Tag Archives: appraisal

What If The Value Of The House On The Appraisal Is Lower Than The Sales Price ?

Unless you plan on buying a home in CASH and just love it to death.  More than likely you are getting a loan.   It does not matter if you are getting a first time home buyer loan or a loan for investment property.  You will have to get an appraisal, there is no whats or buts.  Normally this is the cost that the buyer will have to bear, and if it has been some time since you have bought a home lets say in the last 3-5 years you will find that the appraisals are a bit more expensive now.   Usually you can look to paying somewhere between $450.00 – $500.00 for an appraisal.

But anyways you will have to get an appraisal, part of getting an appraisal is really for your protection as well as the bank.   The appraiser will not only write up a report on what they think the value of the home you are planning to buy but also to see that there are no safety issues with the home.  For example that it is up to code and the roof is not falling apart, and in California that there is a working smoke detector as well as a carbon monoxide detector.

So lets say the home is for sale for $300k but the appraisal comes in at $280k.  The a couple of things has to happen.  Because even though you may be approved for a $300k loan the bank will only lend up to the appraised value.   So that means if you really want the house you will have to put up an additional $20k along with the down payment you were already going to put down.

Or your agent will send in usually an addendum to reduce the home to the appraised value.  This does not mean that it will automatically be reduced the seller will still have to agree to it.  The seller can say no way this is what I want and put back on the market if you do not agree to it.  Or you can go back to negotiations maybe meet halfway.

Something to just to keep in mind that if you were getting a FHA loan that the value on that home sticks with for 120 days or 4 months basically.  Does not matter what bank you go to when you get an FHA loan it is assigned a case number.  Now if you were getting a conventional and you really think the house is worth more you can try a different lender.  If you were using a broker he will just try a different source if you were using a bank you may have to start the process all over again at a different bank.  The file does not carry over when doing a conventional loan.

 

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Remove PMI (pmi insurance) easier than you think.

PMI Insurance (private mortgage insurance) is added to the monthly payment of many home loans.  PMI insurance helps protect  lenders from the costs of foreclosure. PMI insurance provides what the equity of a higher down payment would provide to cover a home lender’s losses in the event of foreclosure.

The Homeowners Protection Act of 1998 establishes rules for automatic termination and borrower cancellation of Mortgage insurance on home mortgages . These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government insured FHA or VA mortgages.

For home mortgages signed on or after July 29, 1999, your PMI must – with certain exceptions – be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your loan payments are current. Your PMI insurance also can be canceled, when you request – with certain exceptions – when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current.

One exception is if your loan is “high-risk.” Another is if you have not been current on your loan payments within the year prior to the time of removal. A third is if you have other liens on your property. For these mortgages, your PMI insurance may continue. Ask your lender for more information about these requirements.

Did you know, even if you have not paid down your loan to 78% of your original purchase price, you can still ask the lender to remove this PMI insurance and the payment they charge you monthly?  Many home lenders will remove your PMI mortgage insurance when the value of your home has increased, your equity is above 20% and you have two years of a good payment history.  You will have to provide the mortgage lender with a home appraisal to verify that your equity is above 20%. 

Do this to get rid of your PMI…

1.         Contact your lender.

a.         Ask them to send you the procedures and requirements to cancel your Mortgage insurance.

2.         Order a home appraisal.

a.         If you feel you qualify for your lender’s requirements, then order a real estate appraisal from a licensed or certified appraiser.

3.         Request to remove your PMI.

a.         Providing you meet all home lender’s requirements.

b.         Providing the appraised value indicates you have 20% or more equity (appraised value minus loan balance equals equity)

…Then start saving money!

 For more information, check out removepmi.net

Leeper appraisal services are real estate appraisers and provide home appraisals for PMI removal, estate appraisal and appraisals for mortgage lending.

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