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Mortgage News: It takes a village to buy a house

house_outline_dollar_400_clr_9658It really does take a village to buy a house. It seems that everyone has to get involved. Let’s see, there’s the mortgage advisor, there’s the attorney, an appraiser, a home inspector, and a realtor. Actually, there are two realtors, because there’s a listing realtor and a buying realtor. You have the sellers and the buyers. You have underwriters, and processors, and executives for the lenders. You have closing agents and title agents. There are just so many people involved that it’s mind-blowing, and if everybody is not doing their job it makes the process a little more difficult. As the mortgage advisor, I also wear the hat of General Contractor, that is, I’m trying to keep everybody on pace as much as possible and making sure everybody is during their job. I want to make sure everything is getting done and nothing is slipping through the cracks so we can get to the closing table at the right time. The date is always set from the beginning, which is always kind of strange because, really, I was taught that the closing date should be when everything is done. We set an estimated date, but when you have all these people you can’t always say how long a process is going to take.

The best purchases happen when you have a good starting team. This team is the trio consisting of the realtor, the mortgage advisor, and the attorney. If you have those three that are really strong, then you can pretty much overcome anything, and it’s a pretty smooth process. It doesn’t always work that way, but when it happens it’s actually a lot of fun. As a broker, I don’t usually get to choose my team, but there are several good teams. Definitely, when certain realtors call me I know it’s going to be a great process, but who knows. I work with a lot of people I don’t know all the time, and you don’t know how the team is going to be until you’re into it.

Sometimes it’s not the members of the village that cause problems, but the family members, notably on the buyer’s or the seller’s side. There’s always someone’s uncle, or mom, or coworker that knows everything, and questions everything. As the mortgage advisor, I get these calls all the time. I explain that they’ll hear a lot of things throughout the process because everybody has bought a house, but times change and what was going on six months, or six years, ago, is different than what’s going on today. I just let them know the some of then noise they hear is true, some of it isn’t, and a good team gets through that.

I love connecting people. There’s nothing better in life when you get to connect two people who can work together. That makes me smile. How can I help you today? Call or email me.

Mortgage News: Alternate and rare mortgage products

house_outline_dollar_400_clr_9658Even in a tough lending market like this, there are a lot of new products coming out, or a lot of old products that some people don’t know about. We’re starting to see some rehab products. There are 203k loans; it’s an FHA product that allows you to purchase or refinance and also get money to rehab the house. There are a lot of stipulations and restrictions, but now we’re starting to see more than just the 203k. There are other rehab loans out there that have better options, which is great because there are a lot of houses out there that can use some work. We need these products so that people can buy some of these houses, and if they don’t have money in their pocket to do the work, they can get this mortgage, which includes the money to buy the house and do the work to update it. Depending on the product you end up using, the rate can be close to the same rate as a non-rehab product. It depends on the situation, but it’s nice to see these products out there.

As I’ve mentioned before, there are all kinds of lenders and all kinds of products. I work with some small local lenders that do common sense lending where they keep their own loans. They’re not quite as guideline driven. Maybe someone has tons of assets and they’re buying a primary residence. They’re putting 30% down, but maybe their credit isn’t as good as it needs to be, but they have a job and they have a good reason for it. Those are the type of loans small lenders like.

Another option is USDA loans. The USDA loan is one of the few 100% financing options out there; it’s based on location so you can only get a USDA loan in parts of New Jersey. It’s also based on income, so you can’t make too much, but it’s 100% financing, just like VA loans. VA loans are out there for veterans. It’s 100% financing, and it’s one of the best products out there for those veterans that still have their benefits available.

We’re seeing lots of creative new products coming out. It’s slow, because they’re taking things slowly, unlike the sub-prime days where they created outlandish products with 100% financing plus 10% on top for home equity loans, or the no document loans for anyone and everyone. Those aren’t going to come back, but we are going to start seeing more creative products. Maybe some asset-based loans where someone has $600 to $700,000 or more in assets, but can’t show much income, and they can pledge assets against the loan.

You won’t likely find a lot of these new programs at your local bank. You’ll usually find them at the small local lenders, which I have access to. As an advisor, I’m always keeping up to date on what programs are coming out, and what my lenders are doing. I get emails daily that I’m sifting through to make sure I don’t miss anything. It’s really helpful when you meet someone who has this specific strange situation and they’re having a difficult time, but they want to get into a house. They’re deserving, but they have a tough situation. There are open programs out there for them.

Let me help you find the RIGHT loan program for your needs – call or email me today!

