Pros and Cons of Bypassing an Appraisal

Pros and Cons of Bypassing an Appraisal

Since mortgage giants Fannie Mae and Freddie Mac announced last year special rules for when a property does not need a traditional in-person appraisal, only about 5 percent of Fannie’s 1.2 million home mortgages—or 60,000—have qualified, The Washington Post reports. Freddie estimates that, eventually, no-appraisal mortgages will account for up to 15 percent of its new loans.

In some transactions, Fannie and Freddie are relying on proprietary analytics and property data to value homes rather than sending an appraiser to inspect it. But not every buyer is eligible to bypass the in-person appraisal. Generally, banks collect a down payment of at least 20 percent, and then Fannie and Freddie identify which properties are eligible.

“If [Fannie and Freddie] have a good basic inventory of information about the house, its value, and what it sold for, you’re more apt to get a property inspection waiver,” Don Frommeyer, a mortgage originator at Marine Bank in Indianapolis, told realtor.com®. However, “the longer it hasn’t been appraised, the more apt you are not going to get a property inspection waiver.”

Bypassing the in-person appraisal could save home buyers money; the average cost of a traditional in-person appraisal is $500, according to Fannie. But real estate experts warn that even if they are eligible, home buyers may not want to bypass the appraisal. “It can save buyers money, but it can potentially lead to them overpaying if they don’t have that second opinion in the appraisal,” says Danielle Hale, realtor.com®’s chief economist. For example, if the appraisal comes in lower than a buyer’s offer, the buyer may be able to renegotiate. “But many markets are so hot right now that buyers may not be able to negotiate the price anyway, even if an appraisal came back too low.”

For borrowers who are refinancing, they may find bypassing an appraisal worth it, Hale says. Some lenders may like the option, too. “We think it’s great for borrowers,” Mat Ishbia, president and CEO of United Wholesale Mortgage, told the Post. It “saves time and money” and leads to shorter timelines for locking in interest rates and closing transactions. More than 10 percent of the lender’s home loans are now appraisal-free, Ishbia says.

But not all are convinced that no-appraisal loans are a good move for home buyers. Fannie and Freddie’s computer programs “cannot smell 20 cats living at the property,” Ryan Lundquist, an appraiser based in Sacramento, Calif., told the Post. “They won’t be able to identify problems that could potentially lower the value of the home.”

Source: “In-Person Home Appraisals Won’t Be Required for Some Loans: Should You Get One Anyway?” realtor.com® (May 18, 2018) and “Fannie and Freddie Approve Thousands of Loans With No Formal Appraisals,” The Washington Post (May 2, 2018)  

States Where Owners Are Likely to Move

States Where Owners Are Likely to Move

Nevada has the highest share of homeowners who are likely to move, according to a new report released by ATTOM Data Solutions. Homeowners in Delaware, Florida, Colorado, and Virginia rounded out the top five places where homeowners are showing the greatest likelihood of moving.

ATTOM Data Solutions, a real estate research firm, culled data from purchase loan applications on residential real estate transactions for its first quarter Pre-Mover Housing Index. The index is based on the ratio of homes with a “pre-mover” flag during a quarter to total single-family homes and condos in a geographic area. An index reading above 100 indicates a home will likely be sold in the next 90 days in a given market.

By metro area, the top 10 highest pre-mover locales are in: Colorado Springs, Colo. (280 reading); Manchester-Nashua, N.H. (213); El Paso, Texas (213); Washington, D.C. (208); Orlando, Fla. (201); Tampa-St. Petersburg, Fla. (200); Las Vegas (199); Charleston, S.C. (198); Nashville, Tenn. (185); and Jacksonville, Fla. (184).

“The pre-mover index provides insight into which markets are poised to see a high percentage of homeowners moving this spring and which markets are likely to see a high percentage of homeowners staying put,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Markets with a high pre-mover index tend to be in areas where homes are still somewhat reasonably priced and have a growing job market, allowing for greater upward mobility. Markets with a low pre-mover index tend to be in areas with a struggling job market or with home prices that are out of reach for the average wage earner.”

The metros with the lowest pre-mover index were Cleveland (46 reading); Rochester, N.Y. (48); Boston (49); Pittsburgh (51); and Providence, R.I. (53).

Source: ATTOM Data Solutions

Use Blog Comments to Boost Your Web Traffic

Use Blog Comments to Boost Your Web Traffic

One of the most overlooked and underrated ways to promote your blog or website is within the comment section of other websites and blogs, writes Jayson DeMers, an online marketing and SEO expert for business owners, in a column for Forbes.com. Posting comments may actually be a strategic move to help you get more recognition among peers and prospects to generate more traffic to your website and blog.

The most effective tend to be comments on blog posts that align with your company’s niche and your area of expertise and that also have enough authority and visibility to attract attention to your work, DeMers notes. He adds it’s important, though, to post as an individual and not as your company or organization to personalize it.

Also, prove that you’ve read the post. “Don’t launch into your own opinions immediately; instead, leave a comment that recognizes the core content of the blog,” he writes. “Otherwise, you may come across as self-promotional, or ignorant to the topic at hand.”

