Must I go Through the Appraisal Process?

Yes, you must. Whenever money is loaned against a property, the lender will want to ensure the property is actually worth what you are paying for it.

This is so that if you were to default on the mortgage, they would have a reasonable idea of what they could expect to get for it if they had to sell it. They use an appraisal to determine the value.

An appraisal is ordered after a contract is signed and accepted on a property, and you – the buyer – will pay for it upfront.

Your lender will use their appraisal management company (AMC) to perform the appraisal. A federal law prohibits lenders and appraisers from having direct contact with one another, so the AMC will assign a specific appraiser to perform the work.

The appraisal itself is completed in two parts. The first part is done online by pulling data for similar properties that have sold recently in the same area – these are called comparables, or comps. The data from comps is compared to the information on your property, called the subject property.

Because no two homes are exactly the same, information from the comps is adjusted to fit the subject property. Details that may need to be adjusted include number of bedrooms, number of baths, lot size, etc.

The second part of the appraisal is a physical inspection of the property. In this part, the appraiser must establish whether the subject property is in the kind of condition that the lender expects it to be in.

Once this has been done, the appraiser writes up the report and sends it to the lender. Regardless of whether you purchase the property in the end, the buyer has the right to obtain a copy of the appraisal, as you paid for it.

If you need additional information on the appraisal process, contact your mortgage professional.

Freddie Mac Offers Easy Steps to Homeownership

f you are looking for an excellent property that offers exceptional financing terms, you may want to look into the HomeSteps programs.

Homes purchased through this program have been taken back in the foreclosure process by Freddie Mac. The financing package, available in many states, includes a low down payment, usually 5%, and no mortgage insurance. The fact there is no mortgage insurance can save you thousands of dollars in premiums.

Financing: Financing is similar to the process you would go through in the regular mortgage process. However, the process may take somewhat longer. If you are planning to purchase a HomeSteps property, you need to demonstrate proof of qualification, which your lender will provide. You also need your own real estate agent, as well as an experienced real estate attorney.

Well-cared-for homes: As you won’t be required to get an appraisal, you can also save money. However, you should ask your agent if you have the option of a home inspection; as with any property you purchase, it’s always good to know what you’re getting in to. That said, Freddie properties are generally very well-cared-for and often move-in ready; Freddie even hires outside services, including landscaping, to maintain properties’ curb appeal.

One word of caution, Fannie Mae’s HomePath program, which was similar to HomeSteps, was discontinued on October 6, 2014, as Fannie felt special incentives were no longer needed. If you are interested in HomeSteps, consult your mortgage professional to ensure the program is still in effect.