VA Cashout Refinance – Use It For Debt Consolidation or More is a post from: Arizona Mortgage Team

Refinancing in 2010 is tough in many parts of the country. Why? It is tough because of the severe “correction” we have had in home values over the past few years. Home values have come down which is causing problems for many folks who want to refinance but cannot meet program guidelines centered around your home’s value relative to the home’s mortgage balance. In general, for a mortgage to get approved the home’s value must exceed the mortgage balance.

If you are fortunate enough to have a VA mortgage you may be able to refinance your current VA mortgage using the VA’s streamline refinance program without having to meet the home value and mortgage balance requirement that I just mentioned. The VA streamline program does not require an appraisal (according to the VA – see below for specific mortgage lender specifics) so if you are in a situation where you home’s value is less than your mortgage balance you may still be able to qualify to refinance your home using this program.

However, if you are not upside down on your mortgage balance and your home’s value and if are looking for some cash out on your home to do some debt consolidation, or minor home repairs, you may want to consider the VA cash out refinance loan program.

The VA cash out mortgage program is good if you already have a VA loan and want to refinance, or if you don’t have a VA loan, but want one and are eligible for one. Some other reasons to consider the VA cash out refinance loan program include:

• competitive mortgage rates,
• no PMI (this is a big cash savings when compared to other loan programs like Fannie Mae, Freddie Mac and FHA),
• you can defer a few mortgage payments,and
• you can be set up to refinance using the VA streamline refinance program if rates drop in the future.

Unlike the VA streamline refinance, the VA cash out refinance will require you to get an appraisal and qualify for the mortgage with your income, assets, and credit. If you decide to go for this program, the VA will let borrow up to 100% of your home’s value with your new loan. (Lender Caveat) However, many lenders in 2010 are capping the new loan amount to not exceed 90% of the home’s appraised value. Also, some mortgage VA lenders are requiring an appraisal and income/employment documentation even for the VA streamline refinance.

You will need to talk to a VA loan officer who specializes in VA loans to see what options you have for your situation.

Other Interesting Posts

Qualify for a home vs. Qualify for a IRA is a post from: Arizona Mortgage Team

As a mortgage guy, from time to time I get asked questions like: “do I qualify for a Roth IRA?” or “what is the difference between a Roth IRA and a traditional IRA?” Of course, my answer is the same – “I’m not qualified to answer this question, as I’m only a mortgage guy.” Typically, I end up referring someone who asks me this question to someone I know who is qualified to handle these questions.

What I will offer though, is that qualifying for a Roth IRA is a lot easier than qualifying for a mortgage. If you think about it, it makes sense. For a Roth IRA, you are giving your money to yourself for a future purpose – so there are no credit requirements. For the Roth IRA you only have to really meet two qualifications: have some source of documentable income and don’t make too much money.

More specifically for the Roth IRA, you are capped in the amount of income you can make annually and you are capped in the amount you can contribute to your IRA annually. These amounts are subject to change on an annual basis, but they do not always change. For more specifics on the program, I encourage you to speak to a qualified financial and/or tax professional.

Now Qualifying for the Mortgage

The mortgage company is giving you money so the responsibility is on you to prove to the lender that you are credit worthy. Your mortgage company will carefully analyze all aspects of your financial situation including: documented income (for most loan programs), money in the bank, and good credit.

Unlike qualifying for the Roth IRA, qualifying for a mortgage goes much better with more income. Mortgage lenders like to see more income coming in on a monthly basis than going out in debt payments.

Unlike Roth IRA questions, if you have mortgage program specifics, ask me a question.

Other Interesting Posts

Prime Lending Loan Officer Moves To Academy Mortgage is a post from: Arizona Mortgage Team

From time to time, I get great pieces of information that come across my desk.

Wondering why more and more great loan officers are choosing to work at Academy Mortgage?

Here is one great loan officer’s announcement to his clients recently of why he made the switch.

