by Supreme Lending | Nov 10, 2024
Your Quick Home Appraisal Checklist
When buying or selling a home, it’s important to understand the importance of a home appraisal during the mortgage process. Appraisals determine the value of a property based on various factors, ensuring buyers, sellers, and lenders are aligned on what the home is worth. Knowing what appraisers look for can help ensure a smooth mortgage process and avoid last-minute surprises or delays. Read on for an overview of the appraisal process including a home appraisal checklist for homeowners, buyers, and real estate agents to consider.
What Is an Appraisal?
An appraisal is an independent assessment of a property’s market value led by a licensed appraiser. The value is based on evaluating several aspects of the home, such as the condition, location, and recent sales of comparable properties in the area. The appraisal is an essential step of the mortgage process required by most lenders to verify that they’re not lending more than the home is worth. For buyers, a home appraisal can also offer reassurance that they are paying a fair price.
The Home Appraisal Checklist: What Appraisers Look For
Here’s a quick look at some key elements appraisers may consider when evaluating a property. You can use this guide when searching for a home or preparing to sell.
1. Home Size and Layout
- What is the total square footage and number of bedrooms and bathrooms?
- Is the layout of the rooms and spaces functional.
- Is there a finished basement or attic that adds to the livable space?
2. Exterior Condition
- Roof: Are there any missing shingles, leaks, wear and tear, etc.?
- Foundation: Are there visible cracks or settling issues?
- Siding, windows, and doors: Check for any damage, peeling paint, or outdated fixtures.
- Landscaping: Is it overgrown or neglected?
3. Interior Condition
- Walls, ceilings, and floors: Are there any cracks, stains, or general wear and tear?
- Kitchens and bathrooms: Is there any damage, outdated appliances, or broken equipment? Are there luxury upgrades that may boost the home’s value?
- Plumbing and electrical: Are the systems up-to-code, functional, and safe?
4. Lot Size and Usability
- How large is the lot?
- Is it safe and functional?
5. Upgrades and Amenities
- Are there any recent home improvements, such as a kitchen remodel, energy-efficient updates, or a new roof?
- Are there unique amenities such as a pool, outdoor kitchen, or wine cellar?
6. Safety and Compliance
- Appraisers will check for safety hazards or code violations.
- Factors like missing handrails, faulty wiring, or broken windows can negatively impact the appraisal.
7. Location & Neighborhood
- Appraisers will examine the property’s location, including proximity to schools, parks, shopping centers, and other amenities.
- Neighborhood conditions, crime rates, and overall desirability can also impact the value.
8. Comparable Sales (Comps)
- Appraisers will compare the home to the sales of similar properties in the neighborhood.
- Factors such as home size, condition, and location are considered to provide a rough benchmark.
Preparing a Home for an Appraisal: Tips for Sellers and Agents
Keeping the home appraisal checklist in mind, there are some measures that sellers or listing agents may consider to prepare for an appraisal and potentially maximize a home’s value.
- Make Minor Repairs As Needed. Fix any small but noticeable issues, such as leaky faucets, old paint, stained carpet, and broken hardware. Minor fixes may go a long way in improving a home’s appraisal value.
- Clean and Declutter. A clean, organized home allows the appraiser to focus on the property’s key features rather than clutter. This step can also enhance the home’s overall appearance.
- Highlight Recent Upgrades. If the home has undergone significant improvements, provide the appraiser with a list of updates, including the dates and cost of renovations.
- Provide Easy Access. Make sure that the appraiser can navigate to all areas of the home, including the basement, attic, and other outdoor structures.
Frequently Asked Questions About Appraisals
1. What is the difference between a home appraisal and a home inspection?
A home appraisal determines the market value of the property, which is essential for lenders to approve the loan amount. A home inspection, on the other hand, assesses the condition of the home and identifies any potential issues or repairs that may need to be addressed. While an appraisal focuses on value, an inspection focuses on the home’s livability.
