Home appraisals are an important step for lenders to finalize the loan process. Banks will do not approve a mortgage that exceeds the actual value of the property. This is the reason it is important to get the borrower’s property evaluated before final approval on the loan is issued by the bank.
Once the borrower makes an offer on his property, the next step is to get it inspected and appraised by a reliable authority. Appraisals are meant to assign a market value to a borrower’s home that is assessed based on various factors. While higher value is always welcome, low appraisals can interfere with the transaction. High appraisals can help in paying for additional closing costs that are incurred during the mortgage process, in case you want to include it in the loan amount.
A lender can make the appraisal process breeze through by being proactive and aware. Here are some important questions they can ask their borrowers to make it more efficient.
Does the borrower have all the necessary documents that will be required by the appraiser?
There are some documents that will be required by the appraiser at the time of property appraisal. Keeping them handy will not only expedite the process but will also show your readiness in being cooperative. The borrower must have the following:
- Title policy
- List of all the items that the borrower is planning to sell along with their home such as furniture, swing sets, pool equipment, security systems etc.
- A survey or plot plan that would have been received by homeowner at the time of closing the house
- Latest property tax bill
- List of all the upgrades and home improvements made from the time the house was purchased. This is necessary to calculate date of installation and cost incurred for the improvement of the house.
Do you have any proofs of spending money on home upgrades?
If the borrower has put money in the house, it is important to prove it. While not mandatory, it is helpful to have before and after photos of the house. Additionally, all the expenses made on each renovation can be maintained on a spreadsheet that should convince the appraiser to correctly evaluate the property. All the important structural improvements and electrical systems should also be noted. These things can dramatically increase the value of borrower’s property.
Do the borrowers have their own comps?
An appraisal is based on sale of most recent properties in your area. It helps when your borrowers have done their own due diligence and prepared a list of at least three well-priced comparable properties. This information is readily available online and can be used to nudge the property valuation in right direction. Comparative market analysis is conducted on factors like number of bedrooms, bathrooms, square footage, location, age and home improvements. All these factors will be compared to other homes in the neighborhood to calculate the borrower’s home value.
How unique is their property?
Some homes are designed uniquely with ultra-modern facilities or sprawled across 5 acres of land or more. These things are integral to the appraisal process and not knowing in advance can complicate the assignment. The appraiser fee is set based on the type of property and not sharing this information at the beginning can lead to rejection of the assignment, therefore more delays.
Will the borrower be available and/or accessible at the time of appraisal?
It is important to know if the borrower will be available around the time when appraisal is scheduled. It is advisable to not plan any business or leisure trips around that time. However, if the travel is necessary, the lender should know how to contact the borrower and what is the best way to do it. The lender should keep all the contact information handy, in case required.
A well-informed lender must educate the borrower that the appraiser’s job is to offer an independent and objective view of their property, based on their assessment. This is the reason it is always advisable to use an expert go-between the two parties. If you are looking for someone that fits the bill, then look no further. Expert Mortgage Assistance has trained professionals who understand the complex environment of appraisals and mortgage. They have all the necessary experience in documentation and underwriting to understand the intricacies of mortgage processes.