You can show off your expertise in the comment section. Offer up a counterpoint to the main point of the blog post or article, but try to reference a statistic to back up your point or offer advice based on your own experience. “This will draw more attention to your comments, and may help you build a bigger following for the personal brand you’re using,” DeMers says.

Make sure you don’t come across as self-promotional, DeMers warns. Avoid pitching your business or services in the blog comments. “This kind of outright promotional behavior is frowned upon by both other readers and blog writers,” he notes.

On your own blog, DeMers says it’s important to be active in the comment section. If a reader leaves a comment, make sure to respond. “Each comment you leave is another chance for you to gain visibility, and allows you to reach out to a new person, so quantity and consistency can add up to big results,” DeMers writes.

Source: “How to Harness the Power of Blog Comments in Your Content Marketing Campaign,” Forbes.com (May 14, 2018)

VA Loan Limits

Maximum loan limits have increased in select counties.

VA loan limits have changed.  This may impact you if you have been pre-approved for a loan amount that exceeds the VA maximum loan limits.

This update is effective for case numbers assigned on or after January 1, 2018 through December 31^st 2018.

VA Loan Limits

Call me today to discuss your county limit and loan options.

Best Tip to First-Time Buyers: Act Fast

Best Tip to First-Time Buyers: Act Fast

A shortage of homes for sale and rising home prices are making it challenging for first-time buyers, in particular, this spring. For those who want to land a home, real estate professionals are urging them to move fast.

The price of an existing home in March was about $250,000, up nearly 6 percent from a year ago, according to the National Association of REALTORS®. Homes are selling faster too, often under contract in about a month.

“The starter house is nearly missing in some markets,” says Jessica Lautz, NAR’s director of survey research and communication.

In Colorado Springs, Colo., real estate pro Jay Gupta says the imbalance between the supply of homes and demand is “unprecedented” and many buyers are being priced out of some areas. Homes that are selling for less than $225,000 are hard to find, he says. Gupta told The New York Times a home listed for $310,000 in the area recently attracted 40 people to a three-hour open house. The home was soon under contract with a buyer offering $30,000 above the asking price.

To increase chances, home buyers should get preapproved for a loan and be ready to act quickly when they find a home they like, Gupta says. They’ll likely need to be less picky too. Pick two or three “must haves” and make those the priority so you can move fast when opportunities arise, Gupta suggests. “You have to be more flexible,” he adds.

Also, home buyers needn’t wait for a 20 percent down payment. More than half of first-time buyers make down payments of 6 percent or less, according to NAR data from 2017. Both Freddie Mac and Fannie Mae support home loans to eligible buyers who put down as little as 3 percent on a home purchase, as does the FHA.

Source: “First-Time Home Buyers Learn to Move Quickly in Tight Markets,” The New York Times (May 11, 2018)

Rising Incomes Provide More Buyer Relief

Rising Incomes Provide More Buyer Relief

Rising incomes are helping to offset recent increases in mortgage rates and gave a boost to housing affordability in the first quarter of this year, the National Association of Home Builders/Wells Fargo Housing Opportunity Index shows.

The index showed that 61.6 percent of new and existing homes sold between the beginning of January and the end of March were affordable to families earning the U.S. median income of $71,900. That does mark an increase from the 59.6 percent of homes sold that were affordable to median-income earners in the fourth quarter.

The median family income increased 5.7 percent to $71,900 in 2018, up from $68,000 a year ago. “This wage growth helped to boost housing affordability,” says Robert Dietz, the NAHB’s chief economist. “A growing economy, along with tight inventories and increasing household formations, will lift housing production in the year ahead. But we expect mortgage rates to continue to rise, and this will place downward pressure on affordability.”

Average mortgage rates surged nearly 30 basis points in the first quarter. They averaged 4.34 percent in the first quarter, up from a 4.06 percent average in the fourth quarter of 2017.

Of the 237 metro areas analyzed in the first quarter, the index showed 167 markets saw an increase in affordability compared to the fourth quarter of 2017. Sixty-eight reported a loss and two were unchanged.

The nation’s most affordable major housing market remained Youngstown-Warren-Boardman, Ohio-Pa. In the metro area, 90.9 percent of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $60,100. Other affordable major housing markets (in order) were Indianapolis-Carmel-Anderson, Ind.; Scranton-Wilkes Barre-Hazleton, Pa.; Toledo, Ohio; and Harrisburg-Carlisle, Pa.

The most affordable small market is Cumberland, Md.-W.Va., where 98.5 percent of the homes sold in the first quarter are affordable to families who earn the median income of $55,500.

On the other end, for the second consecutive quarter, San Francisco remained the nation’s least affordable major housing market. Just 9.2 percent of homes that sold in the first quarter of 2018 were affordable to families earning the area’s median income of $119,600. California continued to dominate the least affordable markets. These cities fell closely behind San Francisco: Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Diego-Carlsbad.

Source: National Association of Home Builders