Mortgage News: Issues in the new home-buying market

house_outline_dollar_400_clr_9658I’ve touched on a lot of these issues in past blog posts, but let’s just go through them all—home inspections, appraisals, mortgage process—in one place.

Home inspection is a big one; buyers and sellers are fighting over what gets fixed and what doesn’t. It’s not that home inspections are new, or that they’re done differently, it just seems the mindset of both the buyers and sellers are different. The buyers think they deserve to have the perfect house and the sellers have the mindset that you get what you see. In the past, the mindset was also that we’d do a home inspection, and if there’s a major issue, we’ll discuss; otherwise, we’re fine, let’s just move on. Most people these days, even though they’re buying a used house, don’t want to fix it up, or to work on it. When we bought 20 years ago, we expected to fix or change things to the way we wanted them. Buyers today seem to want something that is perfect to begin with, and that’s probably part of the problem.

Appraisals are also a big issue. We’re in a rising value market, so housing prices are going up. We’ve seen bidding wars on houses because of lack of inventory, but we’re still using appraisals from the last three to six months when the value was a little lower. As a result, we’re seeing some issues with appraisals not matching up to the purchase price.

The mortgage process is just not what it used to be. It’s not an easy process; there’s a lot of paperwork involved, and there are a lot of headaches. Sometimes the underwriters ask for ridiculous things, but they’re really concerned about bad loans, and being able to sell their loans. They are also worried about their jobs, so they pick over things that used to go unquestioned. Sometimes you just need somebody who’s going to get you through the mortgage process, who can fight the proper battles with the underwriter, or to say, “It’s silly, but we might as well give them this because it’s not worth the fight.”

In the past, there were instances when someone who wanted to buy a house could do so with virtually no documentation. It was easy. We were doing no document loans just because it could get done quicker. People didn’t want to deal with the paperwork, so we were just basically filling out a form and they were getting loans. No wonder we are where we are. It makes sense. Now we’ve gone to the opposite extreme and they want to see everything. I always joke around at the end that the only thing left is a pint of blood.

The funny thing is that this market, in pockets of New Jersey at least, has turned into a seller’s market very quickly, from a buyer’s market to a seller’s market in the last six months. It does depend on where you are, but in Northern New Jersey, it really is a seller’s market, and the problem is lack of inventory. There are buyers out there, but not enough sellers. The ones that are out there are seeing bidding wars, and the houses are selling quickly all of a sudden. Of course, it depends on where you live. There are still areas in the country that are struggling, and sales are low. It really depends on where in the country you are.

Markets can change quickly, but issues with home inspections, appraisals, and the mortgage process itself are almost always present. Having a mortgage advisor that can guide you through this process, no matter what the issue, becomes even more crucial in an ever-changing market. I’d love to help YOU through the process – call or email me today!

Mortgage News: Are you really pre-approved to buy a house?

house_outline_dollar_400_clr_9658The pre-approval is a big issue. First of all, you really need it in order to put an offer on the house, and the realtors really like to see it. You can get pre-approved online by filling out some forms and submitting them. The problem is that you’re just filling in a form and there might be other factors that will influence your approval that a form simply can’t ask you about, such as do you pay child support or alimony, or something like that. You might get a pre-approval, use it to make an offer, and then find out afterwards that you can’t really be approved for the house. You’ve wasted a lot of your time, other people’s time, your money, and now a process that seemed so easy becomes quite frustrating.

The right way to be pre-approved is to call a mortgage advisor. Spend some time either on the phone or in-person. Let them ask the questions, run your credit, and if it’s not cut-and-dry, provide them with tax returns and pay stubs. A lot of times, prospective buyers don’t know what’s important. These days, we want to know what you’re writing off on your tax returns. When you’re filling something out online, they don’t ask you that, and you don’t think to offer that up. Most people wouldn’t even think to mention child support, or an alimony payment. It’s not a matter of hiding; it’s a matter of knowing. Ask the right questions, and get asked the right questions.

For instance, it’s important to know where the down payment comes from. If it’s all gift funds that could affect the program you’re in, then that could also affect whether you can really be pre-approved. The fees on some of the programs are higher, so you might not be approved for as much. The online form just asks how much you have for a down payment, not where it’s coming from. And sometimes where the down payment is coming from might not be a legitimate source. If you’re getting a loan from Joe down the street, that’s not a legitimate source for a down payment. Perhaps you have a stack of cash hidden in your mattress. The money is real, but this is not a legitimate source for a down payment either. There is just no way you can just take that money and use it as a down payment. So, asking where the down payment is coming from is just as important as knowing you have the money for a down payment, something the online process does not account for.

