Appraisal Standards Change And This WILL Affect Your Next Mortgage

Big Changes in Conventional Appraisal Standards Began September 1

Appraisals continue to be the knothole in a lot of real estate transactions. Underwriters and lenders struggle to make sense of the hodge-podge of commentary and adjustments on appraisals as well.

In an attempt to provide consistency and accuracy to the appraisal process, Fannie Mae and Freddie Mac have implemented the UMDP (Uniform Mortgage Data Program) and, ready or not, it rolled out on all appraisals completed on or after September 1, 2011. (FHA has issued guidance that they will follow suit with all case numbers issued January 1, 2012 and after.)

Obviously, the appraiser's job changes with this. But what does this mean to the rest of us - REALTORS, Sellers, Buyers, Refinancing Homeowners? 

While it is the most common source used for information gathering on comparable sales and currently, the MLS may or may not provide all of the data that appraisers will now be required to report. Therefore, they will have to call the listing REALTOR to get it. This could slow things down a bit, and prompt responses by all will be very important to getting appraisals completed on a timely basis.

Some of the significant data changes include the way the following items are reported:

• Days On the Market
• Offering Price
• Sale Type
• Financial Assistance
• Site Area
• Property View
• Property Style
• Condition of the subject property
• Sale Date of Comps
• Quality of Construction (This is one of the biggest changes being made!)
• Basement and Finished Rooms Below Grade
• Appraisal Management Company Reporting

Home sellers will need to help their REALTOR with the gathering of some of the above data points. They need to make known what improvements, especially kitchen & baths, have been made and the costs of those improvements. 

Home buyers and home owners taking advantage of the current rate market to refinance their home may face a longer lead time as these changes are put in place.

On a final note:  Despite all of these changes, nothing takes the place of the Underwriter’s review in the process. It is ultimately the underwriter who is held responsible for insuring that the appraisal is acceptable and supports the value. There is a process that takes place once the appraisal is in that tests the appraiser’s result against an automated valuation model for QC purposes. If this process detects that there are other, potentially closer or more recent comps, it will red flag the appraisal data. The underwriter may then have to further investigate value through the use of a review appraisal or by getting additional information from the current appraiser. So, it’s never over these days until we have a firm commitment from the Underwriter. At Fairway, we have in-house underwriting so we can reach out if needed.

Note to REALTORs: We have developed a Cheat Sheet for our REALTOR partners to use. It will be a great supplement to your listing appointments and your work in writing purchase agreements.

Please contact me to learn more about the high points of the specific changes to the appraisal process and how Fairway can help keep your transactions moving smoothly to closing.

Tim Epps

Sr Loan Officer
918-528-4010

It All Started with a Haircut...

(In mortgage lending and finance, a haircut refers to a discount taken from the par value of assets being used as collateral. For this story, its traditional meaning is used.)


Last August, the young lady cutting my hair and I were talking about weather, sports, life, etc. She told me she had moved here from Iowa to go to school. She and her parents missed each other and (unlike this clip) yada, yada, yada, wanted to be able to see more of each other. I told her that if they wanted to buy a home here, that I could refer a couple of REALTORS^® who could help them find a home when the time was right.
Her mother called me the next day and we talked about how to get approved for a mortgage for a second home. Over the next 6 months and through difficult weather, they made various trips to Tulsa to see homes (and their daughter) with Cindy Roberts of Chinowth & Cohen Realtors. 


Right to Privacy laws and my responsibilty to my clients prevent me from more detail, so... yada, yada, yada... They closed today on a home here in Tulsa!


The moral of the story is you never know who will be put in front of you and what there needs are unless you are available and open. Your next opportunity may come from anywhere, even a haircut.
If you are thinking about buying a home in the Tulsa area (or anywhere in Oklahoma), call me. I can help with long and/or short range planning on how you can get the best loan for a home here. 


Tim Epps
Sr. Loan Officer
Fairway Independent Mortgage Corp
918-528-4010
tim@myfairway.net

Renting Now? Start Paying Yourself "Rent"?

If you are renting a house or apartment now, take a few minutes to review this scenario.

Your rent expense of $800, $750 for rent & $50 for renters' insurance (you are insuring your property, aren't you?), will easily afford you a home of your own. The net payment on an FHA 30 yr fixed-rate mortgage for a  $125000 home is only around $727 on the attached example. You can download a copy of this scenario here.

[Please note that I am always conservative with my projections. I have projected a rate slightly higher than today's market rate and also accounted for the increase in the FHA mortgage insurance premium which will take effect April 18]

Instead of paying someone else rent of almost $50000 over the next 5 years, why not pay yourself? When the tax benefits are considered, your net payment over the same 5 year period is less than $44000. Also, you will have built up almost $10000 in equity in your new home. The benefit grows even greater over more time.

Call me to get a customized scenario for you and ask how you can get on the Path2Buy your new home. Whether your looking now, or waiting 5 months or 5 years, it is important to understand that you will be ready when your time is right.

Tim Epps
Sr. Loan Officer
Fairway Independent Mortgage Corp
918-528-4010
tim@myfairway.net

You Can't Do Well in the Tournament without a Good Coach

It is NCAA Tournament time. Sixty-eight teams are rewarded for a season of hard work and planning with a chance to win the men's basketball national championship. These teams could not be where they are without executing the plan developed by their coach.


Why should a home buyer expect to go it alone? Many people start to research buying a home by going online to search for homes. They have no idea what they can afford or how their credit stands. Without a good coach and team around them, they have no idea if the information they are hearing in the media is correct or even applies to them or our market in Oklahoma.


With all of the game plans possible to attach a home search, how do you know which strategy will ensure your success and possibly shorten your path to the championship?


As the Certified Path2Buy for the Tulsa area, my job is to help you understand what it takes to be approved for a mortgage and prepare for home ownership. I analyze your income, credit, job security and other factors to get you into the home you are looking for. I give you the information to dis-spell the myths and clarify the media reports about the mortgage market. This is done without cost or obligation to you.


Every serious player starts the season with a game plan to win a championship. They don't start by saying, "I'll shoot better this year" or "I know I don't rebound well, but I'll work on it later in the season."


Why would you say, "Someday, I will buy a house" or "Once my credit gets better..." or "Once I save some money for a down payment"?


It's okay to want to own a home. It's not okay not to have a plan to get you there.


Consider this my request for an interview to get the job as your Path2Buy head coach.



Tim Epps
Sr. Loan Officer
Fairway Independent Mortgage Corp
918-528-4010
tim@myfairway.net

What Do You Want to Know About Mortgages?

I am turning over the content of my next few posts to answering your questions.

What do you want to know about mortgages? This is your chance to get answers in plain English.

Do you want to know about:

• Qualification
• Rates
• Loan types & terms
• Rent vs Buy
• How to select a mortgage professional/REALTOR, etc.
• Should I refinance
  

I will provide straight-forward answers to your pressing mortgage questions. Send an e-mail to tim@myfairway.net or call me with your question. Your contact information and any personal identifying information will be kept confidential.

Tim Epps
918-528-4010
tim@myfairway.net