appraisal Process For Homebuyers

Homebuying can be an overwhelming process with many crucial steps, which you are hopefully guided through by a great Mortgage Lender and Realtor on your side. One of the most important steps in buying a new home is to have an appraisal done to ensure that you are getting out of your future home what you’re putting in! Following these important steps can make getting your home appraised a breeze!



What All Buyers Need To Know About The Home Appraisal Process


Do you know what a home appraisal is, or why it’s so important for you to have? Many people misunderstand this crucial component of the home buying experience.

In a nutshell, an appraisal is a valuation of your home; it’s a way for lenders to ensure that they aren’t providing a mortgage that isn’t worth what the home is worth. Your appraisal must match or exceed the value of your loan, otherwise you’ll run into hiccups.

An appraiser is someone who uses comparable sales in your neighborhood as well as the condition of your home in order to make a sound valuation of your home. They’ll include factors both inside and outside the house.

If an appraisal is lower than the amount you thought the house was worth, there are several options, including renegotiating the deal and paying the difference. If it’s higher, it benefits the buyer. But knowing more about appraisals, whether you’re a homebuyer or seller, can help the whole process go more smoothly.

Article originally appeared on Lighter Side of Real Estate

Rely on a Realtor's Recommendations?

Learning from the experience of others holds a lot of value, especially for first-time homebuyers. While consumers are more knowledgeable than ever about the housing market with blogs available (like this one), reading professional recommendations and ratings, or doing a little market recon before even picking up the phone, at some point they have to trust the professionals they’ve so dutifully researched.

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While a mortgage lender will always argue that they need to be hired first, starting with a Realtor you trust can be a great move! They make it their business to know who does good business. A Realtor’s connections and recommendations will be properly vetted as reliable, friendly professionals and most importantly - get the job done.

There are plenty of skeptics out there who feel like using referred business lends way to some dubious profiteering. I’m glad to assure you that the Real Estate Procedures Act (RESPA), a piece of legislation designed to protect homebuyers, strictly prohibits kickbacks for referring mortgage lenders.

Realtors more than anything want your deal to go through and have a successful sale with happy customers, which is why they make recommendations based on their client’s needs. They’re familiar with lenders’ products and what might be a most successful path for their clients whether they are first-time buyers, renovators, investors, etc. Their recommendations are based on who they’ve worked with and who has the follow-through to make the deal happen.

Believe it or not, the rate isn’t the most important quality of a lender. Typically, many larger lenders remain competitive by offering similar rates, anyway. A Realtor doesn’t know rates, they know service and they’ve already weeded through the non-closers. Taking a .05% lower rate won’t mean anything if the lender fumbles at closing. So if you’ve already found a Realtor you trust, their recommendations for mortgage lenders are likely to be trustworthy professionals, too.

No matter who you hire first— a Realtor or a Mortgage Professional— getting pre-qualified (or at the very least, pre-approved) before home shopping is MUST!

How to work toward more home loan options

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There are many perspectives when it comes to how long getting a mortgage takes. Many articles read that it doesn’t take as long as you think, just one to three days! Some articles warn that it’s a many month process toward reaching the final goal. Having seen everything in-between, it can easily be said that you never know just how long it will take.

For buyers who have planned ahead, done any credit repair work that needed to be done (i.e. not zeroed out any self-employed tax returns for two years or saved for a downpayment) then the process will be smooth as silk! But truthfully, that is rarely the case. Many individuals don’t find out that this kind of effort is necessary until after their initial meeting with a loan officer.

The spring market is fast-paced and sometimes pre-qualification letters aren’t enough to out-compete another bidder. In a seller’s market, like the current Richmond market, many sellers won’t entertain offers without a pre-approval letter, meaning your credit and income have been verified. 

So if you missed out on this spring market, take the opportunity during the "slower" real estate months of summer to get your financial house in order and broaden your mortgage options.

Save money!

The larger your down payment, the wider your mortgage options.

Adjust your debt-to-income ratio

Get your credit card balances down as low as you can, or consider consolidating debts into one low monthly payment the bank know is achievable along with a mortgage payment.

Don't borrow any more money

Don’t buy a new car when applying for a loan. Don’t take out a loan on something else while applying for a loan. Don’t stretch your credit so thin that the bank questions your repayment ability, okay?

Student Loans won't stop you

“Almost 60 percent of first-time homebuyers said that student loans delayed their saving for a down payment” according to the National Association of Realtors. Having that debt is commonplace and won’t necessarily prevent you from getting a mortgage as long as you’ve managed it wisely.

Credit Repair

Many mortgage lenders are willing to give mortgages to individuals with a credit score of at least 620, depending on their financial history. If your credit is less than perfect, remember that it is only one part of a whole equation. However, if your score is in need of an overhaul here are some general credit rebuilding tips:

• Look at your credit report for any past due accounts or late payments. If you have accounts, like a student loan payment, that is 90 days or more overdue, pay those off first. Accounts that are 60 to 30 days late will have a less negative impact than accounts that are 90 days or more late.
• If your credit report is showing that an old bill is unpaid, you should not pay it unless you are able to pay it back in full. A partial payment may make the debt more relevant, which can hurt your credit score.
• Lenders will see that you have been making an effort to pay off overdue accounts and reduce your existing debt. This will bring your credit score up and help improve your chances of qualifying for a mortgage. 

Resources: 

Inc.com

Time.com