If you have a problem with a lender over PMI cancellation, contact the Federal Trade Commission and Washington state's attorney general.
An appraisal is an estimation of home's market value done by a licensed appraiser using comparable recent sales of a home in the neighborhood. Real estate brokers cannot perform appraisal. Appraisals are ordered on behalf of a home buyer's lender to protect the interest of the lender. The lender's underwriter will compare the appraisal price to the final sales price of the home to ensure the value of the home is equal to or greater than the loan amount. If the home appraised lower than the final sales price, the home buyer may be able to renegotiate a lower price with the seller. If the seller will not lower the price, the buyer's lender may ask that the buyer put more money toward their down payment in order to make the difference or the buyer can walk-away and receive earnest money back. So in order to set the price of a listing by a buyer and to determine whether that price is at fair market value the respective agents are going to be looking at comparable sales. They will:
What Is Appraised Value?Appraisals provide an objective opinion of value but is not an exact science, therefore appraisals may differ. Appraisals are usually based on market value of what the property could probably be sold for in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as a specified date and the passing of title from seller to buyer under conditions whereby:
What is a Comparative Market Analysis?
Since July 2010 when Dodd-Frank Act was signed into law requiring appraisal independence, mortgage brokers, loan originators and lenders are prohibited to be involved in the appraisal process. Thus, a neutral independent third party - Appraisal Management Company (AMC) was appointed to take over the process. Each lender has a set of AMC companies that they work with.
What buyers can do:
What sellers can do:
Fix health and safety problems first. We will require repairs such as rickety railings, broken windows, loose steps, expose electrical wiring to be corrected prior to closing. All utilities must be working properly during inspection including smoke and carbon dioxide detector.Tidy up. Items not attached to the house - say, clothes scattered on the kids' bedroom floor aren't supposed to count. But clutter obscures the structure and creates a bad impression. Don't kill yourself cleaning. You want it clean, but this isn't a white-glove inspection. Appraisers understand homes are meant to be lived in. However, a dirty, unkempt home can increase its appearance of wear and tear and that condition can affect value.Grasp the mindset. An appraiser will try to see your home through the eyes of a potential buyer, even if you're only refinancing.Maximize views. Remove ivy, weeds and overgrown landscaping that obscure a view. If you've got it, flaunt it. Mow the lawn, trim the hedges. A property that looks good will develop a 'what else is right?' attitude. Keep up with general maintenance. In a glutted market, buyers will choose the spiffiest properties. Make any repairs that would catch the appraiser's eye such as replacing torn window screens, tiles falling off the shower surround or vinyl torn in the laundry room. The appraiser will assign an "effective age" to the house which is based on the condition of the home and any updated performed.Don't over-improve. The neighborhood establishes the value. If your home is already valued in the top 10 percent for your area, forego the upgrades and focus on maintenance.Remodel strategically. Don't make the mistake of the guy who tried to upgrade his small, 1940s home by adding a giant picture window forgetting that the house sat right next to a gas station. Don't expect miracles from a single upgrade. Kitchens upgrades usually bring the best return (but not always). Tour new homes in your area to see what materials and amenities they include. Builders know what sells. Choose neutral (or at least tasteful) colors. Get money in the bag before you launch a remodel. Once the house is gutted, you're stuck, because appraisers look at current value, not projected value. Share the history. Tell the appraiser what you've done to the house, when it was done and how much was it cost. You may not get full credit but it doesn't hurt to note it. Let
the appraiser know about any improvements you've made to the home such
as new floors, windows, counter-tops or a new roof and the contact
information of the contractor who performed the work.Point out red herrings. With the implementation of recent Home Valuation Code of Conduct, lenders are not allowed to contact appraisers anymore. However, agents and potential homeowners can provide the appraiser your own comps of similar size properties, condition and amenity levels in your immediate market area. If a neighbor recently unloaded a house in a distress sale, explain the circumstances so their low-ball price such as divorce, financial distress or heavy concessions can be pointed to the appraiser so it doesn't get factored into the "comps" against which your home will be judged. Know your market. A four-bedroom home is usually worth more than a two-bedroom (in general). Top appraisers often carry the "SRA" senior residential appraiser designation and can be found at the nonprofit Appraisal Institute. If you find serious mistakes in the appraisal report and the appraiser refuses to make corrections, appeal directly to the lender. If the lender stonewalls and the deal falls apart - consider filing a complaint to the state appraisal board. I am here at your service.
Call me if FHA financing is the best for you.
Recent HUD announcement to increase its annual mortgage insurance and mortgage insurance for the life of the loan makes the decisions to go conventional a bit easier (if one can qualify). Here are some pointers for conventional with Private Mortgage Insurance (PMI):
3% gift funds is allowed provided that:
Please be advised that the files will require closer scrutiny from the lender as well as the mortgage insurance company. Pacific Coast Financial will pre-underwrite the files internally to ensure that our files will be approved. Each borrower is unique. Please call or email us for free consultation.
Everyone is unique. Complete the form below and I will contact you personally.