Home appraisals are an important part of the buying and selling process. Lenders use appraisals to make sure that the home is worth what the borrower is paying. A home’s appraisal value is based on a number of factors, all of which we’ll discuss in this post.
Whether you’re a buyer, seller, or are just learning about the process of buying a home so you’ll be better equipped in the future, this article is for you.
How is a home appraisal different from an inspection?
While home appraisals and inspections are performed by licensed or certified professionals, they have to different functions. An inspection ensures the safety of a home, as well as whether or not it will need repairs in the immediate or near future.
Appraisals, on the other hand, aim to value a home based on its property value, the size of the property, and the location of the property. The condition of the home is a factor in valuing a home, which is why some people confused appraisals with inspections.
Who pays for appraisals?
Like most closing costs, a home appraisal is a burden that falls on the buyer. Typically, the lender you choose will work with will actually order the appraisal. The cost, which usually amounts to a few hundred dollars, can be added to your closing fees. You can find the cost for an appraisal listed on the Closing Disclosure document provided by your chosen lender.
Which factors determine the home’s value?
To appraise the house itself, appraisers will look at the condition of the home. They’ll also weigh the features of the home in their valuation--things like the number of bedrooms and bathrooms, for example.
However, the two key characteristics of a home that contribute to its value are its age and size.
Which external factors contribute to the home’s value?
As you might suspect, the location of your home matters greatly when it comes to appraisals. Homes are appraised based off of average prices for their neighborhood and region.
Other location factors include how accessible the home is, if it’s located on a waterfront, and whether it has desirable views.
When does a home get appraised?
While your experience may vary based on your specific circumstances, most appraisals occur after a buyer has signed a purchase contract. One this is done, the lender will take the steps necessary to order and process the appraisal.
How long is the home appraisal process?
Once the buyer has signed a purchase contract, the appraisal is usually completed and processed within 7 days. The appraisal report will be sent to the lender. This report contains the appraised value of the home. Buyers are entitled to a copy of this report, and should keep one for their own records.
49 School Street, Chelmsford, MA 01863
Listing a house may seem like a long, arduous process, especially for a first-time home seller. But with the right real estate agent at your side, you can receive expert support at each stage of the home selling journey.
What does it take to hire a diligent real estate agent to ensure you can sell your house? Here are three tips to help first-time home sellers employ the ideal real estate agent.
1. Conduct a Comprehensive Search
Search far and wide for a real estate agent – you'll be glad you did. With an extensive search, you can learn about the pros and cons of working with various real estate agents in your area and plan accordingly.
Don't hesitate to reach out to friends and family members for real estate agent recommendations. If friends and family members enjoyed outstanding experiences with certain real estate agents, it may be a great idea to contact the housing professionals who have helped your loved ones achieve their home selling goals.
Also, look for real estate agents who boast many years of industry experience. These housing market professionals are likely to understand the ins and outs of selling a residence. As such, they may be better equipped than other real estate agents to help you optimize the value of your house.
2. Ask Plenty of Questions
If you find a real estate agent who seems like a viable candidate to help you sell your residence, it is important to set up a face-to-face meeting. That way, you can ask questions and determine whether this individual is the right person to assist you.
During a face-to-face meeting, find out what a real estate agent has to say about your residence. Typically, a diligent real estate agent will conduct extensive research before meeting with you and should be able to offer honest, unbiased home selling recommendations.
Furthermore, there is no such thing as a "bad" question, especially for those who are selling a house for the first time. And if you have questions for a real estate agent, a face-to-face meeting provides an excellent opportunity to get your queries addressed by a housing market expert.
3. Get Client Referrals
Ask real estate agents for client referrals. Then, reach out to past clients so you can better understand how a particular real estate agent has supported home sellers over the years.
If a client offers glowing recommendations of a real estate agent, this housing market professional may prove to be the best choice. On the other hand, a client who encountered problems with a particular real estate agent may help you avoid making the wrong decision as well.
Ultimately, the right real estate agent is someone who can help you sell your house and keep you informed as the home selling journey moves forward. And if you spend some time learning about the real estate agents in your city or town, you should have no trouble employing a top-notch real estate agent who can take the guesswork out of selling your residence.
