How Does A Home Appraisal Work?

How Does A Home Appraisal WorkWhether you’re a buyer or a seller, a home appraisal is a critical component of the home selling process. An appraisal is also required in situations where a home is gifted to a family member, so it’s important to have a clear understanding of what it entails. 

What Is A Home Appraisal?

A home appraisal is an unbiased estimate of a home’s fair market value conducted by a professional appraiser. All 50 states require that appraisers be licensed and/or certified and demonstrate knowledge of the specified area. The purpose of a home appraisal is to determine whether the home’s asking price is appropriate based on its location, condition, size, and amenities.

Appraisals are done in almost all purchase, sale and refinance transactions, with the exception being when a buyer uses cash and doesn’t have a mortgage. They are typically coordinated by the mortgage lender to ensure the loan isn’t too large in relation to the home’s value.

How Are Appraisal Values Determined?

Licensed appraisers calculate a home’s value based on comparable recent sales in the area and current market trends. Factors such as the home’s floor plan, size, number of rooms, and any upgrades or amenities are also considered. Upgrades and amenities could include things such as a pool, an expanded garage, or a remodeled kitchen.

The appraiser conducts a visual inspection to appraise a home, noting the home’s condition and whether any major repairs are needed. It’s important to note that this differs from a home inspection in that the appraisal assesses a home’s value, while an inspection assesses its condition. In an inspection, the home inspector actually makes repair recommendations. During an appraisal,the appraiser notes any necessary repairs but does not make recommendations.

When Is An Appraisal Done?

After an offer is made, an appraisal is one of the first steps in the closing process. Everything will proceed as planned as long as the appraisal value comes in at or above the price in the contract. If it appraises for below that amount, closing can be delayed or canceled altogether.

What Does A Home Appraisal Cost?

Costs vary based on the mortgage type, but a home appraisal generally costs $300-500. It is almost always paid for by the borrower as part of closing costs.

Staying Social While Distancing

Staying Social While DistancingFor many months, the COVID-19 (Corona-virus) pandemic appeared to be a problem that only existed in foreign lands. Now, this virus has arrived on the shores of the United States and has disrupted jobs, hospitals, and lives. People are being asked to practice social distancing measures to curtail the spread of the virus while some parts of the country are being asked to stay home entirely. The good news is that there are still ways for people to remain social while being safe. 

Get Outside Safely

One of the first tips that people need to remember is that they are still allowed to go outside. Even in states that are telling people to shelter in place, people are still allowed to go outside and get some fresh air. This is a great way for people to not only stay in shape but many other people are doing the same thing. Therefore, this is an opportunity for everyone to get some vitamin D, run into a few neighbors, and socialize (while practicing safe social distancing measures, of course!).

Get The Family Involved In The Cooking Process

Next, given that many restaurants are going to be closed during this crisis, take this opportunity to get the entire family involved in the cooking process. Take a few minutes and bake some cookies with the kids. Ask them for ideas on what to cook for dinner. This is a great opportunity for children to learn about something new, given that they are going to be home from school for a while.

Use Video Chat Applications

Finally, remember that there are still ways for people to stay in contact with one another through video chat apps. These include FaceTime and Skype. Even though that trip to visit the grandparents was canceled, this is still a great way to stay in touch. Furthermore, this can be a way for families to check in with each other and make sure that everyone is doing alright.

Stay Social During The Pandemic

In the end, it is going to be a challenging few months; however, with the right strategies, the country is going to come out stronger on the other side. Put these tips to use and stay social during the pandemic! 

Disruptive Technology And The Real Estate Market

Disruptive Technology And The Real Estate MarketRecent advancements in technology continue to disrupt the real estate market. This includes the use of “Big Data” for data mining, artificial intelligence combined with machine learning, augmented and virtual reality, use of drones, blockchain technology, and the ongoing deployment of 5G.

The Use Of Big Data

Consumers have access to more information about real estate market conditions because of the collection and online presentation of the results of data mining “Big Data.” For example, it is easy to learn if a market is a buyer’s or a seller’s market by searching for the median number of days a house will be on the market before it sells in a certain area.

Artificial Intelligence And Machine Learning

Artificial intelligence (AI) combined with machine learning works with data mining of Big Data to make the information more actionable. Real estate investors can set up search parameters to look for the exact type of properties that they want and let the AI software do the grunt work to find the investment opportunities.

Machine learning allows AI chatbots to learn correct responses to inquires from the questions previously asked. AI chatbots provide customer service 24/7 non-stop to handle leads and make sure to neglect no one.

Augmented And Virtual Reality

Virtual reality allows interested buyers to do a digital walk-through of a property and be able to imagine what it looks like. Augmented reality is used by some REALTORS® to digitally stage a home, listed for sale, by using digital furniture in the virtual walk-through. This furniture is selectable based on a potential buyer’s taste. Staging a home digitally is far less expensive than using real furniture.

Use Of Drones

The exciting use of drones captures a beautiful fly-over and fly-around a property to show what it looks like on the outside and its surrounding environment.

Blockchain Technology

Blockchain technology, which is the type of software used for cryptocurrency, will have an application for digital verification and signatures in real estate transactions. This technology allows the reduction of all the massive paperwork for a title closing to a secure, digital format.

