The Analytics on Appraisals
The Analytics on Appraisals
What is an Appraisal?
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.
When doing your research, always be sure to cite great sources! Check out the sources for this article below!
WHITNEY RUSH, VALLEY WEST MORTGAGE
House Flipping and some details you need to know.
We can bet you’ve flipped a coin, but have you flipped a house?
High priced homes are exactly what house flippers are looking for. Why? Because high priced homes turn out a more profitable result. Flipping houses is a trend that has recently re-started during the better parts of the housing bubble. A flip occurs when a person has purchased and sold the home within a year. Financing was a lot easier back then compared to what it is now, so investors were buying cheap homes and flipping them. Now, as pocket friendly priced houses are more scarce, investors are forced to buy the more expensive homes. Though this may have seemed like something that would slow down the flipping process, according to a CNBC mortgage article by Diana Olick, house flippers are finding this method to be more lucrative. The return on a flipped house has gone up from 24 percent last year (2014), to 36 percent this year (2015).
House Flipping Around the Country
Olick also tells us that “Nevada and Florida, where the share of distressed homes are still relatively high, are still seeing the most house flipping action. Chicago IL, Dayton OH and Baltimore MD offer some of the best gross returns.”
What’s the Catch?
The downside to flipping homes, that has to be taken into consideration before venturing into such a big project, is the possibility that home flippers could quite possibly lose everything they are investing in. If you buy a property that you plan to invest in and find the cost of renovation is something you can’t afford, then you’re stuck with a house that you can’t sell. You may be able to sell the house to another home flipper, but you’re not going to get all of your investment back. An even worse situation would be where you’ve done everything you can and still can’t sell the home, because of the location or other factors. You could be looking at paying the cost for the home, the renovations, and any new upgrades you may have already done and never even see a profit returned.
What Are Some Of The Draw Backs?
When you decide that flipping a home is the right move for you, there are a few things you need to consider before you start purchasing materials. If the home is older, you may be forced to bring the electrical wiring up to code. Homes that were built in the late 1950’s and 1960’s, were in fact built to code. That code however, was set during the same time period. As the years clicked by, building codes have changed a number of times. The codes are updated every time a new discovery is made that could result in structural damage, fire damage or simply put, the home could collapse at any moment. Even if you’re remodeling your existing home, you’re going to need to update all of your electrical to the current building codes. We’re not talking about just one section of your home. The entire home will need to be rewired. This also goes for the plumbing and any insolation you have in your current home. Commercials on television and radio make remodeling your home sound so easy. In some case’s it really can be. If you have an older home though, you will have a few hurdles to overcome first.
Mold is another factor that you need to consider when you decide to flip a house. In Las Vegas, and other warm cities, the mold removal industry has seen a recent spike in business. A small leak from your bathroom faucet could possibly end up causing more damage than you would think. Molds are a kind of fungus that can grow on wood, concrete, bread, oranges, or any surface that provides a suitable combination of temperature, moisture and food. Molds feed on nutrients on the surface of wood – they do not eat or weaken the wood itself.
When buying a home, to flip or just to live in, you’re going to need a home inspection. Most inspections will identify any issues the home currently has. This includes mold damage, faulty wiring practices and building code violations.
How You Can Flip a House
In order to flip a house you have to be sure that the market is right. By that we mean, the housing market. You want to try and buy your investment property at a time when your investment will return the best profit. The idea is to buy a house for a low value, reconstruct and fix it up, make it livable and give it some eye appeal. After jazzing up the property, you sell the property and ideally because you’ve put so much work into the property, you sell the property for a higher amount than what you paid for the house and its repairs. It can be a risky but rewarding business. Maybe flipping homes could be a new hobby for you.
Stop Assuming. Start Asking.
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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Watch Las Vegas grow in 30 seconds
Las Vegas, Nv -
In the last 40 years, Las Vegas has made a lot of changes. Here is a short clip provided by the Goddard Space Flight Center of our city moving city limits.