Another important differentiation the online process doesn’t account for is how your income is comprised. When asked how much you make, you might simply enter $60,000. Well that could have been $40,000 in base pay plus $20,000 in overtime. If you didn’t have overtime the year before, the lender will look at the past two years and take the average. If you have overtime, then your salary isn’t really $60,000, it could be figured at $40 or $50,000. Or, they may not accept overtime at all if it was only a one-time thing. The same thing happens with a bonus. If you only got a bonus one year and not the other, or if it’s not a guaranteed bonus, you might not be able to use that bonus as part of your income. The hardest income to verify is when you’re self-employed. In that case, you’ll really need to meet with a mortgage advisor in order to review your tax returns to see what you’re really making, what you’re writing off, what you show you’re making, and not what you actually might be putting in your pocket every week. Those are the types of questions that really need to be asked and vetted out when being pre-approved.

To avoid getting a pre-approval that’s not really a pre-approval, meet with a mortgage adviser that is trusted, or that has been referred to you. You’ve just got to do your due diligence. In the end, it makes the whole transaction easier and it doesn’t waste anyone’s time. Whether you like the answers and the numbers or not, this process is backed by solid data and solid information, giving you a solid pre-approval.

Call or email today if you’d like to get pre-approved for a mortgage!

Mortgage News: Home Inspection issues and how to handle them

house_outline_dollar_400_clr_9658The home inspection occurs after you’re under contract and have had the attorney review. The inspector will usually take four or five hours to inspect the entire property, resulting in an inspection report that will tell you every single thing that is wrong with the house. That’s their job. Some of them tell you even more than everything that’s wrong in the house. I always remind my clients that you’re buying a used house; you’re not buying a brand new house. It’s a used house. You like this house. The important thing is to find out if there are structural issues, and focus on those. Is the chimney safe? Are there termites? And then what happens is you get a huge report, a 70-page report with every little thing that’s wrong in the house, and the focus switches from the structural issues to the little issues. The buyers go back and ask the sellers to fix certain things or give them money toward closing costs so then can fix things in the house. It sometimes becomes a fight, and I’ve seen deals fall apart over it. The buyer wants everything fixed; the seller says they’ll fix the major things, but they’re not going to fix everything. Some of the buyers are stubborn; they want a perfect house when they’re buying a used house, so it becomes a big battle.

I have a situation right now where the inspector’s report showed that the house doesn’t have a septic, but a cesspool, which are apparently illegal in New Jersey. The seller insists it’s not a cesspool, but a septic and supposedly has documentation that says it’s a septic. The inspection clearly states it’s a cesspool, so they’ve been battling for almost two months. Just recently they agreed to have this fixed and are sharing the costs, but I’ve seen plenty of deals fall apart because of inspection issues.

If an issue is fairly big, the sellers will generally have to fix it because it will continually shows up on the inspection report and it becomes an issue with every buyer. If the sellers have been stubborn, unless they find the perfect buyer who desperately wants it, they are going to have to fix it at some point. Rather than go through multiple buyers with the same issue every time, the sellers are better off just fixing it.

I find the fighting between buyers and sellers usually begins when the buyers want everything fixed. Too often, both parties get mad and it becomes a personal battle instead of just a sale or transaction. It’s very common these days for buyers and sellers to be fighting over inspection issues. I tell my clients to fight over the main issues and reach a common ground on everything else, then we move on.

No matter what issues come up during the mortgage process, I’m here to guide you through. Ready to get started? Call or email me today.

Mortgage News: Weird but true

house_outline_dollar_400_clr_9658I guess just like in any business, you see a little bit of everything in the mortgage industry.

I had a case recently where we had been working on a closing for about a month and half, and were a week away from closing when the seller passed away. Now it has to go into the estate and I’m sure there are all kinds of probate issues and things the estate has to deal with and document. It took another year before we closed that one. Luckily, the buyer waited it out; he wanted the house, was in no rush, and understood the situation. The seller’s family was onboard and friendly, also understood the situation, and did everything they could to move things along. It was a long year! Of course, we had to start all over by submitting a new loan, new appraisal, new everything. In the end, though, it all worked out.

