Wednesday, July 14, 2010
7/14/2010 04:47:00 PM | Posted by
Arbor Mortgage
Technically, the news about the Fannie Mae Loan Quality Initiative is not new. In fact, it’s pretty darn old; being first announced in February of 2010. But, a big “to-do” is still being made over it since its implementation on June 1, 2010. The section that has every one up in arms is “undisclosed liabilities”. This is FNMA’s way of shifting some of the responsibility for a loan’s performance to the lender, by requiring that the lender verify that all the borrower debts have been disclosed in the loan file.
This means that the lender has to double check to be sure that you didn’t get a new car loan or increase the balance on an existing credit card. If anything material changed on the credit profile before closing, the lender will be on the hook for that loan.
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Thursday, July 8, 2010
One of the most confusing parts of the home loan process these days is the appraisal. There have been so many changes in guidelines and legislation that you practically need an advanced degree just to figure out who is even ALLOWED to appraise your home.
Let’s start with the basics:
What is an appraisal?
An appraisal is a professional appraiser’s opinion of the current market value of a home. An appraisal performed for a mortgage transaction will often involve a physical inspection of the subject property. The appraiser will collect and analyze local real estate sales data along with your property information; including condition, prior sales information, sales contract data, and other pertinent property information. The appraiser is not a home inspector and will only be inspecting the home for the purpose of concluding an opinion of value for your lender.
Why do I need an appraisal?
Every mortgage lender requires an appraisal when lending money on real property. The most common appraisals are the full physical inspections mentioned above. The appraiser not only determines an opinion of market value, but they also inspect the property for adherence to specific loan program guidelines. For example, FHA appraisals have additional rules that conventional appraisals do not.
Who picks the appraiser?
The appraiser is always chosen by the lender. Recent legislation requires that someone not within the loan origination process (i.e. – not the loan officer) to order the appraisal. Many banks and lenders have interpreted this law in a way that causes them to use third party Appraisal Management Companies (AMC) to order their appraisals. This often raises the price (to pay the middle man) and lowers the quality of the appraisal (AMC’s generally pay appraisers less and choose outside the geographic area).
Some lenders, like Arbor Mortgage, have an internal appraisal ordering system separate from the loan originators that orders from a specified list of appraisers local to your market. Always use a lender that utilizes an internal system to order appraisals, instead of outsourcing it. Appraisals that are managed by internal systems generally have lower costs, faster turn times, and higher quality.
How long does an appraisal take?
There is no one size fits all answer for the turn-around time on an appraisal. Each appraisal has its own level of complexity that will affect the amount of time it takes to complete. For a suburban area, with a common style home, it should take 3-5 days to receive an appraisal after inspection. For more rural areas or unique properties it can take a little longer.
What happens if my appraisal is too low?
In today’s market, many appraisals are falling short of contract prices. For a home buyer, this is not the end of the world. While it will take additional work and negotiation, this can actually be a GOOD thing. The appraiser is there to make sure that the contract price is a fair price, based on comparable local sales. If recent sales in the area are much less, than the last thing you want to do is overpay. Having the appraiser come back with a lower value gives you an opportunity to negotiate a lower purchase price with seller, potentially saving you thousands.
That’s not to say that all sellers will agree to a lower price. In some cases the seller may refuse, or even ask the buyer to bring the difference. But, that is the your choice, since most contracts have an appraisal contingency that allow you to walk away from the sale if the appraisal falls short of the agreed upon sales price.
For other questions about appraisals or the home buying process, Contact Us.
Tuesday, June 29, 2010
With the mortgage market tightening up over the last couple of years, many people think their only down payment option for a new home is 20% or more. That couldn’t be further from the truth. Surprisingly, there are many options for low down payment loans.
Zero – That’s right, $0 – down loans
Didn’t zero down loans go away with the mortgage meltdown? No way, there are still some terrific zero down programs available.
USDA Rural Development – The United States Department of Agriculture has a Rural Development loan product that is truly zero down. USDA loans come in 2 flavors – Guaranteed and Direct. The Direct program is for low income buyers and is only available through the USDA offices. The Guaranteed program is available through mortgage lenders or brokers and is for low-moderate income families purchasing in rural/semi-rural areas. Aside from not requiring a down payment, these loans have many other advantages. There is no monthly mortgage insurance, interest rates are very low, and the areas of rural eligibility are very liberal.
Tuesday, June 22, 2010
Raise your hand if you've ever received the dreaded "Escrow Analysis" from your mortgage lender? I see it, dozens, hundreds, no thousands of hands are raising right now.
It usually comes once a year and describes which bills, tax and insurance, were paid out of your escrow account and how much money was put into your escrow account each month. Inevitably, there wasn't enough money to cover those bills and keep a cushion, so now your mortgage company is {gasp} raising your payment!
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- Arbor Mortgage
- Arbor Mortgage is a Michigan based mortgage lender that has been providing mortgage solutions for more than a decade. Since 1998, Arbor Mortgage has helped more than 20,000 people purchase or refinance their homes. Arbor offers a variety of mortgage programs including FHA, USDA Rural Development, VA, Conventional and Alternative loans.
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