2. What happens if the home appraises for less than the sale price?
If the appraisal comes in lower than the agreed-upon sale price, the buyer and seller may need to renegotiate. The buyer could request the seller to lower the price, or the buyer may need to pay the difference out of pocket.
3. Do you need an appraisal when refinancing?
Yes. When refinancing,* it’s essential to understand the home’s current market value, especially if you’re taking cash out of your home equity. The appraisal also plays a key role in determining the Loan-to-Value ratio, which can affect loan terms, interest rate, and whether private mortgage insurance may be required.
*By refinancing an existing loan, total finance charges may be higher over the life of the loan.
What’s Next?
A home appraisal is one of the most important steps in the mortgage process. Once the appraisal is complete, the report is submitted to the lender for review. The lender reviews the appraisal report to verify the property’s appraised value aligns with the loan amount. When all loan conditions are met, it’s smooth sailing to closing.
Whether buying, selling, or listing a home, understanding the home appraisal checklist can help make the mortgage process smooth and seamless.
For more information about mortgages and steps of the loan process, contact your local Supreme Lending team today!
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by Supreme Lending | Oct 14, 2024
An Overview of Your Mortgage Checklist
Ready to buy a home but don’t know where to start? We’ve got you covered with what is needed for the loan application process with this basic mortgage checklist! To qualify for a home loan, lenders will need to review several personal and financial documents during the application and mortgage underwriting process. To help streamline the process, it’s helpful to know what all you may need to provide to ensure your mortgage goes smoothly. Once you have completed the loan application and given your intent to proceed with your loan, here’s a general mortgage checklist of required documentation.
Proof of Income
Lenders need to verify that you have a steady income to make your mortgage payments. This is a key part of the loan process, and the documents you’ll need to provide include:
- Pay stubs from the last 30 days (most current)
- W-2s and tax returns from the last two years
Employment Verification
In addition to proof of income, lenders verify your employment to ensure you have stable job security. Be prepared to provide:
- Employment history for the last two years, address any gaps
- Offer letter or contract if you’ve recently started a new job
Credit History
Your credit score plays a big role in determining what loan options and rates you may qualify for. Lenders will pull your credit report to review your creditworthiness. You have options to review your credit beforehand as well.
Proof of Assets
To help determine how much you may be able to afford for a down payment and closing costs, lenders will review your financial assets. At this point in the process, the following will be needed.
- Bank statements from the last two months
- Investment account statements including 401(K), IRAs, stocks, CDs, money market funds, Terms of Withdrawal Retirement, profit share, etc.
- Source of any large deposits, for example if you received mortgage gift funds or sold a large asset
Additionally, any assets used for a down payment, closing costs, and cash reserves must be documented by a paper trail.
Debt-to-Income Ratio
Lenders will review your debt-to-income, known as mortgage DTI, to ensure you can handle additional mortgage payments. This is calculated using:
- Total monthly debt payments, for example credit cards, car loans, student debt
- Monthly gross income including salary, investment income, bonuses, and commissions
Identification
To confirm your identity, you’ll need to provide:
- Government-issued I.D. (valid driver’s license or passport)
- Copy of Social Security card (SSN)
- Residency history, typically for the last two years including landlord information for renters or a mortgage statement if applicable
Other Information Depending on Your Situation
In addition, you may need to provide other documentation depending on your current circumstances.
These could be:
- If paid off a mortgage in last year, need copies of the release of mortgage lien
- If own 25% or more of business, need company tax returns for last two years
- Divorce decree or child support order, if applicable
- Refinance copy of note, Closing Disclosure, and survey
- Relocation Agreement if the move if financed by employer (i.e. buyout agreement, documentation outlining company-paid closing cost benefits)
- Insurance quote
Program-Specific Documents
For government-insured loan programs, there are a few more items you’ll be required to provide:
- FHA: Copy of Social Security card for each applicant and co-applicant
- VA: Original Certificate of Eligibility (COE), copy of DD214 discharge paper, and contact information of nearest living relative
- FHA and USDA: Total household income of all borrowers moving into the new home
Preparing for a Smooth Process
By preparing yourself for a seamless mortgage process, you’re showing lenders you’re organized and ready to move forward. This preparation may help prevent potential delays, reduce stress, and have the majority of items needed to secure your dream home. Bookmark this mortgage checklist to have on-hand when you’re ready to start your homebuying journey.