From: Michael McDermott
Sent: Thursday, July 08, 2010
Subject: IMPORTANT ANNOUNCEMENT – Changing The Way Your Clients Experience the Home Buying Process

Good afternoon everyone,

I urge you to read this email in its entirety; I guarantee that it will change the way you look at the lending industry and ultimately help you grow your business! It’s a bit lengthy but well worth the time it will take to read it.

I am very excited to announce that I have moved to another mortgage company. A move that was made with you and your clients in mind.

As many of you know, I have been with PrimeLending (formerly CTX Mortgage) for nearly 8 years now and I can honestly say that I enjoyed my time there. PrimeLending is a stand up mortgage company in an ever-changing market and I wish them the best.

However, just recently PrimeLending has struggled through some growing pains that have adversely affected the turn times that I expect from a company that stands behind my business and ultimately supports you and your client. After missing a few close of escrows over the past couple of months, I felt that a change was necessary.

So the question is, where did I move to and why did I move there? After meeting with several companies, I felt that Academy Mortgage had the most to offer your clients. This is where things get interesting; please read on.

Academy Mortgage is not the largest mortgage company in the valley but they are the third highest producing mortgage company in Maricopa County.

They offer absolutely everything in office…key phrase, in office, not in house!

I have personally met with each processor, underwriter, doc drawer and loan funder within Academy Mortgage and every single one of them is within walking distance from me.

The days of sending an email or waiting for a returned phone call from an underwriter are officially over!

This is absolutely crucial to the unprecedented loan processing system I am about to tell you about…

So here it is…Academy Mortgage offers a Guaranteed 10 Day Close!

Not only do they offer this but they stand behind it by offering the buyer $100 for every day after the 10th day for up to 5 days that their loan doesn’t close.

Year to date, Academy Mortgage has only had to pay two buyers a fee for going past the 10th day. This speaks volumes to me and I’m sure it does to you as well! If a company is willing to fork out some of their own money for the inconvenience of not closing in less than 10 days, I know they take your business seriously and they will do whatever it takes to get the job done on time.

As I mentioned earlier, there are several reasons for making this move but I will share the rest of those reasons over the next several days and weeks but I will tell you that Academy is VERY competitive in regard to interest rates and their processing fees are less than half of what you have been used to seeing.

I hope you are as excited as I am about this news and I look forward to working with you in a more efficient manner than ever before. I appreciate the business you have trusted me to handle over the past several years and I assure you this move is in the best interest of everyone involved; especially the most important one…the buyer.

As always, if you need anything from me, I can be reached at mcdermotthomeloans@gmail.com or directly at 602-694-5279. Have a great day!

Your Trusted Mortgage Planner,
Michael McDermott
Direct: 602-694-5279

Related Posts

• Shane Hollenback: Why Academy Mortgage Closes Loans In Ten Days
• Academy Mortgage: 3rd Biggest Lender in Maricopa County December ’09
• Close Your Mortgage In Ten Days

Jumbo Loan Rates Drop To 2003 Levels is a post from: Arizona Mortgage Team

Since the credit crunch that began a couple of years ago, jumbo loans have been harder to find.  Many of the lenders who used to specialize in jumbo loan financing are no longer around – and many of the larger lenders have tightened their guidelines – or just stopped lending money for jumbo loans all together.

But within the last few months, it seems that there have been a handful of lenders who are now offering jumbo loan financing – and just in time… interest rates on jumbo loans has dropped to levels not seen since 2003.

Courtesy WSJ

According to the WSJ:

Just a year ago, the average rate on a 30-year jumbo mortgage—a loan of more than $729,750 not backed by government-sponsored agencies Fannie Mae or Freddie Mac—was 6.86%, according to Greg McBride, a senior financial analyst at Bankrate.com. Now it is 5.48%—a rate that rivals those available during the height of the credit bonanza.

“In just the past couple of months, jumbo loans have really started to be competitively priced,” says Keith Gumbinger of HSH Associates, a publisher of consumer-loan information.