Shopping for a new home should be an exciting experience, but if you are unsure of where you stand with your credit, it can be a little nerve-wracking. Having good credit will not only help you to secure more favorable interest rates for your mortgage, but it can also help you to avoid less favorable loan structures, higher down payments, and additional costs such as PMI. The best way to prepare yourself for your financing is to whip your credit into shape before your hunt begins. Check out three ways to help prep your credit.
Check for Any Collections
Collections are delinquent accounts that can seriously affect your credit score. Review your credit report and address any collections that are listed. If there are ones on there in error, file a dispute with the credit bureaus. If you owe the debt and can pay it, contact the collection company and ask if you can satisfy the debt by paying it and have it removed from the report. Finally, if you can not afford to pay the whole debt, discuss with the creditor possible settlement options.
Don't Request Any New Credit
When you open a new credit card or credit account, it can affect your credit in multiple ways. First, it will count as a hard inquiry, which can slightly lower your score, and secondly, it may change the average of your credit history. Mortgage companies don't like to see a lot of credit being acquired right before a mortgage is being established, so if it can wait, let it wait until the mortgage is secured.
Pay Down Your Credit Card Balances
If you have the means to reduce the balance of your credit cards, now is the ideal time. Your credit score is affected by your credit card balances in two primary ways. The first being the amount of debt that is listed on all of your credit cards. The second is the ratio of the amount owed on your card in relation to the credit limit on the card. A good ratio is less than 30%, so to keep your credit score high, you will want to be below this percentage. Paying a large chunk of your debt can increase your score by several points, and also improve your debt to income ratio. Just be sure to do this at least thirty days out so that the new balance is reflected when your score is pulled.
Don't let poor credit lower your chances of buying the home that you always wanted. Follow the tips above to pump up your credit before applying for your next mortgage. Even a few points can mean significant savings.
You’ve been thinking it for a while: “I really should start putting some money aside for a down payment.” But, you just can’t seem to find any wiggle room in your budget.
You’re not alone. Saving for a down payment isn’t easy. Especially if you’ve got rent, car payments, student loans, and are trying to put money aside for retirement.
In today’s post, we’re going to talk about how to make a game plan for your down payment. This way, you can start saving immediately, bringing you closer to your goal of homeownership each day.
Step 1: Give each dollar a job
The first rule of budgeting is that you need to know where each dollar you earn ends up. From there, you can start re-allocating funds to the things you want to save for.
There are many apps and tools available to help you out with this process, including YNAB (You Need A Budget) and Mint. If apps aren’t your thing, you can always use a simple spreadsheet.
First, account for all of your income. This could include your salary, rental income, or other forms of money that you have coming in.
Next, detail each of your weekly and monthly expenses. Everything from groceries to the internet bill and retirement contributions.
Step 2: Reassess your expenses
Now it’s time to make some tough decisions. Are there ways you can cut down on your weekly or monthly expenses? Maybe you aren’t using that Amazon Prime membership as much as you thought you would. Or, maybe you’ve decided you don’t really watch anything on cable but the news. There are a number of ways one might cut back on their monthly bills.
Get creative with family plans, bulk shopping for food, or cooking budget-friendly meals. All of these savings will add up quickly.
Step 3: Pay off small debts with high interest
Let’s face it, if you have thousands of dollars in student loans, you might not be able to aggressively pay them down by the time you want to move out of your apartment.
But, for small debts (under $1,000 credit card debt, for example), you could save more in the long run by paying them off and avoiding interest payments.
Step 4: Be smart about your savings
With the right savings account and credit card, you can earn money through savings interest and through cashback rewards on credit cards.
First, find a savings account with the highest possible interest rate. These can often be found from choosing an online bank who doesn’t have the overhead of running branches.
Next, direct deposit a set amount of your paycheck each week into that savings account. This way, you can be sure that you won’t dip into your down payment savings.
To generate additional income, you can use cash back rewards from credit cards for things like groceries and gas. Choose a credit card that offers the best cash back rewards for things like groceries and gas purchases. The key here is to only use your credit card on necessities and to always pay off the card in full at the end of each month.
If you follow these four steps, you should be able to streamline your down payment savings process and start saving right now.