Deployment Of 5G

The 5G mobile technology allows the connections to a smart device that can broadcast information about a property listing to the local environment. This allows for digitally-assisted home viewing, which is responsive, interactive, and for a potential buyer to ask questions about a property.

Summary

Technology continues to make the search experience when buying more effortless and more pleasant. The promising news for REALTORS® is that even though around half of the homebuyers find a property online that is of interest, the vast majority (93%) use a real estate agent to close the transaction. Technology is making the process easier; however, smart buyers still work with a qualified real estate agent to buy a home.

If you are interested in buying a new home or refinancing your current property, be sure to contact your trusted home mortgage professional.

How Do Mortgage Points Cut Your Interest Costs?

How Do Mortgage Points Cut Your Interest CostsThose who are involved in the real estate industry likely know that mortgage rates are at an all-time low. At the same time, nobody wants to pay more for a house than they have to. Some of the most important factors that dictate how much someone is going to pay for a house include points and interest rates.

While interest rates are incredibly low, there is a way to make them lower. This comes in the form of points. This is additional money that is paid upfront to get a better deal over the life of the loan. Even though this sounds great in theory this might not be the best option for everyone. There are a few important points to keep in mind.

What Are Points?

Often, the lender is going to offer someone the option of paying points when the mortgage is created. This should be viewed as paying interest on the loan in advance. In exchange for paying interest upfront, the lender should offer to lock in a lower interest rate over the life of the loan. The more points someone purchases, the better the rate.

For example, paying one point of interest may reduce the interest rate on the loan by 0.25 percent. This is standard. Take, for example, a $200,000 home. One point on this loan would cost someone about $2,000. In exchange, the interest rate on the loan is going to drop by 0.25 percent. This might be worth it in the long run.

Discount Points

Other people might have heard about something called discount points. This is another term for mortgage points. The two terms can be used interchangeably. Typically, people can purchase as many discount points as they want, up to the limit of the lender. 

An Overview Of Origination Points

Another type of points that people might have heard about is origination points or origination fees usually expressed by a percentage of the loan amount. These are points that are charged to the borrower to cover the of processing, or originating, the mortgage loan. These fees are included in the total closing costs disclosed when you apply for your home loan.

Origination points are almost always negotiable. The number of origination points that a lender is going to charge can vary from place to place. Therefore, always be sure to ask about origination points. There might be a way to get these points waived, saving the borrower a significant amount of money.

As always, your trusted mortgage financing professional is the best source of information for your personal mortgage situation.

What’s Ahead For Mortgage Rates This Week – April 20th, 2020

What’s Ahead For Mortgage Rates This Week -March 9th, 2020Last week’s scheduled economic reporting included readings on home builder sentiment, housing starts and building permits issued. Weekly reports on mortgage rates and initial jobless claims were also released

NAHB: Homebuilder Confidence Crashes as Coronavirus Impacts Construction

Homebuilder sentiment concerning housing market conditions dropped significantly in April according to the National Association of Home Builders Housing Market Index.

April’s index reading of 30 was the largest month-to-month drop recorded since the Housing Market Index started 30 years ago. Homebuilder confidence was 42 points lower than the March reading of 72 and was the lowest reading since June 2012.

Index readings over 50 indicate that most builders are confident in current market conditions.

Sub-index readings also fell considerably in April; builder confidence in current market conditions dropped from 79 to 36. Builder confidence in housing market conditions over the next six months dipped to an index reading of 36 in April as compared to the March reading of 75.

Builder confidence in buyer traffic in new single-family housing developments dropped from an index reading of 56 in March to a reading of 13 in April; builder sentiment readings about buyer traffic don’t usually exceed an index reading of 50 but had done so in recent months. Homebuilders also said that federal assistance for builders wasn’t distributed consistently;  Builders need federal financial help to maintain payrolls and other expenses.

Commerce Department readings on housing starts and building permits issued dropped in March. Housing starts progressed at a seasonally-adjusted annual rate of 1.216 million starts as compared to February’s pace of 1.564 million housing starts.

Analysts expected a March reading of 1.290 million housing starts. Building permits issued were lower at 1.353 million permits issued as compared to 1.452 million permits issued on an annual basis in February. Analysts expected a March reading of 1.250 million building permits issued.

Mortgage Rates Near All-Time Lows as Initial Jobless Claims Slow

Freddie Mac reported mixed results for mortgage rates last week; rates for 30-year fixed-rate mortgages averaged 3.31 percent and were two basis points lower. Rates for 15-year fixed-rate mortgages averaged 2.80 percent and were three basis points higher. Rates for 5/1 adjustable-rate mortgages fell by six basis points and averaged 3.34 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

First-time jobless claims were lower last week but remained much higher than readings reported before the COVID-19 outbreak. 5.25 million initial claims were filed, which surpassed expectations of 5 million new claims filed. 6.60 million claims were filed the prior week.

What’s Ahead

This week’s scheduled economic releases include readings on new and existing home sales, consumer sentiment and weekly reports on mortgage rates and new jobless claims.