The recent low rates on jumbo loans has caused an uptick in refinancing activity – with some jumbo lenders reporting that jumbo refinancing up as much as 50% vs. what it was last year.

Refinancing a Jumbo Loan: Big Savings

Due to the large loan amounts of a jumbo loan, when you lower the interest rate by refinancing your jumbo loan, you can save a great deal of money.  Dropping your interest rate just a single percentage point can add up to over a thousand dollars – on a fairly “regular” jumbo loan product.

A simple example pointed out by the WSJ was where a homeowner with a 30-year fixed-rate $800,000 mortgage at 6.86% pays $5,247 a month. If he were to refinance at 5%, his monthly payments would be reduced by $952.

Jumbo Lenders in Arizona: We Are Here

Working with the right loan officer who knows what lenders are offering what terms on jumbo loan financing here in Arizona is key — there are a handful of different lenders offering jumbo financing and each one has different guidelines.

Contact us today to see if it is in your best financial interest to refinance your jumbo home loan here in Arizona — or anywhere else!

Related Posts

• Jumbo Loans: Do They Still Exist?
• Jumbo Mortgage Loans: The State Of The Market
• Arizona Jumbo Loans: 3 Common Questions

What is foursquare and Why Should I Use It is a post from: Arizona Mortgage Team

What is foursquare and why should I use it?

If you participate in social media, it is very likely that you have asked this question by now.

It may be that this is the first time that you have heard the actual term, but if you are on facebook or twitter, you have probably noticed someone’s updates that start with “I’m at …” or “I just became the mayor of …”.  That is foursquare.

If that is the case your next line of thinking is probably to ask …

“Why would someone care where I’m at?”

or

“Why do I want everyone to know where I’m at — so they can rob my house and/or stalk me?”

Regardless, it has captured your attention and, maybe, peaked your interest.

You're not gonna convince me!

So again: What is foursquare and why should I use it?

There are two main aspects to foursquare.

1) It is a game and a competition.

2) It has actual business application.  (In fact, I believe that it is one of the most powerful business-to-consumer social media tools.) Check out these foursquare articles by Justin McHood, SEO Maestro.

Here are a couple of videos that offer an introduction to foursquare.

If you are in Arizona, come to our foursquare swarm party next Friday and learn why and how YOU should use foursquare.  The aforementioned SEO Maestro, Justin McHood, will be leading a discussion on how Arizona real estate professionals can use foursquare for business.

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• Come Join The Academy Mortgage foursquare Swarm Party

Come Join The Academy Mortgage foursquare Swarm Party is a post from: Arizona Mortgage Team

New to Foursquare?  Been on Foursquare for a while?

The swarm badge is one of the crown jewels of Foursquare and one of those things that everyone wants to have.

Don’t have your Swarm badge yet?

Join us for our first-ever Swarm badge party!

We are going to have our first ever Swarm badge party and are handing out free beverages for those people who are on their way to getting their Swarm badge.

And if you already have your Swarm badge?

Join us anyway, and help all of those people who want to get a Swarm badge join the cool kids club.

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• What is foursquare and Why Should I Use It

Top Five Market Factors That Influence Mortgage Rates is a post from: Arizona Mortgage Team

Timing the market for the best possible opportunity to lock a mortgage rate on a new loan is certainly a challenge, even for the professionals.

While there are several generic interest rate trend indicators online, the difference between what’s advertised and actually attainable can be influenced at any given moment by at least 50 different variables in the market, and with each individual loan approval scenario.

Outside of the borrower’s control, the mortgage rate marketplace is a dynamic, volatile, living and breathing animal.

Lenders set their rates every day based on the market activities of Mortgage Bonds, also known as Mortgage Backed Securities (MBS).

On volatile days, a lender might adjust their pricing anywhere from one to five times, depending on what’s taking place in the market.

Factors That Influence Mortgage Backed Securities:

1.  Inflation –

According to Wikipedia:

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, annual inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.

A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.

As inflation increases, or as the expectation of future inflation increases, rates will push higher.

