Mortgages

What Buyers Should Know About Appraisals

Just about everybody has heard of an appraisal and knows what it is- an assessment of a home’s value based on empirical evidence like recent sales, replacement costs, and the subjective opinions of underpaid appraisers hurrying from one gig to the next.  What many Buyers don’t know is that, even though they get to pay for it,  the appraisal isn’t for them, it’s for their bank.  While it’s true that the bank wants you to know you’re getting your money’s worth, they are really much more concerned about whether they are getting their money’s worth.  See, most of the time, banks are the ones who are really buying the home, even though you get to have your name on the title.

Appraisal Ape says,"Results are relative. I'm just doing my job!"

The true purpose of the appraisal is to assess the dollar-figure at which the bank could reasonably expect to sell your house in the event of a foreclosure.  They have to take the worst-case scenario into account to make sure they don’t get stuck losing any of their money if they have to take your house back.  This makes the appraisal a tricky piece of the buying process, because banks won’t lend you more than the amount of the appraised value. That means that if your appraisal comes back lower than the agreed-upon purchase price, you’ll end up having to cover the difference or re-negotiate with the Seller, either of which could potentially cause the deal to fall apart. Appraisals are especially critical and unpredictable these days, with regulations on appraisers and loans tightening daily as a result of the loose standards of the past several years that contributed significantly to the recent market slump. It is no longer a foregone conclusion that the appraisal amount will be high enough to cover the spread.

I am not suggesting  that appraisals aren’t accurate or useful. They most certainly have their value.   I just think it’s important to let Buyers know up front what some of the potential hurdles and complications might be. That way, there won’t be quite so much flop sweat to clean up the week before closing when we all huddle together gnawing our collective fingernails, waiting to find out if the appraiser’s thumb will point up….or down.

Thanks for reading! You can read more of my articles here.

My Clients rock the house, and here’s why!

Dear Client,

Just wanted to say, write, scream from the mountain tops: thanks.  You’re the best client.

How are you the best client?
You’re knowledgeable about the market, you’ve got an open mind for opportunity, and you’ ve got a your financials together so that when we DO find the right property, we’re ready to move forward.

You’ve got market knowledge through:

• the auto search we’ve set up for you,
• and you’ve selected favorites on there, so I have an idea of what you’re looking for.
• If another property comes on the market that meets some of the criteria, I know it’s one to take a look at for you, based on your likes and dislikes.

You’ve got an open mind for opportunity because we’ve spoken about how easy it is to paint, put in new carpet, redo kitchens and bathrooms, and the costs associated with this, so when we find a home that’s not a perfect match, we know a $3,000 fix won’t eliminate a home off your list.

And you’ve got your financial situation clear and ready, from speaking with up to 3 lenders, finding which is the best candidate to help you through one of the largest decisions you’ll make. You’ve talked about ways to improve your credit while we’re looking, you’ve looked at all the loan programs available to you to the point where you can remember them easily, and you’ve got a calculation of what your monthly payment should be so that you’re comfortable.

And we’re working together to make you the best client.  I’m here to help, but wanted to say thank you for all the work you’re doing to become the best client possible.

Because it makes you a success story.

Internet Home Search: Drinking from a firehose

The Internet  is no longer a fad, much to the chagrin of a good friend of mine who will remain nameless. His stock in Beta tapes, Laser Discs, and Pepsi Clear are hopefully rounding his portfolio out nicely, and it’s from this perch that there are  few squatters left.

The solution the Internet solved was the lack of Information Now!, a movement that swept across the nation with the such speed that there’s not even an 80’s Pop reference I can make to draw a close-enough comparison, though jams and break-dancing are close.  It got you real estate information, whatever it was, when you wanted it, and when it didn’t get there quick enough, they went to fiber-optics, cell phone towers, and a failed attempted bringing back carrier pigeons.

And it solved problems…but questions beget questions.  And the one thing the ‘Innanet didn’t do, was ask you why?  Imagine the time saved?

Long tail searches have really fleshed out this trend, where your computer, or G-Mail can almost see where you’re coming from, through algorithms  but not really.  “Live performances Final Countdown WAV” searched at 3:00AM  doesn’t need an explanation, it’s just basic curiosity, but ” Homes Bellingham Under $300,000″ can return, oh say, more than your share of sites.  And you just have a simple question.  That’s where we come in.

You might  get a call asking why, mainly because for every 5 billion  people who are looking online at homes, there are a few that have valid questions to be answered, and are frustrated because drinking through a fire hose doesn’t ever seem to quench thirst.  No one’s ever stood back up, and said “That hit the spot!” unless they were part of a very poorly written satire for the WB (that took a lot of time and effort to write, but did the execs call back? No).

So here’s why we’re calling. Offering problems to solutions, and here’s my list of how:

Looking for a property online? You’ve got three thousand Bellingham real estate websites at your disposal, and yet all you’d like to do is see all the three bedroom, 2 bathroom homes under 1,500 square feet.  You’d like to see them as soon as they come on the market if possible, because you’ve seen all the others, and they’re starting to blend together!  What if you only checked your e-mail, clicked on a link that showed you just these?