A New Study Shows How To Convert Foreclosures into Rental Properties
Las Vegas, Nv - Lewis Ranieri, the co-inventor of the mortgage-backed security, authored a research paper with University of California economist Kenneth Rosen that lays out the case for using federal entities to support private investors who are already converting foreclosed properties into rentals.
This Foreclosure to Rental model can more than likely be adapted into every market the United states currently offers. Mr Ranieri and Mr. Rosen have chosen the top ten markets where their research could benefit greatly. The cities listed are Chicago, Denver, Detroit, Oakland, Seattle, Minneapolis, and Los Angeles. The reasoning behind why these cities were picked is rather quite simple. These cities have a very high rental condition and high levels of bank-owned foreclosures.
Las Vegas, is not well suited yet because we have poor rental fundamentals despite a glut of bank-owned inventory. No matter what our city makes it's way on to every list created, Good or Bad. It just so happens that Las Vegas is one of the worst housing market in the United States, as well as having the highest unemployment rates.
The paper argues that existing industry and government effort to modify mortgages, while necessary, won’t alone be enough to deal with the problem of already vacant properties and those that may not qualify for modifications.
So why is the government needed? There’s two reasons: First, Fannie Mae, Freddie Mac, and the Federal Housing Administration sit on nearly half of all foreclosed properties, making them key sellers to investors that are converting properties into rentals. Second, Mr. Ranieri says investors could soak up the overhang of distressed properties even faster if Fannie or Freddie expanded their investor financing programs.
The paper includes a series of other interesting ideas that build on the rental-conversion idea:
• Employ a “rent-to-own” option that would allow tenants to allow some tenants to ultimately purchase their rental homes. Mr. Ranieri has already employed that option through his company, Selene Finance, which invests in distressed loans and homes.
• Raise the ceiling on the number of loans that Fannie and Freddie will guarantee to a single buyer. Currently, those limits are set at 10 and four, respectively, but Mr. Ranieri has argued that investors who make large down payments of 30% or 35% should be able to take out 25 mortgages. That would allow smaller investors to get more involved in repairing their local markets, even as federal officials consider structured sales of bulk properties to larger outfits.
• Change appraisal rules for investor purchases to evaluate the value of properties based on the rental income, rather than the traditional metric of “comparable sales.”
Other influential housing analysts, including Laurie Goodman of Amherst Securities, have also strongly backed policies
But the idea remains unpopular with the National Association of Realtors and major real-estate brokerages, which say that foreclosed properties are selling briskly and don’t need to be taken off the market.
Settlement offers help for Nevadans who faced foreclosures
Las Vegas, NV (KTNV) -- Las Vegas is one of the hardest-hit areas in the country when it comes to foreclosures, and residents are wondering how the new national settlement may help them.
There are still many questions regarding how the payout will reach those who need it most, and some worry that it's already too late.
"I went to home modification twice," James Miller, a Las Vegas resident who lost his battle with the banks, said. "And they say, 'we'll see what we can do about it.' Nothing happened."
Miller said he paid cash for his house, but was advised to take out a loan for $182,000. He couldn't keep up with the payments, and despite trying to work with Bank of America, he says they took over his home in August of 2011.
"It was our home," Miller said. "My wife was so aggravated, she had a stroke and died. That's not going to bring her back, nothing will bring her back, but I'd like to get my home back."
The government announced a $25 billion deal reached between 49 states and the nation's five largest banks on Thursday.
Those lenders were accused by the government of a long list of abuses- among them, robo-signing. Under this deal, about 1 million homeowners under water with their mortgages will have their debt reduced by lenders or be able to refinance at lower rates.
Another 750,000 Americans who lost their homes in the last three years will get a check for about $2,000.
Unsure on whether he qualifies for help in this settlement, Miller said he intends to find out.
"I'm 80 years old, and I got nowhere else to turn," he said.
Critics say the settlement will only help a small fraction of the millions of homeowners who are drowning under their mortgages, and it won't move anyone back into the home they lost to foreclosure.
