An appraisal is a document provided by an appraiser (the person who conducts the appraisal report) that provides a professional estimate of the value of your home.
Appraisals are conducted by a third-party appraiser who is completely objective in their process. Appraisers do not work in favor of the lender nor the borrower. They simply conduct the appraisal and produce their findings.
Appraisals are most often conducted two ways. The first way an appraiser can conduct an appraisal is by noting comparables. Comparables, or comps for short, are properties within the neighborhood of the home you’re buying that are similar to yours. The appraiser will use the values of the similar properties nearby to determine the value of your home. The second way is by estimating how much it would cost to replace your home should it burn down or be otherwise destroyed. The appraisal will compile all of the findings of the appraiser including:
Comparisons with homes near the subject property
Notes about the real estate market in the area as a whole, including the ages of the homes and the average selling prices of the homes nearby
Notes about the appearance of the inside, outside, and surrounding area of your home
Notes about any visibly unfavorable characteristics about the home like cracked concrete or damaged windows
Pictures of everything that adds value to the home including, bedrooms, appliances, and fixtures
Why Lenders Need Appraisals
Lenders do not want to dish out more than the actual market value of the subject property. An appraiser’s goal is to determine that value. With this figure, the lender knows how much the property will sell for if you default on your loan. They also know how much they can lend to you without taking a loss if you default.
For example: If the subject property is appraised at $150,000 – that’s how much it will sell for on the open market. If your lender gives you a loan of $175,000 and you default on your loan, they now have to try to sell the home at a higher amount than what its appraised for, which can be difficult. If they end up selling the home for the actual market value, they’ve just lost $25,000. It is for this reason that lenders usually give a loan amount that is at or under the appraised value.
Why Borrower’s Need Appraisals
Appraisals are usually buyer paid and can be paid for at closing or during the application process. If you’ve signed a contract to buy a new home for $200,000 and the appraisal comes back valuing the home at $150,000, you should negotiate with your lender to lower the loan amount because you’re paying more for the home than it’s actually worth.
Overall, appraisals are a measure of protection. They ensure that neither party is lending or spending too much during the purchase process of a home.
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How many times have you made financial assumptions? Once? Twice? A billion times? The fact of the matter is that we all make financial assumptions in our daily lives. We assume that we are not financially stable enough to buy our dream home or to even pre-qualify for a mortgage loan. Making financial assumptions has to do with some kind of rash decision we made when we were younger. We really wanted the new iPhone and decided that it was worth over drafting our bank accounts for. We've all seen those really persuasive commercials that tell you "Now is the best time to buy".
It's no secret that what you do in the past may come back and bite you in the future. That's a part of life. Its called a learning curve. Why should that stop you from finding out if you are eligible for a home loan? The answer is quite simple. There are several factors that impact your chances of obtaining a home loan. Not every rash decision you have made in the past will effect your chances. The only way of finding out if you are eligible for a home loan is to ask a lending professional. That's where Valley West Mortgage comes in.
Just because you have a low credit score, a recent car payment and a few student loans, does not automatically disqualify you from becoming pre-qualified for a home loan. Although all three of those scenarios may count against your debt to income ratio, also known as DTI, it does not mean that you are out of the game. As long as you have a decent credit score and you can prove that you are able to repay your loan back on time, you may potentially qualify for a home mortgage loan.
Not being able to repay a mortgage loan is one of the top reasons why most home loan applications are denied. Instead of financial assumptions, you should reach out to a mortgage lending professional by calling or simply filling out the contact form below, to see if you can be considered for a home loan today.
Note: Not all applicants will qualify for a home loan. There are several factors that are taken into consideration for determining if one may qualify for a home loan. Please consult a mortgage lending professional if you have any questions.
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Loan Officers should always give you Contact Information
Weither you are a First Time Home buyer or an experienced Home Buyer, Dealing with a Local Mortgage Broker can be frustrating at times. Your point of contact with a Mortgage Company like Valley West Mortgage is always going to be through the Loan Officer. Loan Officers are defiantly a breed of their own, in a good way. We can vouch for that. Having a solid line of communication with that loan officer is the key ingredient when you apply for a home mortgage loan. Whether you use Email, Cell Phones, or the good old fashions Fax Line, A loan officer should always be able to communicate.
When you talk to a Loan Officer with any company, you should always ask for a few minor details. All should be answered with out hesitation if they are in fact a real loan officer. It's like asking someone for their ID at a bar. Very simple task for anyone over the age of 21. The same rules apply to Loan Officers.
SO what do you ask for?
When talking with your professional loan officer you may ask for a few certain details to prove the L.O.'s authenticity and the same for their company. Here is a short list of some of the things you could ask a loan officer for. Our Very Own Senoir Loan Officer, Jeff Gonzalez provided us with this list.
All of these items are very easy for a loan officer to obtain and provide at a clients simple request. A failure to provide the following information should result in you or anyone else shopping around for another Mortgage Company like Valley West Mortgage.
Valley West Mortgage wants all of our clients to provide all of the information needed to start a loan with our company. The same goes with any one of our professional Loan Officers providing any client with the information they need to make the best choices possible. Contact Valley West Mortgage today to talk with Senior Loan Officer J. Anthony Romero, or any of other Qualified Loan Officers. Tel: (702) 696-9900 | FAXL (702) 436-2400.