topic Re: Finding a new place if loan has issue in Mortgage Loans

Finding a new place if loan has issue

EaglesFan2006 — Wed, 15 Aug 2018 00:57:28 GMT

Hello,

I have a conditional approval right now. One is the appraisal. We are worried about it coming in low (DW way more than me, but still). I’m confident this will work, but if it doesn’t and the appraisal is low and we have to walk, how does that work? Since I’ve already been through underwriting, is at as simple as transferring the contract to a new home? Is it even ethical to look at homes while under contract for another? I know mortgages can fall through for a lot of reasons, so I’m just curious. I hate even thinking about this, but with nowhere to live in 6 weeks I’m trying to hedge every possible scenario.

Re: Finding a new place if loan has issue

Anonymous — Wed, 15 Aug 2018 02:07:11 GMT

From my understanding, appraisers KNOW the purchase price of the house and they work for the bank. They more than likely will place the value at or slightly above the purchase price. The house my partner and I bought in December was listed for $130k, we offered $134k with seller paying $3500 in closing costs (as allowed by our lender). The house appraised for $135k.

Re: Finding a new place if loan has issue

CreditInspired — Wed, 15 Aug 2018 03:11:31 GMT

Hi OP

First, why do you think the appraisal will come in low. Did your realtor do a CMA (comparative market analysis)?

If it comes in low, there should be a contingency in your contract that offers 3 options: you could make up the difference (a big no-no), the Seller could drop the price to the appraised valuw, or you can walk (the contract becomes null and void).

You can always look at other homes. You just can’t make an offer. You don’t want to put yourself in a position where you could possibly have two accepted offers.

And you may be stressing for nothing—buyer’s jitters.

GL2U

Re: Finding a new place if loan has issue

EaglesFan2006 — Wed, 15 Aug 2018 11:24:53 GMT

@CreditInspired wrote:
Hi OP

First, why do you think the appraisal will come in low. Did your realtor do a CMA (comparative market analysis)?

If it comes in low, there should be a contingency in your contract that offers 3 options: you could make up the difference (a big no-no), the Seller could drop the price to the appraised valuw, or you can walk (the contract becomes null and void).

You can always look at other homes. You just can’t make an offer. You don’t want to put yourself in a position where you could possibly have two accepted offers.

And you may be stressing for nothing—buyer’s jitters.

GL2U

Our realtor did a CMA, but was nervous about the lack of comps in the area. Basicly any recent sales were huge gaps in square footage (like over 1000). I'm assuming the seller's agent did a CMA and was comfortable, but I don't know. I know they originally listed it about 30k more than what the asking price was when we looked at it first (about 3 months after the original listing).

We do have the contingency and I know we can walk away, but if that happens I just wanted to know what options were. Essentially, do I have to go through the whole UW process again if I find another home that is similar or less in price? With a deadline for our lease approaching in 6 weeks, I just want to be sure I'm protected. I have to imagine situations like that have happened before.

I definitely wouldn't make another offer while this house was out there. It's the house we want, and I want more than anything for it to work out. And I'm sure you're right, I'm probably worrying about nothing. But I want to be as prepared as I can possibly be.

Re: Finding a new place if loan has issue

Anonymous — Wed, 15 Aug 2018 15:08:12 GMT

OP - What CreditInspired has mentioned is absolutely true.
If the appraisal comes in slightly low, you can use it as a bargaining chip with the seller.
If the appraisal comes in too low then you have a problem.
In either of the situations, if you have a financing contingency, which it seems like you have, you are free to walk away. And you will get your ernest money back. You will not get the option fee back though.

To answer your question about Plan B, if you do back out and find another house, you will go through the entire process again.

Good luck!

Re: Finding a new place if loan has issue

MauiMan85297 — Wed, 15 Aug 2018 20:08:19 GMT

@Anonymous wrote:
From my understanding, appraisers KNOW the purchase price of the house and they work for the bank. They more than likely will place the value at or slightly above the purchase price. The house my partner and I bought in December was listed for $130k, we offered $134k with seller paying $3500 in closing costs (as allowed by our lender). The house appraised for $135k.

The appraisal is from an independent third party and it's illegal for a lender to influence an appraisal-that was pre 2009 and post now has regulations in place that prohibit that. The answers above are correct, if there are no comparable comps within 1 square mile the appraiser will go outside of the area for them.

Re: Finding a new place if loan has issue

EaglesFan2006 — Wed, 15 Aug 2018 21:33:40 GMT

Thanks all, still really hoping this appraised at or close to contract

I know the lender can’t contact the appraiser. However the listing agent will be there when it happens. Is there anything listing agents do to help the appraiser? Will the listing agent get a sense of how it goes?

Re: Finding a new place if loan has issue

CreditInspired — Wed, 15 Aug 2018 21:37:11 GMT

OP
I might be wrong but I think your loan approval is good for 90 days. Confirm with your LO. But if it’s been more than 90 days, @pirospavalentino is correct. It’s a different home and everything starts from scratch.

