HOW AN APPRAISAL COULD AFFECT YOUR MORTGAGE REFINANCE RATE AND COSTS

Refinancing your mortgage may help you lower your interest rate and monthly payments, or cash out some of your home equity. Your lender may require an appraisal as part of the refinancing process. The result can affect the new interest rate you will qualify for, along with other costs.

What is an Appraisal?

An appraisal is an inspection conducted by an independent professional to assess the current market value of a house based on its size, amenities and condition. An appraiser compares the home in question to similar properties in the same area that have been sold recently.

Each lender decides whether to require an appraisal to refinance. Some government mortgage programs offer streamlined programs without an appraisal. If your lender requires an appraisal, you will have to pay for it. The fee is typically several hundred dollars.cc

How Can Your Home’s Appraised Value Affect Your Refinancing Options?

The current market value of your home can affect your loan-to-value ratio, which is a percentage calculated by dividing your mortgage balance by your home’s appraised value. A lender will consider the LTV ratio, in addition to your credit score and debt-to-income ratio, to set your interest rate.

If your home’s value has increased since you bought it, you may qualify for a lower interest rate. If your home’s value has fallen, however, you may not be able to qualify for a competitive interest rate because lenders consider borrowers with low amounts of equity riskier than borrowers with more equity. If the appraised value of your house is less than your mortgage balance, you may not be able to refinance the loan at all.

How Can the Appraisal Affect Private Mortgage Insurance?

If the LTV ratio is 80 percent or higher, you may need to pay for private mortgage insurance, which can cost hundreds of dollars per month. If you have been paying for PMI, your home’s value has increased since you bought it and you have more than 20 percent equity, you may be able to eliminate PMI and save money each month.

If you have less than 20 percent equity and don’t want to pay for PMI, you might be able to avoid it by choosing a cash-in refinance. You could pay down your mortgage balance to reduce your loan-to-value ratio, eliminate PMI and get a lower interest rate.

How to Prepare for an Appraisal

Given the importance of your home’s appraised value, you want to present your house in a positive light. You should make sure your home is clean and free of clutter so the appraiser can easily see all the important features. You don’t need to make major improvements before an appraisal, but you might want to apply a fresh coat of paint and make some inexpensive repairs.

Source: RIS Media

Mortgage Market Update, July 2020

This month’s market Primary Mortgage Market Survey® from Freddie Mac showed that the 30-year fixed-rate mortgage (FRM) averaged 3.03 percent, the lowest rate in the survey’s history dating back to 1971.

“The summer is heating up as record low mortgage rates continue to spur homebuyer demand,” said Sam Khater, Freddie Mac’s Chief Economist. “However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth.” In addition:

• 30-year fixed-rate mortgage averaged 3.03 percent with an average 0.8 point for the week ending July 9, 2020, down from 3.07 percent. A year ago at this time, the 30-year FRM averaged 3.75 percent.
• 15-year fixed-rate mortgage averaged 2.51 percent with an average 0.8 point, down from last week when it averaged 2.56 percent. A year ago at this time, the 15-year FRM averaged 3.22 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.02 percent with an average 0.3 point, up slightly from last week when it averaged 3.00 percent. A year ago at this time, the 5-year ARM averaged 3.46 percent.

Freddie Mac. ©2020. All rights reserved.

How to get the best mortgage rate

A house is a major purchase. In fact, it’s typically one of the biggest purchases people make in their whole lives. If you’re like one of the millions of buyers who get a mortgage for their dream home, securing the lowest interest rate possible could go a long way toward saving you money over the lifetime of the loan.

According to national nonprofit American Consumer Credit Counseling, here are five factors homebuyers need to consider to get the best mortgage rate:

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Good credit score. The higher the credit score, the better the mortgage rate. People with lower scores are considered more at risk of defaulting on the loan. To improve your score, make sure you pay all your bills on time and try to eliminate or significantly lessen credit card balances.

Down payment. Building savings and being able to put forward a larger down payment will help you receive a lower mortgage rate. Ideally, you should try to save up enough to make a 20 percent down payment.

Steady employment. Working for the same employer for at least two years shows mortgage lenders you have steady earnings, which makes you a more attractive borrower.

Fixed rate vs. adjustable rate. Fixed-rate mortgages keep the same interest rate the entire life of the loan. Adjustable-rate mortgage (ARM) rates change over time, beginning with an introductory period that lasts three, five, seven or 10 years of a steady rate. Following this introductory period, the ARM rate may change periodically

15 year vs. 30 year. If you have a consistent income and feel you’ll live in your home for an extended period, it may be worth considering a 15-year loan rather than the average 30-year loan. Although a 15-year loan means higher monthly payments, it’ll save you thousands of dollars in interest.

Make sure you shop around for lenders and do research, even when refinancing, to make sure you’re getting the best rate for your situation.

This article is intended for informational purposes only and should not be construed as professional advice.

Source: Reprinted with permission from RISMedia ©2020. All rights reserved.

Top 5 Reasons the Mortgage Process Gets Bogged Down

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Things are moving along at a nice pace and then BAM! out of no where come mortgage issues… how could this happen?!  Believe it or not, there are a few very common things that frequently are the sources of those bumpy roads. Read on for some tips from Jason Banks, with Presidential Mortgage.

1)         Internet banking – With the invent of internet banking, we find clients are very active with money transfer.  Each transfer has to be paper trailed and followed.  We once had a client with 23 different accounts that they would push money to every month.
2)         One day sale! – I get called a few times a month by the client that is at LOWES, HOME DEPOT, SEARS, etc. stating they have a fantastic sale on Washer Dryer.  Keep in mind, the mortgage process is like a recipe…change one ingredient and you may not end up with a house.
3)         Availability of Funds – any time a borrower is withdrawing funds from a 401k, IRA, TSP, or some other “non-cash” account, we recommend that the client withdraw the funds at least 2 weeks prior to settlement.  We have had clients try to wait to the last minute only to find out it is a 10 day process…
4)         Lack of Urgency – The mortgage process is many times a very tight time line.  I find that for some clients, they are not aware that every day counts.  I have sent loan papers out on a Monday to be told they can get them back to me within a week OR SO….  The quicker we get the loan package the quicker we can get everything ready to submit.  On every file we hope to have the loan ready to submit the minute we get the appraisal in hand.
5)         Appraisals – The timing of appraisals continues to be an issue.  We are now requesting the reports be turned into us with 15 days.  This is up from 10.  So please write your contracts accordingly as we cannot push appraisers for expedited service based on HVCC guidelines.

Everyone wants a smooth deal… taking these observations to heart will be a huge help in keeping the mortgage process moving smoothly along.