The state Attorney General said Nevada will receive about $1.3 billion in benefits from loan modifications and other relief.
you can watch the news report Here
Falling rates help everyone
Las Vegas - It's going to happen again and again and Valley West Mortgage will keep reporting on it. Rates keep getting lower and lower. That couldn't make us any happier. Please Note: The actual interest rate you were quoted last week will have changed this week. Based on raw data from more than 20 leading lenders as well as feedback from the MBS Live community, the average Best-Execution rate, before rounding to the nearest eighth, hit its lowest level on record, 3.81%. Although 3.81% is closer to 3.75% than 3.875%, we won't declare 3.75% to be the Best-Execution champ until the average from our lender survey falls to 3.75 or lower, and we're not there yet. Please call your Local Mortgage Lender to find out more details.
Last week, we noted a high degree of stratification in rates as lenders responded to the bond market rally at different paces. This continues to be the case today, but perhaps to a slightly smaller extent. When we say that rate offerings are more stratified, we're talking about various lenders offering increasingly different rates to the same type of borrowers. Among some lenders in our survey, best-execution rates are still at 4.0%, while the bulk have moved down to 3.875% and 3.75%. The important point here is to not believe everything you read about mortgage rates these days, unless the source examines multiple lenders and offers the caveat that they can only report averages while individual experiences may vary.
For instance, several lenders are priced WORSE today than Friday. It's far more important to be working with someone you trust in a process that is more likely to hit its deadlines than to go overboard in pursuing the lowest possible quotes. In the current market, overfocus on lowest possible rates can lead to delays which can result in a higher rate than the one you were originally trying to avoid!
Why should you use a Las Vegas Mortgage Broker instead of going to a bank?
Las Vegas, Nv
Below is an excerpt from a letter to President Obama. This letter was sent to him by the National Association of Mortgage Professionals (NAMB) of which, we are a proud member.
" The Georgetown University study stated that Mortgage Brokers saved borrowers thousands of dollars when it came to their mortgage needs. And the obvious differences on using a broker for your mortgage is that Mortgage Brokers are licensed by their state and the NMLS, take continuing education, take a national and state to be able to be licensed, have a criminal background check with fingerprints, and have their redit checked. Mortgage Originators that work for these banks failed to pass some of these items, test, background checks, etc., and that really sets Mortgage Brokers apart from those depository institutions.
There are thousands of good honest Mortgage Brokers in America that have never participated in sub prime loans or have used any of the exotic products that Wall Street or the Mega Banks created. And most of these companies that did these loans were not mortgage brokers.You consistently use the term Mortgage Broker to relay information having to do with the Housing industry and that is not fair. Let me give you an example. When a drug creates a problem in the medical industry, the FDA goes and contacts the maker of the drug and deals with the company. They don't go to Walgreens or CVS and shut them down, making them the scapegoat for selling the drug. The same is with the Mortgage business. We only sell what is out there from the banks and wholesale lenders. We have never developed or created any of these products. We do not underwrite them or approve them. Yet it seems that every time something comes out about the mortgage industry, it is a Mortgage Broker that did it."
In short, Mortgage Brokers provide a valuable service and save their clients' money over going to a Mortgage Bank or Depository Bank. Let's put this in plain english. We sell the Ice Cream. Not make it.
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.
- A copy of the loan officers License
- A copy of the loan officers Company License
- The Loan Officer NMLS and State License Number
- A Link to the MLD.NV.GOV website.
- A link to the NMLS website.
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.
Qualifying for an FHA or VA loan date extended.
Great news to anyone interested in qualifying for an FHA or VA loan. President Barack Obama that reinstates the higher loan limits until December 31st, 2013. The president did not provide his extension to the Power Houses known as Fannie Mae and Freddie Mac.
FHA and GSE maximum has been at $625,500 since October 1, 2008. Under the restored limits the highest FHA loan available in designated high cost areas will be $729,750. "Loans written between October 1 and today's effective date of the new legislation will not be eligible for the new limits. Limits on VA loans will return to the levels established under the Veterans Benefits Improvement Act of 2008 which are, in some cases, higher than FHA limits", according to a recent post by Mortgage News Daily.