The contrary is also true; when inflation declines, rates decrease.

Famous economist Milton Friedman said “inflation is always and everywhere a monetary phenomenon.”

Public enemy #1 of all fixed income investments, inflation and the expectation of future inflation is a key indicator of how much investors will pay for mortgage bonds, and therefore how high or low current mortgage rates will be in the open market.

When an investor buys a bond, they receive a fixed percentage of the value of that bond as ‘coupon’ payments.

With MBS, an investor might buy a bond that pays 5%, which means for every $100 invested, they receive $5 in interest per year, usually divided up over 12 payments. For the buyer of a mortgage bond, that $5 coupon payment is worth more in the first year, because it can buy more today than it can in the future, due to inflation. When the markets read signals of increasing inflation, it tells bond investors that their future coupon payments will be less valuable by the time they receive them. So basically, this causes investors to demand higher rates for any new bonds they invest in.

2. The Federal Reserve –

As part of its 2008-2010 stimulus effort, the NY Fed spent almost all of its $1.25 trillion budget buying mortgage bonds. Many believe this strategy kept mortgage rates lower over a 15 month period.

The lending environment significantly changed between 2008, when the Fed began its mortgage bond purchasing program, and early 2010 when the market was left to survive on its own.

When the MBS purchase program was announced in November 2008, mortgage bonds reacted immediately and dramatically.

But at that time, there weren’t any investors willing to take a risk in buying mortgage bonds. The meltdown in the mortgage market and world economies lead many investors to shy away from the risks associated with MBS, which is why the Fed had to step in and basically assume the role as the sole investor of mortgage bonds.

However, loan underwriting guidelines drastically tightened up by 2010, which may create a little more confidence in the mortgage bond market.

3. Unemployment –

Decreasing unemployment will suggest that mortgage rates will rise.

Typically, higher unemployment levels tend to result in lower inflation, which makes bonds safer and permits higher bond prices. For example, the unemployment rate in March 2010 was at 9.7%, just slightly below its highest mark in the current economic cycle.

Every month, the BLS releases the Nonfarm Payrolls (aka The Jobs Report) which tallies the number of jobs created or lost in the preceding month.

The previous report indicated a loss of 36,000 jobs. Not necessarily a number that will move the needle on the unemployment gauge, but some economists suggest we need about 125,000 new jobs each month just to keep pace with population growth. So that negative 36,000 is more like negative 161,000 jobs short of an improving unemployment picture.

One flaw to pay attention to with unemployment rates is that the method of surveying fails to capture part-time workers who desire full-time employment, discouraged job seekers who have taken time off from searching and other would-be workers who are not considered to be part of the labor force.

4. GDP –

GDP, or Gross Domestic Product, is a measure of the economic output of the country.

High levels of GDP growth may signal increasing mortgage rates.

The Federal Reserve slashes short-term rates when GDP slows to encourage people and businesses to borrow money. When GDP gets too hot, there might be too much money floating around, and inflation usually picks up. So high GDP ratings warn the market that interest rates will rise to keep inflation concerns in balance.

Spiking GDP with flat/increasing unemployment begs some questions.

There are two major indicators that help provide more context:

1. Increases to worker productivity – employers are getting more work out of their current employees to avoid hiring new ones

2. Surges in inventory cycles – when the economy first started contracting, manufacturing slowed down to cut costs, and sales were made by liquidating inventory.

This is like a roller coaster cresting a hill, where one part of the train is going up, the other down. Eventually, the other side catches up, inventories are rebuilt by manufacturing more than is being sold. Both surges can throw off periodic reports of GDP.

5. Geopolitics –

Unforeseen events related to global conflict, political events, and natural disasters will tend to lower mortgage rates.

Anything that the markets didn’t see coming causes uncertainty and panic. And when markets panic, money generally moves to stable investments (bonds), which brings rates lower. Mortgage bonds pick up some of that momentum.

Acts of terrorism, tsunamis, earthquakes, and recent sovereign debt crises (Dubai, Greece) are all examples.