If you have any questions about what documents are needed or how to get pre-qualified, our team at Supreme Lending is ready to help!
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by Supreme Lending | May 7, 2024
So, you’ve decided to take the plunge into homeownership. Congratulations! But where do you start? The mortgage process may seem overwhelming, especially for first-time buyers. That’s where your local Supreme Lending team comes in to help simplify the journey from pre-qualification to closing, resulting in a smooth and seamless experience. Let’s break down the nine basic steps of the mortgage process and see how Supreme Lending can help you every step of the way.
1. Get Pre-Qualified.
When buying a home, it’s crucial to know how much house you can afford. Getting pre-qualified or pre-approved for a mortgage is a great first step to becoming a homeowner. A pre-qualification will provide an estimate on what you may be able to qualify for based on information you provide such as assets, income, and credit. Your lender can even provide a pre-qualification letter, which can help show sellers that you’re a capable and serious buyer.
2. House Hunting.
Let the house hunting begin! Work with a real estate agent and view properties based on your location, style, and budget. At Supreme Lending, we understand that finding the perfect home is about more than just the numbers. That’s why we want to ensure your mortgage aligns with your dream home.
3. Make an Offer and Negotiate.
Found your dream home? Now it’s time to make an offer and negotiate a contract based on agreed upon price and terms. With Supreme Lending by your side, you can approach negotiations confidently, knowing that we’re here to support you through all the steps of the mortgage process.
4. Complete a Full Loan Application.
Once your offer is accepted, it’s time to move forward and complete the full mortgage application process by notifying your lender of your intent to proceed with the loan. Supreme Lending can then help guide you through this important step and help you gather the necessary financial documents required, such as pay stubs, tax returns, and account statements.
5. Review the Loan Estimate.
Understanding the details of your loan is essential. During this step, Supreme Lending will provide you with a comprehensive Loan Estimate (LE) document, that breaks down initial disclosures and transaction terms, such as interest rate, closing costs, and any other applicable information. Carefully take the time to review and ensure you fully understand your loan before moving forward.
6. Property and Title Evaluation.
Before finalizing the deal, it’s essential to ensure the home is in good condition and ready to be moved in to. An appraisal is ordered to determine the home’s market value, an inspection is completed to confirm that the home’s systems are up to code, and a title search is conducted to confirm a clear transfer of ownership. Finalizing these important assessments is paramount for a smooth closing.
7. Underwriting Review.
Your loan application undergoes a detailed underwriting review to ensure all lending guidelines are met. Additional conditions may be requested for final approval. With Supreme Lending’s expertise, you can trust that your application is in good hands. Our in-house underwriting team works diligently to streamline the process, keeping you informed every step of the way.
8. Clear-to-Close and Final Review.
Once your loan is approved and all conditions are met, you’re issued the three most exciting words throughout the steps of the mortgage process: Clear-to-Close! You’ll receive an official Closing Disclosure (CD) at least three days prior to your closing day to review. Once you sign off, the final documents are prepared and confirmed.
9. Closing Time.
The big day has arrived! With Supreme Lending, you can sign your closing documents with confidence, knowing that everything has been accurately reviewed and ready to transfer the funds and ownership. Finally, you receive the keys to your new home, marking the end of your journey to homeownership and the start of an exciting new chapter.
While the path to homeownership may seem daunting at first, with Supreme Lending, it becomes an exciting and rewarding experience. From pre-qualification to closing, we can provide the expertise, support, and personalized service you need to navigate the steps of the mortgage process with ease.
So, what are you waiting for? Contact your local Supreme Lending branch today to get started.
