How Does the New Appraisal Law Affect You?

New Home Valuation Code of Conduct (HVCC) regulations went into effect on May 1, 2009 and they are having an impact on all parties involved in a real estate transaction, including refinances.

The intent of the new regulations were to enhance the integrity of the appraisal process, and it begins with the ordering of an appraisal. Lenders can no longer choose an appraiser from their pool of appraisers. The appraisal must now be ordered through a third party appraisal management company (AMC) who will randomly select an appraiser. As a result, borrowers can expect a new "norm":

1. Appraisals now cost more due to the fact that they are handled by a management company. Expect to pay around $425 or more - they used to be $350. You might also experience additional fees that were never charged before such as fees for no-shows, or a higher fee for a more expensive home.



2. Expect to pay for the appraisal when it gets ordered instead of at the closing table. And you might also be required to pre-pay an amount in anticipation of a no-show.



3. If your loan application gets rejected, a new lender could require a new appraisal.



4. Because the appraisal process takes much longer going through a management company, be sure you allow enough time in your contract to allow for the new requirements. Rush files are going to be difficult at best.

Getting Your Home Ready to Sell

When it comes time to sell your home, most sellers have a list of things they want to take care of before putting their home on the market. It's that nagging little "to-do" list" that you've been meaning to get to.

A good rule of thumb - if it's broken fix it. If you are capable of making a professional repair, then by all means go ahead, otherwise, call in a professional. You will get it repaired correctly and be less apt for the buyer to mention it later during their inspection.

Beyond that, focus on things that make the rooms look bigger, brighter and more spacious. Start by going through each room in your home and de-cluttering, boxing up and storing items that aren't being used. Clearing off counter-tops will give the appearance of having ample storage

Specifically, repair all the electrical and plumbing issues. Replace old carpet or at least have them cleaned - especially if you have pets. Applying a fresh coat of paint will make the home sparkle. And you might consider neutralizing rooms that have strong paint colors - buyers like a neutral palette they can make their own. And don't forget the outside - spend a little time in the yard cleaning up the landscaping and make sure the entrance to your home is clean and tidy.

With some homes taking longer to sell, homeowners will want to do every thing they can to get the best price in the shortest amount of time.

How Your FICO Score is Determined

Here is how your FICO (credit) score is determined. The percentages below show how each area is weighted in your total score.

Payment history (ontime versus late): 35 percent

Dollar amounts owed (total amount owed on credit): 30 percent

Length of credit history (how long you have had a charge/payment history): 15 percent

New lines of credit: 10 percent

Types of credit used (credit cards, loans etc): 10 percent

Help is Here - Obama's Home Affordability Initiatives

The Treasury Department along with the White House have released the details on the new "Home Affordable " initiatives.


The refinancing program will allow an estimated 4-5 million borrowers with Fannie Mae or Freddie Mac loans to refinance into new 30-year loans at the current market rates. First, homeowners will need to verify that either Fannie Mae or Freddie Mac actually holds the mortgage, by calling their mortgage servicer.

Beginning immediately, Fannie Mae and Freddie Mac can provide:

• Refinancing without requiring new mortgage insurance - normally mandatory for loans with less than 20 percent equity.
• Maximum loan-to-value ratios up to 105 percent.
• Maximum mortgage amounts as high as $730,000.
  

The second program, called "Home Affordable Modification" is provided to restructure 3-4 million seriously delinquent mortgages - those loans which would go to foreclosure this year and which meet the following criteria:

• Loans that closed prior to January 1, 2009.
• Homeowners must agree to work with their servicer to make on-time payments at a reduced rate.
• Under this program, loan servicers who help troubled homeowners, by reducing payments to no more than 38% of their monthly income, will receive matching government funds to reduce payments even further to 31% of monthly household income. To accomplish this, interest rates on some loans could go to as low as 2%, length of the loans extended to as long as 40 years, and loan balances could be reduced as well.

As always, we are here to support your real estate needs and happy to help you in any way that we can....just a phone call away!