…..

Putting It All Together:

Economic data is reported daily, and some items have a greater tendency to be of concern to the market for mortgage rates. If you are involved in a real estate financing transaction, it’s helpful to be aware of these influences, or to rely upon the advice of a mortgage professional who is already dialed in.

Related Posts

• 8 Questions To Ask About Mortgage Rates
• Understanding Mortgage Lingo at Closing
• Is Refinancing Worth It?
• Should You Refinance? 4 Possible Reasons Why It May Make Sense

Financing On A Foreclosure, Short Sale or New Construction is a post from: Arizona Mortgage Team

Short sales, foreclosures and new construction homes all have caveats that need to be considered when pursuing financing.

If the guidelines and potential pitfalls are not properly understood, you could face delays in closing or potentially even a denied loan.

Short Sales & Foreclosures -

Short sales and foreclosures are everywhere. They often represent great value when looking to by a new home.

However, they also present a unique set of problems that homebuyers need to be aware of and plan for.

1.) Property Condition

Typically, when homeowners are facing foreclosure or looking to short sell their house, it means they lack the financial means to pay the mortgage or maintain the property.

A property in poor health can cause many financing issues for traditional financing.  FHA loans have specific rules requiring that the property is move-in-ready, unless you’re using a 203(k) Rehab Loan.

2.) Timing Challenges

Short sales typically come with awkward timeframes for purchase contract approval and loan closing.

Each bank is different, but approval can take anywhere between a week to 120 days.  As a general rule, the larger the bank the longer it takes to get short sale approval.

The lack of a set timeframe for short sale approval makes the timing of loan submission, rate locks and closing very challenging. You have your approval conditions cleared to close on time, just to find out that new appraisals, income, employment and asset verifications need to be updated by an underwriter to cover the most recent 30 days. Worst case, purchase contracts and legal documents may have to be re-submitted to a bank for an updated approval.

Either way, be prepared for a lot of redundant paperwork when purchasing a short sale property.

New Construction -

Home buyers looking to purchase new construction using FHA financing will have more hoops to jump through than those purchasing through conventional (Fannie Mae / Freddie Mac) financing.

If you want to use FHA financing to purchase new construction then you need to be aware of a number of issues that can trip you up.

First, you MUST have a certificate of occupancy (C.O.) certifying that the property is complete and move-in-ready. If you do not have this then you typically CANNOT go FHA. You’ll need a renovation loan, but a FHA 203K WILL NOT work.

You’ll need to employ the Fannie Mae HomeStyle for a property without a C.O.

In addition to the C.O. you’ll need some combination of the following documents as dictated by your lender and your unique situation:

• Builder’s Certification
• One Year Builder Warranty (10 YR Warranty may be required)
• Termite Inspection (when applicable)
• Septic Inspection (when applicable)
• Well Test (when applicable)
• Construction Permits

There are a number of factors which go into exactly what combination of documentation will be required to satisfy your lender and FHA, so it is best to work with an experienced loan officer when purchasing new construction with FHA financing.

If you plan on using conventional Fannie Mae / Freddie Mac financing you’ll still have hoops to jump through, just not as many as FHA. You’ll also have a higher down payment requirement and the credit qualification guidelines tend to be stricter.

Whether it be FHA financing, conventional financing or renovation financing, it’s important to have a qualified home buying team in place that can lead you through the maze of paperwork and negotiations.

Related Posts

• Short Sale, Trustees Sale, Loan Modification: Luck Is The Difference
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Arizona Home Inspections: What You Want To Know is a post from: Arizona Mortgage Team

Congratulations on finding a house!

You now have only a few days from when you signed the purchase and sales agreement to have a home inspection.

Chances are your real estate agent made the offer contingent upon a satisfactorily home inspection and obtaining mortgage financing.

What Is A Home Inspection?

According to Wikipedia, a home inspection “is a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. This is usually conducted by a home inspector who has the training and certifications to perform such inspections.