Researching the area?You’re interested in waterfront, lakefront, mountain view property but don’t know the area that well, the pricing for certain areas and why they might be higher than others, how close are the schools, are they any good?  What if there was someone who’s job it was to know all of these things, and keep you up to date with bulleted lists and photos?

Looking at homes based on what the listing price is? You’re looking to either move here, downgrade your home size,  check out second homes, or condos, but are amazed at the prices, and wonder if there are any hidden costs, association rules, or more importantly DUES?  What if the home has been on the market for 900 days, with no price reductions and the seller is ravenous to take any offer? What if there was a contact you’d made that could get you this info on all properties?

Looking at getting your feet wet by previewing a few homes? You’ve made your list of 19 homes that might meet what you’re looking for, but looking at the list it’s daunting. Some might have 3 bedrooms, some might have 3 bedrooms and an office that would fit what you’re looking for, but you could cut down your tour by about 10 homes if someone had walked through these before after talking to you for a little bit, and got a sense of exactly what your tastes were?

Looking online for a lender to give you the best rates? You’ve checked out homes online, and are ready to talk with a lender so you know which homes are in your realm , but you’re afraid of just putting your information into any system. You want someone who knows the programs, who’s done this a million times successfully without any hiccups, and is going to explain to you your options; the good ones, and the bad ones, and the ones you should just steer clear from, but you don’t know how to find these people.  What if there was someone who worked with lenders EVERYDAY, and knows the folks who follow through and have a great temperament for what you might be facing? First-time home-buyers, haven’t bought a home in a few years, or are just curious if there have been any changes?  What if there were someone who does this everyday that can take 5 minutes and walk you through the process?

Wondering what buying a home entails, start to finish?

Where to start if I want this to be a fairy tale, rather than a woe of caution? You’ve tossed and turned over whether or not this is a good idea for you, but have a zillion questions, and need a plan.  A successful plan to get you where you need to go.  What if there were one available, tailored to what you wish to accomplish?

Your answer could be a real estate agent.  Yes, you can do it yourself.  You can build a house yourself.  My Dad fixed the sink by himself, and watered his forehead and Chuck Norris T-shirt every time he went to get a glass of water, before they called a professional to come in and do the job correctly, quickly, and at minimal cost. And no round house kicks for disrespect.

Click to chat below, if you’ve got any questions, and I’m available!

Shopping for a Mortgage?

Do your Homework

Know what the lowest rates are that you could get from each lender, and what offers are available in the marketplace.

Here are some things to consider

• Interest rates – There are two basic types of interest rates – 1. Fixed rate mortgage - you pay a fixed interest rate for the entire term of the loan, most commonly 15, or 30 years. 2 Adjustable rate mortgage (ARM) allow for initial lower payments and adjusts itself over the years of repayment, based on a variety of financial instruments, usually the rate will increase after the initial period of 3, 5 or 7 years. This is a pre-agreed condition on a set period of time. These are the types of loans that got lots of people in trouble when they readjusted and raised their monthly payments so they were out of reach.
• The Term or Repayment period – The longer the repayment period, the lower your monthly payments, but  at the end of the repayment period you will have paid a lot more since you are paying interest over a longer period of time. The shorter the repayment period, the higher your monthly bill, but the total amount of interest paid will be less.
• Down payment – Usually, a larger down payment is required when your credit record is poor. A larger down payment could lower the interest rate of your loan if you have a good credit record.
• Closing costs – Usually there is an approximate 3-5 percent charge as closing fee which depends upon the type of loan you are choosing, this can often include the amount the lender is charging you for making the loan. Often these costs as well as origination fees can either be re-negotiated or included in the home loan mortgage.
• Lock-in period – This is like insurance against the sudden rise in interest rates.
• Mortgage Insurance - If you down payment is less than 20% you will have to pay to insure your mortgage in case you default
• Taxes and Homeowners Insurance - These are items that will usually be added to your monthly payment. Taxes are set aside each month for your local government, and your lender wants to be sure your home is insured.

There are many factors that determine the terms of you mortgage and how much your monthly payments will be. There more educated you are about all these factors the better you will understand what you are getting into and how to compare the options that will be presented to you.

If you have any questions or need a recommendation to a some good lenders feel free to email me or give me a call at 360-739-6981.

The Crisis of Credit Visualized

A couple of months ago I saw this video posted up on Facebook and I thought this was one of the best videos I had seen which really explained what had happened with easy credit to purchase homes.

We now know what is going on with the story now with the Fed, Treasury, the banks, AIG and Wall Street all playing a roll of getting us into this mess and now working on getting us out of this mess.

The author Johnathan Jarvis did this as part of his thesis work in theMedia Design Program, a graduate studio at the Art Center College of Design in Pasadena, California.