I’ve seen people lose their jobs two or three days before closing and watched the deal fall apart right away, and that’s no fun. In that situation, it typically falls apart from both the lender and buyer’s side. At that point, the lender denies the loan because the client is no longer working (they will do a last minute employment verification) and can’t qualify. In all fairness, as the buyer, this is probably what you want to happen. You don’t know how long you’ll be without a job and won’t likely want to take on this huge debt, so you’ll want to back out of the deal anyway. It’s very scary to take on a mortgage payment, even scarier to take one on without a job.

I had another case recently where my clients were under contract to buy a house. The seller, well, the husband, went to work one day and gave notice to his job that he was retiring because he and his wife had just put their house under contract and were going to move to Delaware. He got home from work that same day to find a note on the counter from his wife. It said, “I’m leaving you. I took the dog. Don’t come find me.” The husband had just given notice at his job, had the house under contract, and his wife through him a curve ball. He decided to back out of the contract. Technically, my buyer could have sued him or gone after him and pushed the issue. I think they just felt bad and decided, “This is bad karma. We’re going to walk away. We feel bad for the guy.” I get it—it’s not a fight you really want to fight. But it was very interesting. I had never had a purchase fall apart for that reason.

Just last week I had a new one. My client had been looking for a condo and had been looking at a lot of them. He found one he really liked and agreed on the price. After agreeing on the price, he found out that the condo does not allow grills and he grills five nights per week. He said, “I cannot live in a home that does not allow me to have a grill.” I can’t argue with the rules, so he had to back out of the deal and I don’t blame him. Strange, yes, but true.

One time I had a deal where my client committed fraud by submitting fraudulent documents. I had no idea. The documents looked as real as can be. We went through the whole process, got to the closing table, and there was no money there. I don’t know what they thought they were getting away with, but it was a very interesting case and I had no idea what was going on. I couldn’t believe it. I really liked them and was excited for them. They were a young couple buying a house, so I thought. I guess they wanted the house and decided to do anything to get the house. People get attached to houses. I always tell people, remember, it’s a place to live. I know you’re excited to have a house, but you can’t get too attached to it. We caught them in the end, but it was difficult.

You definitely see some weird things in this business. I’m here to help you through the process no matter how weird it gets! Call or email me today to get started.

Mortgage News: What NOT to do when getting a mortgage

house_outline_dollar_400_clr_9658There are a lot of things you should do when getting a mortgage, but there are four things you should NOT do! The four are: change jobs, spend a lot on credit cards, buy a car, and make large cash deposits. So, changing jobs–it’s not always necessarily a bad thing, but it can be, especially if you’re going from a salary position to an hourly position, or a salary position to a 1099 position. Forget it! That could ruin your purchase; you might not get a mortgage if you change jobs without a discussion with your mortgage advisor. Even if you’re not happy in your job, sometimes it makes sense to stay in the job until after you close on your home.

The next thing not to do is spend a lot on credit cards. I know that sounds obvious, but many people don’t realize that it can have an impact. I’ve seen situations where people have gone out and spent a lot on furniture to for the new house before the mortgage is fully approved. Others might purchase a big vacation, or just go out on a shopping spree. What happens is they put it all on credit cards and right before closing, then the lender pulls the credit report and sees the new debts, which have created new debt ratios, and the loan is denied. Again, wait until after you close on your home to make any large purchases on your credit card.

Another big “not to do” is buying a car. I get it; sometimes the car dies and you have no option. Before doing that, however, we need to discuss how to do so without affecting your loan qualification. We need to talk about how much you can afford so as not to throw off your debt ratios. It’s also a paperwork nightmare because you get tons of paperwork from the dealer, but nothing really says what your monthly payments are going to be. The lender needs to know that because it won’t show up on your credit report for at least a month; you don’t want it to be a surprise when it does. You also don’t want to co-sign for someone else purchasing a car. Overall, I always try to avoid people buying a new car during the process, but if it’s a necessity, I appreciate when they call me first. That means they took my advice and they understand that it can affect their ability to buy a house. Together, we can figure out what you can afford without it becoming a hindrance to the process.

Lastly, you should not deposit large amounts of cash during the process. The banks want to know where every penny is coming from, so if they see large cash deposits, they worry that somebody else is loaning you money to buy this house and that throws up a red flag. Maybe you simply won $8,000 in the Super Bowl pool and you deposited it into your checking amount. Seems harmless enough, but the bank will think it’s shady and will question where the money came from, and request proper documentation. There are a lot of legitimate reasons to deposit cash; we just need to make sure it’s done in a way that aligns with the proper procedures. For this reason, I always tell people to call me prior to making any large cash deposits.