The inspector prepares a written report, often using home inspection software, and delivers it to a client, typically the home buyer.

The buyer uses the knowledge gained from the home inspection to make informed decisions about their pending real estate purchase.

The home inspector describes the condition of the home at the time of inspection but does not guarantee future condition, efficiency, or life expectancy of systems or components”.

It is not the job of the home inspector to estimate market value or to let you know you got a good deal on the price of the home. This is done typically through an appraiser.

Why Have A Home Inspection?

Buying a home is the single most expensive investment many of us will ever make.

A home inspection is designed to provide the home buyer with the information they need to make a more informed decision about the property.

The home inspection report should clearly identify any potential significant defects, and give the home buyer a realistic estimate of the costs of repairs so that they can be negotiated in an updated purchase contract.   An inspection should also highlight any areas or features that need to be addressed in the near future which may be reaching the end of their useful life span.

What Do Home Inspections Cost?

The home buyer generally has to pay for the inspection up front, but there may be an agreement in the purchase contract for the seller to reimburse those fees at the time of closing.

Home inspection fees vary from state to state. An estimated cost of a home inspection is around $250-$400, depending on what services have been selected, as well as where the house is located.

In addition to the general home inspection, there are many common services that home buyers also choose to have preformed when having a home inspection. These additional services are not typically included in the general home inspection fee.

Optional Home Inspection Services:

• Wood destroying pests
• Radon gas
• Lead base paint (homes built before 1978)
• Asbestos
• Carbon monoxide
• Pools, spas, barns, or other external structures
• Docks and sea walls
• Underground sprinkler systems
• Septic

Once the inspection is completed, the buyer generally has seven days to put in writing the “request for repairs” required by the seller to make prior to taking possession of the home.

The sellers may not be obligated to make every repair, so make sure you read the purchase and sales contract carefully to make sure the agreement does not state that the home may be sold in “as is” condition.

The Home Inspection Process:

A home inspection should include examination of all major systems, including the plumbing, heating, air conditioning, electrical, and appliance systems.

The home inspector will also look at the structural components, such as the roof, foundation, basement, exterior and interior walls, chimney, doors, and windows.

It is recommended that the home buyer and/or representing buyer’s agent be present at the time of the home inspection.

A typical home inspection can take between 1 ½ hours to 3 hours, depending on the size and condition of the home.

Remember you are paying for the home inspection. Follow the home inspector around and ask questions about the condition of your home and how to maintain it.

Related Posts

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The Players Helping You Buy Your Home is a post from: Arizona Mortgage Team

When you buy a home, there is a team of players on your side helping you through the transaction — it is a team sport since there are so many tasks, important timelines, documents and responsibilities that all need special care and attention.

Besides working with a professional team that you trust, it’s important that the individual players have the ability to effectively communicate and execute on important decisions together as well.

Real Estate Agent -

A Realtor® is a licensed agent that belongs to the National Association of Realtors®, which means they are pledged to a strict Code of Ethics and Standards of Practice.

A few of the important roles your agent performs:

• Determine your home buying needs
• Define your property search criteria – neighborhoods, school districts, local amenities…
• Provide insight on market trends and property values
• Negotiate purchase contracts
• Pay attention to due-diligence periods and other important timelines
• Articulate inspection and appraisal reports
• Professionally estimate fair market value on listings

A common misconception of many First-Time Home Buyers is that hiring a real estate agent will end up costing more money.

However, the typical arrangement in a purchase transaction is for the seller to cover the buyer’s agent commission.  In some cases where a new home developer or For Sale By Owner is listing a property and offering a lower price to deal direct, it is still a good idea to have an agent in your corner to protect your financial and investment interests.

Considering that some buyers may see 5-7 real estate transactions in a lifetime, compared to an agent that closes the same amount in a month, it is obvious to see that there is a big advantage to having the ability to rely on that experience when your home and security is on the line.

Mortgage Professional -

A mortgage professional (loan officer, mortgage planner, loan consultant, etc.) is the glue that holds the entire transaction together (biased comment).

