Conditional Approval!

[Kozmo]

Got an email last night saying the loan was approved pending the following:

1. Cancelled earnest money dep check
2. Proof of insurance
3. A form for a state grant we are trying to her.

Appraisal was completed and the broker said she should know by Friday what it came back at.

But for the insurance this is where I'm confused. They asked us for the value...which obviously we don't have so we cannot get insurance. But they sent us a form to fill out asking to describe the property I.e what kind of frame is it?

Is this normal? Doesn't the assessor just come out to do all of that or am I off on this?

Also, when the broker sent our app she only sent February's bank statement saying that Januray was too confusing because we got married and there was a lot of money moving around. But the bank didn't ask to send them another statement or even March's when it's available.

[JM-AM]

Is the home New Construction, or Existing structure?

[tooleman694]

When we got our insurance we just gave them the price we bought the house for.

[Kozmo]

Existing

[Wecandoit]

We bought an existing home and our insurance company asked questions about the foundation, square footage, the frame, rooms, garage, year built, etc. Then the insurance company used a math formula to figure out what to insurance the property for. Also, they did take a couple of pictures of the outside-did not have to go in. The amount they gave us was WAY higher than what we bought the house for.

And the form for the state grant (we did the same grant I think in Michigan) was just a one page app. The grant application does say that it will take six business days to process, and ours took exactly six. Then MHSDA sent an email to our loan processor saying the funds were cleared to use, and we got our clear to close within thirty minutes of that money coming back. We did have to pay for our homeowners insurance up front too.

Congrats on the conditional approval-almost there

[Kozmo]

So I checked the MSHDA site because they constantly update it to show how much $ is left and now it says they are using it for veterans only. Before it was first time homebuyers...but because the Money went so fast they are reserving the last $3m for veterans... Which is cool.

But the bank or my broker has not said a peep about it. Maybe they are unaware?

They applied for the funds before the change took place. Maybe we still get it? Hmm

As far as insurance goes that's the same thing they asked us. So I guess I'll have to fill in as much as I can.

Thanks! Just need the appraisal to come back solid!

[JM-AM]

Most if not all states have a tax assessor web site. If you go to the site it should have the information you need for structure, electrical, etc... etc... Or you can just wait until your appraisal comes back.

As far as Insurance is concerned, you need to know what the Max Deductible that is allowed, and that the home would be replaced at the then current replacement value.

One of the things that most Homeowners do is purchase Insurance on the value they paid for the home or appraised value whichever is higher. While technically there is nothing wrong with this concept, it is not something I personally agree with.

As an example some areas the homes are starting to pick up pace and housing prices are increasing. So if some major disastor happens a few years down the road (hopefully nothing ever happens), will you be able to rebuild your home with the insurance amount purchased? The answer 90% of the time is no. Over time materials cost more, labor cost more, removal of demolition cost more, as examples. So if you purchase a home today for 200K and was appraised for 205K, and in a few years or later your home is destroyed by some unforseen reason, you feel no problem I have insurance. Until you find out it will cost 255K to replace your home, but you are only covered for 205K.

Just speaking more from experience many years back, so I usually recommend at least 25K more then the higher of the home selling price or appraised value. It isnt that much more in premiums. Now if you really cant afford a little cushion in insurance then you are okay with selling price or appraised value whichever is higher (which should be the appraised value).

[Kozmo]

Good points. I wouldn't have thought of that.

I'm going to assume they will still ask for Marchs bank statement because they only have one but so far haven't asked.

At any rate I guess we're not too far from getting an ok to close. I'm assuming next week we will know. We had it in the agreement for 4/19 but maybe we can get her closed sooner