Monthly Archives: May 2013

Facts About Residential Real Estate Appraisals

Category : Real Estate Loans , Residential Loans

Appraisals are an Important Part of Your Home Buying Transaction. A real estate appraisal helps to establish a property’s market value–the likely sales price it would bring if offered in an open and competitive real estate market.

Your lender will require an appraisal when you ask to use a home or other real estate as security for a loan, because it wants to make sure that the property will sell for at least the amount of money it is lending.

Don’t confuse a comparative market analysis, or CMA, with an appraisal. Real estate agents use CMAs to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraisal price with their CMAS, but an appraiser’s report is much more detailed–and is the only valuation report a bank will consider when deciding whether or not to lend the money.

About Appraisers and Appraisals:

  • Appraisers are licensed by individual states after completing coursework and internship hours that familiarize them with their real estate markets.
  • The lender might use an appraiser on its staff, or contract with an independent appraiser. If you are allowed to choose the appraiser, and it isn’t someone the lender is familiar with, the results might be subject to review before they are accepted.
  • The appraiser should be an objective third party, someone who has no financial or other connection to any person involved in the transaction.
  • The property being appraised is called the subject property.
  • You will probably pay for the appraisal when you apply for your loan.

What You’ll See on a Residential Appraisal Report

Appraisals are very detailed reports, but here are a few things they include:

  • Details about the subject property, along with side-by-side comparisons of three similar properties.
  • An evaluation of the overall real estate market in the area.
  • Statements about issues the appraiser feels are harmful to the property’s value, such as poor access to the property.
  • Notations about seriously flawed characteristics, such as a crumbling foundation.
  • An estimate of the average sales time for the property.
  • What type of area the home is in (a development, stand alone acreage, etc.).

Home loan refinance FAQs

Category : Real Estate Loans , Residential Loans

What is refinancing?

Refinancing lets you change your home loan to suit your new circumstances. Mortgage Choice recommends an annual  Home Loan Health Check to assess whether the original home loan you chose is still the most suitable option.

How does refinancing work?

When you take out a new loan, you use some or all of the funds to pay out your existing loan. The new loan often comes from a different lender, but many people refinance with the lender they’ve been using for years. If you move to a new lender, that lender will take care of paying out your existing loan.

If you are unsure whether refinancing is right for your current situation, refer to our refinancing checklist. Check out our latest Refinance Home Loan Infographics too for more details.

What type of things do people refinance for?

Home loan refinancing may be used for different reasons including:

Renovating your home or other home improvements such as a pool.

Paying off your debts such as credit cards by rolling them into your home loan.

Obtaining a cheaper rate, even if it means giving up a few loan features.

To raise cash for a purchase such as a car

You are paying a high interest rate – for example, if you arranged a low-start, rising-rate loan from your home builder.

You want to switch from a variable rate to a fixed rate, perhaps because you can want to reduce the risk of higher repayments.

How will refinancing benefit me?

Refinancing can be a smart way to manage your money. Here are a few reasons why you may want to refinance:

To get a peace of mind with a fixed rate

To obtain a lower interest rate so as to reduce your monthly payments

To gain the flexibility to pay off your loan faster

To consolidate credit cards, personal loans or other debts to reduce your interest rate and monthly repayments

To unlock the equity in your current property to finance a renovation, purchase an investment property or free up some extra cash.

Loan features to consider before applying for loan

Category : Real Estate Loans

The questions below will help you decide the features you need, which should in turn guide you to the home loan that suits your needs. When answering the questions, think ahead, not just until next year but also to 5 or even 10 years down the track. It’s important to be realistic in your answers. Ask yourself the following questions:

Do I want to pay the loan off as quickly as possible or am I happy to see out the term of the loan?

Am I good at sticking to a budget or am I a spendthrift?

Do I require certainty in the amount of my loan repayments or am I happy for them to fluctuate with official interest rate movements?

Am I likely to want to draw back some of my repayments in the future for spending on holidays, cars, furniture, etc?

If I am planning on having children, how will this affect mine or my partner’s work situation?

For existing children, have I adequately budgeted for school fees and other expenses that are likely to come up in the future?

Am I likely to receive some form of cash windfall or bonus at any stage?

How secure is my employment or work situation?

These answers will assist you in clarifying your goals, which will in turn help us work through the different loan options and arrive at the one that suits you.

Five most common questions about “Hard Money Loans”

Category : Hard Money Loans

For those who have never obtained a hard money loan, there are typically a lot of questions. Here are some of the most commons questions and answers about private and hard money loans:

 1. What exactly is a hard money and or private money loan?

A hard money or private money loan is a non-bank loan. Whether the source of the loan is a private individual, a fund, or an insurance company, a hard money or private money loan is any loan that comes from a non-bank source. Interest rates charged are typically higher than a bank loan, and loan terms are much shorter. One can expect to pay between 7% to 18% interest, and the loan term offered is between 90 days to 2 years.

 2. Do some hard money lenders offer longer loan terms such as a 15, 20, or 30 year mortgage?

Typically a hard money / private money lender will provide a loan for a term of 90 days up to 5 years. Most hard money loans are made on a short-term basis. It is very rare to find a hard money or private money lender that will offer a loan term for longer than 5 years, however there are some exceptions.

3. Will a hard money lender give me 100% of the purchase price like the old days of hard money lending?

Before 2007, it was common to find hard money loans that would give you 100% of the purchase price of a piece of real estate. Since the real estate crash however, most hard money lenders will only give you a loan for a percentage of the purchase price. And these days, more emphasis is placed on the borrower’s ability to bring in a significant down payment. With most hard money loans, be prepared to bring in between 10% to as high as 50% on some real estate.

4. What if I have a bankruptcy, short sale, or a foreclosure on my credit? Can I still get a hard money loan?

Although there are some hard money lenders that will not make a loan to you under these credit-based circumstances, there are many that are still willing to make you a loan even if you have these types of marks on your credit report.

5. What kind of collateral can be used for a hard money loan?

Although most hard money lenders only use real property as collateral (real estate), there are some hard money lenders who will use jewelry, recreational vehicles, and other types of collateral to make a loan. However, it is difficult to find hard money and private money lenders that will accept such collateral. Most hard money lenders want to use real estate as the collateral for the loan.

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