Welcome back to our discussion
on real estate news you can use. My name is Michelle Camaioni with RE/MAX
Closers and this month, we've been talking about the struggles of the loan
process.
It truly is a very
detail-oriented process that digs into every financial corner of your life and
it can be very stressful so, we've broken it down this month to talk about what
your lender expects. Communication with your lender. What paperwork will be
required the speed with which you need to get that paperwork to your lender and
today we're going to talk about the appraisal.
The appraisal is a very
important part of any loan process whether it's a refinance or whether it's a
purchase because when a lender makes a loan, they are required to get an
independent third-party opinion of the price and the person who provides that
opinion is an appraiser.
Now, an appraiser is someone who
is highly trained they have thousands of hours that they have to invest as apprentices
before they can become formal appraisers and so they're certified to determine
what is the value of a home. In the case of a
refinance, you can only take out enough money from your house if you're doing a
cash out up to about 75% of the value of your home.
To break it down in easy numbers.
If your home appraises for a $100,000, you can only owe $75,000
on that home, so if you're doing a purchase, the house has to appraise for the
minimum of the purchase price of the house. So, if
you're buying a 300,000 house, that house has to appraise for 300,000. The
appraiser comes out typically about midway into the refinance or the purchase
process and does an opinion of value and then uploads that to a management
company who then shares it with the bank that ordered the appraisal.
While you will be paying for
that appraisal upfront that appraiser is independent of your lender and is
there to help the underwriter appreciate. We talked about the underwriter last
week. Help the underwriter appreciate that they're not lending too much money
on that home so all of this is for your protection to make sure that you don't
end up owing more than the house is worth at any given point in time.
Expect to pay for your appraisal
up front, expect for the appraisal to determine how much money you can borrow and
expect once the appraiser comes out to the property that you'll get that opinion
of value within a week or 10 days.
One final note about
appraisals is that there are certain special requirements for FHA appraisals
and VA appraisals. They do a little bit of a harder look at the property. Make
sure there's no broken glass, no tripping hazards, no falling hazards and
things like that so sometimes what will come out of an appraisal is the
appraiser will say yes, it's worth 300,000 but you need to put a handrail up on
the back steps or it's worth 300,000 but there's some broken windows here or
some chipping paint there that have to be fixed before you can take the loan
and those things are called lender required repairs.
So, this is something
completely separate and distinct from your home Inspection and it's a list of
repairs that the appraiser says needs to be made before the bank will be
willing to do the loan.
I hope you found this
information helpful. If you’d like to
talk more about the real estate process, I’d love to help you. Please feel free to reach out to me.
