What Are Your Options If Your Home Appraises For Less Than The Sale Price?

What Do You Do When A Home Appraises For Less Than The Sale Price?

To be honest, in today's market a home's appraised value is unlikely to fall short of its sale price. It can happen, but buyers and sellers are more savvy about "the going price of a home", and the U.S. housing markets have exhibited steady growth since 2011. These factors are something that home appraisers are likely to consider when assigning a home's Fair Market Value.


Knowing a home's Fair Market Value, can help set the downpayment amount on a purchase. Mortgage lenders use home appraisals as the "value" portion of the your mortgage's loan-to-value (LTV) calculation, where "value" is equal to the lower of your home's purchase price or its appraised value.

If your home appraises for less than its sale price, there are three potential outcomes :

• Buyer and seller renegotiate a new, lower home sale price

• Buyer increases downpayment to meet new LTV and downpayment minimums

• Buyer chooses neither option, and cancels home purchase contract

The possibility of a "bad appraisal" is one of the reasons why the most home purchase contracts are written with an appraisal contingency. In the event that the home fails to appraise for its purchase price, the contingency clause gives buyers an opportunity to re-evaluate. Protecting the buyer.

Appraisal contingencies can also be used to renegotiate or exit contracts if an appraiser identifies required home repairs, such as chipped paint or cracked windows. 

If you plan to buy a home consider your household budget and your expected home downpayment. An appraisal can change your math, and so can rising home prices. It's best to know how much home you can afford -- it's free and there's no obligation whatsoever.

Read More

Reverse Mortgage. Is It Right For You?

Reverse Mortgage. Is It Right For You?

What is a Reverse Mortgage?

A reverse mortgage is a form of equity release (or lifetime mortgage). It is a loan available to home owners or home buyers, enabling them to access a portion of the home's equity. The home owners can draw the mortgage principal in a lump sum, by receiving monthly payments over a specified term or over their (joint) lifetimes, as a revolving line of credit.  

Reverse mortgages are available to all US citizens and Permanent Residents age 62 or older with substantial equity in their home. The maximum loan amount you may qualify for is based on the youngest homeowner’s age, current rates, and home value. There is no income or credit score requirements as there are no monthly repayments. You must continue living in your home as your primary residence and continue to pay your properties taxes and insurance.

Is a Reverse Mortgage Right for You?

Without knowing an Individual's particular situation, it's hard to say if reverse mortgage is right them. The best thing a homebuyer can do is get advice from an experienced mortgage professional to determine if a reverse mortgage is right for them. But, here are some basic requirements that you need to know: 

•The youngest borrower must be at least 62 years of age

•LTV must be in the vicinity of 62% - a bit higher for older borrowers (maybe 70% age 75, maybe 75% age 85)

•Credit score does not matter

•Income does not matter

Request A Quote From Me »

Read More

Buying A Home Before You've Sold Your Current Home?

Buying A Home Before You've Sold Your Current Home?

So, you've found the perfect home but you haven't sold your current home yet. What are your options? In order to qualify to buy another home while keeping the one you already have, you will need to qualify based on some general guidelines pertaining to income, credit, and assets.




Below are some general guidelines to keep in mind:

Income: Your DTI (debt to income ratio) cannot exceed 56.999% if you’re utilizing a government loan such as an FHA Mortgage or a VA Mortgage. And 45% if utilizing a Conventional loan up to 417K.

Credit: For a VA loan, the minimum credit score is 580. The VA loan allows up to 100% financing, so there is no down payment requirement. For an FHA loan, the minimum credit score is 620, and the minimum down payment is 3.5%. For a conventional loan, the minimum credit score is 620 and the minimum down payment is 5%.

Assets: You will need to show proof of liquid assets to cover the amount needed for down payment and any cost involved with your purchase loan.

Request A Quote From Me »

Read More

How Do You Determine Your Down Payment On A Home?

What Should Your Down Payment Be?

How much you put down should depend on the purchase price of the home you are looking to buy and the loan type you'll be purchasing with. For example, VA and USDA mortgage loans require ZERO down payment. FHA loans require 3'5% down payment, and conventional loans require 5% down payment. The first step is to speak to an experienced loan officer to determine your overall qualification and pre-approval. Based on your income, assets, and overall debt, the loan officer should be able to give you proper advice on the amount of your down payment, and provide down payment options.

Ultimately, the best thing a homebuyer can do, is get advice from an experienced mortgage professional to determine down payment options that fit their needs.

Request A Quote From Me »

Read More

Buying Or Refinancing A Home After Bankruptcy, Short Sale Or Foreclosure

Buying or Refinancing A Home After Bankruptcy, Short Sale or Foreclosure.
The guidelines below explain the waiting periods for bankruptcy, foreclosure and short sales when obtaining a new CONVENTIONAL LOAN.

Bankruptcy (Chapter 7 or Chapter 11)

A four-year waiting period is required, measured from the discharge or dismissal date of the

bankruptcy action.

Exceptions for Extenuating Circumstances

A two-year waiting period is permitted if extenuating circumstances can be documented, and is measured from the discharge or dismissal date of the bankruptcy action

Bankruptcy (Chapter 13)

A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The waiting period required for Chapter 13 bankruptcy actions is measured as follows:

• two years from the discharge date, or

• four years from the dismissal date.

The shorter waiting period based on the discharge date recognizes that borrowers have already met a portion of the waiting period within the time needed for the successful completion of a Chapter 13 plan and subsequent discharge. A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four-year waiting period.

Exceptions for Extenuating Circumstances

A two-year waiting period is permitted after a Chapter 13 dismissal, if extenuating circumstances can be documented. There are no exceptions permitted to the two-year waiting period after a Chapter 13 discharge.

Note:The purchase of second homes or investment properties and cash-out refinances

(any occupancy type) are not permitted until a seven-year waiting period has elapsed.

Deed-in-Lieu of Foreclosure and Preforeclosure Sale

These transaction types are completed as alternatives to foreclosure. A deed-in-lieu of

foreclosure is a transaction in which the deed to the real property is transferred back to the

servicer. A preforeclosure sale or short sale is the sale of a property in lieu of a foreclosure

resulting in a payoff of less than the total amount owed, which was pre-approved by the servicer.The following waiting period requirements apply:

Waiting Period Additional Requirements

Two years 80% maximum LTV ratiosa

Four years 90% maximum LTV ratiosa

Seven years LTV ratios per the Eligibility Matrix 
The maximum LTV ratios permitted are the lesser of the LTV ratios in this table or the maximum LTV ratios for the transaction per the Eligibility Matrix.

Extenuating Circumstances

Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations. If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower’s claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower’s inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, property listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.).

Per Fannie Mae selling guide 2013 more info for BK and FCL. 
*(reference: https://www.fanniemae.com/content/guide/sel011713.pdf)

Request A Quote From Me »

Read More