In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 5%+ over the next twelve months. One major challenge in such a market is the bank appraisal.
If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.
Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth, and an appraiser’s evaluation of that same home.
Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges anyone looking to buy or sell in today’s market to remember the impact of this challenge:
The chart below illustrates the changes in home price estimates over the last 12 months.
Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, meet with an experienced professional – 708-529-5839 who can guide you through this and any other obstacles that may arise.
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How to Read Your Credit Report
Do you know your current credit score? Before you even look at properties, if you are taking out a home loan, you will need to obtain a loan pre-approval. There are various factors that determine what you can afford and your credit score plays a big factor. Some buyers think they can afford more, or that their credit score is better than it is, so it is a good idea to obtain your credit score as soon as possible.
Learn more about your credit report from this Time video:
Quick Tips for Getting Started on Your Home Purchase
Buying a home can be a complex process, but it doesn’t have to be. With a little preparation, you can save a lot of time and hassle by having all of your documents ready when your mortgage professional needs them.
To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one). They will also need information regarding all of your debts and assets.
In order to expedite the paperwork process, start gathering the following items:
– Most recent paystubs for one month.
– W2s from the last two years.
– Signed copies of your last two years’ tax returns, including all schedules that were filed.
– Homeowner’s insurance company name and number.
– Most recent bank statements for two months.
– Most recent statements from any retirement and investment accounts for two months.
What costs are involved?
Within 3 days of your application, your Loan Officer must provide you with a good faith estimate of closing costs. Along with any down payment, you will have to pay closing costs at your closing as well. This is a brief rundown of some of the fees that could be associated with your new mortgage:
– Application/Processing Fee – Charged by the loan officer to process your loan application.
– Appraisal Fee – Charged by the appraiser to determine the current value of the property.
– Closing Fee – Charged by the closing agency (escrow, attorney, title) to ensure the close of your transaction.
– Credit Report Fee – Charged by the credit reporting agency to provide your credit report to your loan officer and/or lender.
– Title Search/Title Insurance Fees – Charged by the title company to ensure the property is free from liens or title defects.
– Origination Fee – Paid to the originator to obtain a lower interest rate. This is usually expressed in the form of points. One point equals 1% of the loan amount.
– Discount Points – Paid to the lender to secure a lower interest rate.
– Miscellaneous Fees – VA and FHA loans may have other fees associated with them.
– Private Mortgage Insurance (PMI), document preparation, notary, recording and tax service are other fees which may fall under this category.
Let us help you evaluate your personal situation and assist you in finding the loan program that works best to meet your individual goals and needs. This is brought to you by: Pamela Jackson, Mortgage Banker, PHH Home Loans
Phone: (630) 881-4378 Fax: (630) 757-6622 License:NMLS#346456 [email protected]