People aren’t used to really thinking about where their money is coming from, or going to, and how it can affect their chances at getting a mortgage. From the moment you start working with me, I’ll tell you to call me for anything major, or that you think might be major. Call me first and ask, “Do you think I can afford this?” I help you run the numbers to make sure you have enough money for closing costs and to afford what you want to buy. At the same time, I can review the debt ratios, procedures, or whatever else is needed to ensure a smooth loan process.

Ready to get started? Call or email me today!

Mortgage News: I’m buying a home, when should I start the mortgage process?

house_outline_dollar_400_clr_9658Many prospective homebuyers wonder when the best time is to meet with a mortgage adviser. My advice: meet early in the process! If you’ve started looking at homes, you should have already met with a mortgage advisor. If you’re thinking of buying a home within the next year, schedule an appointment with a mortgage advisor. No, it’s not too early.

There are a lot of issues that can be avoided if you meet early in the home buying process. Obviously, the whole thing of making sure you can qualify for the mortgage, that you’re buying in a price range that is comfortable for you and not stretching yourself, are often the primary issues that need to be resolved. Beyond that, though, most people just don’t know what they are going to find on their credit reports. Sometimes the worst of them are medical collections that people are completely unaware are out there. You go to a doctor, the doctor sends a bill that maybe gets sent to the wrong address or is just missed in the mail pile and you don’t pay it. Doctors don’t waste time; if a bill goes unpaid, they send it to a collection agency, and it shows up on your credit report. Sometimes, there are simply mistakes that are on your credit, or late payments that you didn’t realize were reported. If we meet early in the process, we can identify those things and fix them to get your credit scores higher. Increasing your credit score will give you better rates when the time comes, saving you money.

There are also circumstances that are completely acceptable, but that must be handled in a particular way in order to qualify for a mortgage. For instance, one client lives with her boyfriend and the boyfriend deposits his check, then takes the cash out of the ATM to give her to deposit into her account to pay the bills. This situation is perfectly legitimate, but to qualify for a mortgage the banks will want to know where the money is coming from, and it’s hard to trace cash deposits. If I learn about this early in the process, I can explain how to handle this scenario so it is acceptable to the bank, giving us one less hurdle to overcome when it comes time to qualify. In this case, the boyfriend should write her a check and she should deposit the check, or he should deposit his check right into her account, giving a clear trail of where the money is coming from.

Another issue that commonly comes up is gift money. Frequently, buyers have family members who are gifting them a portion of the down payment. It is allowed, but there is an acceptable process for showing the gift and tracking it. In order to get an approval, it is important to follow this process. Also, it can affect what mortgage program we use, so again, that’s why it’s important to meet early. We can talk about the gift before it happens and plan it out to avoid hurdles during the approval process.

A friend offered this analogy: when you meet people early in the process it’s like they’re wearing jeans and a t-shirt, and they’re about to go into a job interview. Before doing so, they meet with you and you make them wear a nice suit and tie, or a dress, and prepare them for any curve balls. You get them ready to walk in and nail the interview.

That’s exactly it. I can tidy up the package and put it in a position to get the best product, the best rates, while making the process smoother and less stressful. Let’s get started – call or email me today!

Mortgage News: Why use a mortgage broker rather than a bank?

house_outline_dollar_400_clr_9658There are several reasons. When using a bank, you have access only to their rates and their programs, and must work within their limited hours. A mortgage broker, on the other hand, has access to numerous programs and rates, and is usually available any reasonable time, via cell phone or email. As a broker, I feel pretty strongly about this one. When you go to a bank, a bank has one set of programs (their own set), and one set of rates. As a result, you’re not always getting what’s best for you. Maybe there’s a program that’s better for you, which will save you money, or maybe there are better rates. At a bank, you only get one set of rates, and maybe this bank doesn’t have the best rates. As a broker, I have access to 30 different banks with 30 sets of rates, not just one. Perhaps there’s a problem with your credit that your local bank won’t do, but a smaller bank that I work with will do. Or maybe there’s a problem with your credit that I can help you fix before we got to work on your loan, whereas the banker will simply say, “We can’t do it.”

As I mentioned, I can shop up to 30 different banks with 30 sets of rates. Some of my banks prefer 15-year mortgages and give better rates on those; some of them like FHA mortgages and give better rates on those. Some prefer bad credit loans, so if your credit isn’t great, you’ll get a better rate with that bank over your local bank. A primary reason to use a broker rather than a banker is the broker gets better rates. Let me put it this way. When you go to the bank, the person you’re assigned to work with is getting a salary, insurance and benefits. The bank pays them to sit at the desk. The bank doesn’t pay me, but they offer me good deals, good rates, to bring them loans, and then I get a commission from the bank. If I bring them a loan, I get a commission; if I don’t bring them a loan, I don’t get a commission. I cost them nothing so it benefits them to give and offer me better rates.