However there may be some light at the end of the tunnel. If I recall correctly when I was a Realtor, when an appraisal is done and especially if it’s low, that value stays in the computers for at least 6 months. So if Seller doesn’t want to come down, the next buyer’s lender will see the amount of the first appraisal and I seriously doubt the next lender will go higher than the one on the books.

Hopefully, someone will respond to this because I’m not 100% on the exact details.

Re: Finding a new place if loan has issue

JVille — Wed, 15 Aug 2018 22:04:47 GMT

As long as you stick with the same lender they will simply transfer all the file to a new house. Update and adjust (new app, title, etc) anything that may be getting old. It will be easier as you will be credit approved and ready to go.
As to the Appraiser, they do have a FULL copy of the purchase agreement when they accept the assignment. So they know what the sales price is and it’s their job to Protect you and the Lender but usually unless it’s just crazy IF the price can be supported they will do it. Can’t happen all the time but normally it works. FSBO (For Sale By Owner) sales are the ones that have the biggest issues. No Realtors involved and no one running the Comps. The seller either wants way to much or they have left $$$ on the table all in an effort to not pay for professional assistance (pricing, marketing, screening buyers before letting just anyone into your home).
I’m sure it will all work out and Congratulations for getting this far!

Re: Finding a new place if loan has issue

EaglesFan2006 — Thu, 16 Aug 2018 18:03:00 GMT

@JVille wrote:
As long as you stick with the same lender they will simply transfer all the file to a new house. Update and adjust (new app, title, etc) anything that may be getting old. It will be easier as you will be credit approved and ready to go.
As to the Appraiser, they do have a FULL copy of the purchase agreement when they accept the assignment. So they know what the sales price is and it’s their job to Protect you and the Lender but usually unless it’s just crazy IF the price can be supported they will do it. Can’t happen all the time but normally it works. FSBO (For Sale By Owner) sales are the ones that have the biggest issues. No Realtors involved and no one running the Comps. The seller either wants way to much or they have left $$$ on the table all in an effort to not pay for professional assistance (pricing, marketing, screening buyers before letting just anyone into your home).
I’m sure it will all work out and Congratulations for getting this far!

Thank you all for the advice. The appraisal happened this morning so it's going to be a few days of anxious waiting (much like the last couple of weeks). I hope it all works out...I think I read all I can about how appraisers adjust and all that, and about all I can definitively conclude is that it's an inexact science. Hopefully it comes through!

Re: Finding a new place if loan has issue

DollyLama — Thu, 16 Aug 2018 18:13:31 GMT

As far as CMAs, even though the best comps might be an extra bedroom and bathroom and over 1000 sq ft, they have to adjust figures for those areas. Then they take in the upgrades to the one you are buying.

Re: Finding a new place if loan has issue

JVille — Thu, 16 Aug 2018 18:33:51 GMT

Exactly an “inexact science” as good a description as I’ve heard. An appraisal is simply one persons opinion. Granted it’s suppose to be an informed expert opinion buttt good day, bad day, the stars in or out of alignment.

Good news is this will soon be done with and over!

Re: Finding a new place if loan has issue

EaglesFan2006 — Thu, 16 Aug 2018 23:42:42 GMT

I got some title docs back today, and the municipality one indicates that property taxes went down $1200 for next year. That sounds great, but is that a bad sign for the neighborhood? Just curious if that could impact the appraisal that happened today, or do they really not have anything to do with each other?

Re: Finding a new place if loan has issue

JVille — Thu, 16 Aug 2018 23:50:49 GMT

Actually that sounds too good to be true. I would ask questions about last years taxes vs this years.

Re: Finding a new place if loan has issue

EaglesFan2006 — Fri, 17 Aug 2018 00:10:34 GMT

I’m definitely going to ask already forwarded it to lender. But does something like that have any impact on the appraisal that happened today?

Re: Finding a new place if loan has issue

JVille — Fri, 17 Aug 2018 01:01:29 GMT

I would call the Title Examiner who prepared the Title Report.

Re: Finding a new place if loan has issue

EaglesFan2006 — Fri, 17 Aug 2018 01:39:01 GMT

Thanks for the tip I will. I certainly want to make sure everything is in line.

Of course now I’m even more freaked out about this appraisal.

Re: Finding a new place if loan has issue

JVille — Fri, 17 Aug 2018 02:10:51 GMT

Don’t worry about the taxes affecting the Appraisal. Let that thought go completely!

Re: Finding a new place if loan has issue

EaglesFan2006 — Fri, 17 Aug 2018 19:28:22 GMT

Well fear realized. Appraisal came in over 20k lower. So we have our last hope out to renegotiate (about 3k more than the appraisal with cash we will bring) but I am not optimistic. Just really sucks. 6 weeks until lease end. Feeling pretty hopeless

Re: Finding a new place if loan has issue

JVille — Fri, 17 Aug 2018 19:34:16 GMT

It’s up to your Agent and the Listing Agent to Educate the sellers that the buyers are going to walk if the price is not adjusted. This problem for the sellers is not going to disappear. The next buyer will have the same problem.