In addition to establishing the purchase price and monthly payment a borrower can qualify for, the mortgage team will also need to communicate with all of the other players on the home buying team throughout the entire process.

To highlight a few details your mortgage team is paying attention to:

• Initial pre-qualification to determine purchase price / loan amount
• Explain all loan program options that may fit your investment goals
• Collecting / organizing loan approval documents
• Watching economic indicators that influence daily rate changes
• Locking rates
• Communicating with title / escrow officers
• Submitting loan package to underwriting departments
• Updating disclosure / GFE paperwork within proper time frames
• Following funding through the final recording
• Tracking inspections, insurance and other lending requirements
• Post closing rate / program monitoring (although that might just be us)

Insurance Agent -

The lender in any mortgage transaction will require a homeowner’s insurance policy (hazard insurance).

This policy protects the property in the case of fire, theft or other damage (except flood or earthquake, those are separate policies and may be optional).

If it is determined that the property that you want to purchase is in a flood zone, flood insurance is not optional, it is mandatory.

The flood zone determination will be done with a “flood certification” from a third-party provider.

Title and Escrow -

It is possible to have a title company and an escrow officer work for different companies.

Also, some states use closing attorneys and there are still a few states where they use abstract of title instead of title insurance.

In most purchase transactions, the seller has the option of choosing the title company.

The title and escrow officers are often thought of as the same role, but in reality are quite different positions.

The title officer takes care of all issues that have to do with the title (also referred to as the deed) of the property.

The lender may require a title insurance policy guaranteeing that the title is free and clear of all liens except those being filed by the lender.

Escrow takes care of receiving, signing, and notarizing the final loan documentation, as well as collecting the other paperwork associated with the home sale.

The escrow officer is a neutral third party that makes sure no money is transferred until all conditions for each side are met.

The money management of an escrow company include:

• Real estate commissions
• Funds to mortgage company
• Homeowner’s Insurance Premiums
• Property Taxes
• HOA Dues and other third-party fees

Finally, the escrow officer will see that you are properly recorded as the new owner with the county.

Home Inspector -

When you have found the home that you like, it is a wise idea to have a professional take a look at the home to see if there are any issues with the property that could be a problem in the future.

Even though some buyers have an “Uncle Joe” who has owed several homes and knows what to look for, a certified Home Inspector can be money well spent.

They will look at the functionality of the home to make sure the electrical, plumbing and physical aspects of the home are strong, which will help the buyer make an educated decision about following through with the purchase, or renegotiating certain aspects of the contract.

Keep in mind, the home inspector and appraiser have different jobs. An appraiser determines value, while the inspector looks for structural problems, defects or maintenance issues.

The inspector is doing this strictly for the buyer’s sake. The lender is not concerned if a faucet has a minor leak as long as the property is worth the sales price. Therefore, the lender generally does not require an inspection unless the purchase contract requires one.

So, an inspection is not required, but it is recommended. As a matter of fact, one of the forms in an FHA application package is one that says “For Your Protection: Get a Home Inspection.”

Appraiser -

While the appraiser is typically never seen by the home buyer, an appraisal is obviously an important component of a home purchase transaction.

The appraiser will conduct an analysis of the property to determine the current market value. The bank will always require an appraisal, and in some cases need a second opinion of value if the program guidelines or loan amount require it.

Appraisers compare the sales prices of similar properties sold in the neighborhood and surrounding areas with the subject property.

This can be a very tricky process, especially if there are few properties to choose from, or if there is an overwhelming amount of foreclosures and short sale listings.

Now, since two homes are rarely identical, the appraiser has the difficult job of trying to compare apples to apples; sometimes red delicious to yellow delicious, or sometimes Fuji to Winesap.

When done, the estimate of value is given. If that value is below the purchase price, then negotiation may take place. If it is at or above the purchase price, we are ready to go forward.

Related Posts

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• How To Value A Property That Is Not Yet Built
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