The other thing about going to a bank over a broker is the person who is working for you at the bank is a 9 to 5 employee who sits behind a desk, without any stake or sense of urgency in closing your loan. They’re getting paid the same thing regardless of whether or not they close a loan. If you need them on nights or weekends, they’re not available. When you’re at work, you’re not thinking of your mortgage. When you get home, you think about it; you might read an email requesting some paperwork and wonder, why do they need that? Or you realize the appraisal came in low and wonder, what do we do? These are the things that can keep you up at night. With a banker, you’ll have a sleepless night because you’ll have to wait for the next business day to find out. With a broker, you can get your sleep because you can usually get answers right away.

When you work with me, you get my cell phone number. You can call or text me in the evening, on the weekends, or anytime you have a question. I also answer emails. You can call me after work, and I often make appointments to meet my clients in the evening at their homes. Whenever, or wherever, is convenient for you. I don’t just work banker’s hours; I’m available when you need me. Call or email me today to get started on your mortgage!

Mortgage News: Understanding the property appraisal

house_outline_dollar_400_clr_9658An appraisal is the valuation of property as determined by an appraiser. The appraiser goes out to the house, evaluates its features and size, takes pictures, and then compares it to other similar homes in the area that have sold over the past six months. They compare the number of bedrooms, the size, and the style, to other homes within the same town, preferably within one to two miles. The appraisers use an objective system to determine the value of the home. This value often differs from what the seller and buyer have come up with, which is a sales price based on negotiation. Sometimes, the appraiser comes back and says, “Well, compared to other houses sold in the area, this is not worth what the purchase price on the contract says.” This can become problematic when the lender does not want to give a mortgage on a home that is overvalued. From the lender’s perspective, they don’t want to take a chance because if they’re overpaying, and the borrower defaults on the mortgage, the lender is stuck with a house that isn’t worth as much as the mortgage.

I’ve had this happen. We were halfway through the mortgage process and the appraiser came back and said, “This house is worth $50,000 less than you’re buying it for.” At that point, the buyer has several options, and I’ll focus on those options since my client is the buyer. The first option is to renegotiate the price with the seller. You don’t want to buy a house that the minute you walk in the door, the value has dropped X amount. Of course, the sellers will say that we agreed on the previous price, and won’t want to lower the price, so it could be a battle. Sometimes it works, sometimes it doesn’t.

Option two is you can buy the house. In the eyes of the lender, the purchase price is now what the appraised value is, so if you’re putting 20% down, you’re putting 20% down on the appraised value, You’re still buying the house for the original contract price, so you have to then come up with the difference between the appraised value and the contract price out-of-pocket, so you’re bringing more money to closing. The lender normally has no problem with this option.

Option number three is that you can walk away from the deal. This happens when the seller won’t renegotiate the price and you aren’t willing to come up in price. You don’t want to overpay for the house, so you don’t complete the purchase.

What I usually see happen is that the buyer and seller meet somewhere in the middle. I tell my clients, “Look, before the appraisal you were happy with the purchase price. This is a good chance for you to renegotiate the price and it may be a meet in the middle somewhere price.” It doesn’t always work this way because sometimes the buyers don’t have enough money for a down payment. If they’re only putting 5% down, they won’t have the extra money. But I always tell them to try to meet somewhere in the middle; maybe you’re overpaying based on the appraisal, but you were happy with the price a week ago. So, we meet in the middle. The sellers probably aren’t happy, but they want to sell. The buyers are getting a better deal than what they’d originally worked out, so they’re good to go.

One of the things I almost forgot to mention is that appraisals can be challenged. It’s a very difficult process, because the way the challenge works is that you have to find mistakes in the appraisal or you need to find comparables that are better than the ones used. Once you submit the challenge, it goes back to the same appraiser. This makes it especially difficult because you’re asking the appraiser to acknowledge they missed something or made a mistake. Who wants to say that? It’s rare that I see a challenge work. Recently, I had an appraiser who had the square footage wrong in the appraisal. It wasn’t the house; he made a mistake, acknowledge it, and made the adjustment.

As your trusted mortgage advisor, I will help you with any appraisal issues that arise during your home-buying process. Call or email me today if you have any questions.