You’re pre-approved for a mortgage, you found your dream home and put in an offer. It’s been accepted! Before you can take possession, an appraisal is necessary.

Will you be able to move forward with the purchase? That depends on the loan-to-value of the home you’re pursuing.

Here’s what Eric Ridlington, owner of Prestige Appraisal Service, had to say about the process.

Michigan Mortgage: How is the value of a home appraised?

Eric Ridlington: Simply put, an appraisal consists of a comparison of your home to the most similar, recent and nearby sales in a given area. The appraiser will view your home inside and out, and use that for the basis of selecting comparables.

MM: What factors do you look at when appraising a home?

ER: The appraiser should consider all features including – but not limited to – the site, design, quality, condition, size, room count, added features and overall appeal to the market. An appraiser should consider all factors of a home and/or property as the typical buyer would, but also with a professional eye because of their experience in their given market and neighborhood.

MM: Why is the appraisal value so important in the lending process?

ER: The value of your home assists the lender in determining to approve your loan or not, or to what extent to agree to lend. Meaning, how much money to lend you. They’ll use the appraised value to calculate loan-to-value.

MM: Thanks for the great information! If a seller is interested in increasing the value of their home, what updates or upgrades should be made?

ER: The most common updates which impact value are the big items such as siding, kitchens, bathrooms, etc. However, to get a big bang for your buck, flooring, paint and light fixtures go a long way because those items cover such large areas and painting can be done without a professional in most instances, if you’re willing.

Not only is Eric Ridlington an appraisal expert, he’s also a professional member of our Service Rewards program that offers home discounts for honorable service. Why?

“The Service Rewards program appeals to me because it benefits many people who work in the community in careers which help so many people,” he said. “I see it as an opportunity to say thank you for their service.”

If you have questions related to the appraisal of your home, give us a call at 231-799-2606 or visit our website. As always, we’re here to help!

Don’t let your dream home slip through your fingers. A solid pre-approval letter will give you a leg up.

Getting preapproved and having a dependable, air-tight written pre-approval from a respectable lender could never be more important than it is today.

In what is called “a seller’s market” multiple offers are being made days and sometimes hours after a property is listed on the market. We have seen purchase agreements that are tens of thousands of dollars more than list price.

This seller’s market has created some unique challenges that serious buyers need to be prepared for.

1. Standing out among the crowd. Anytime you have a competitive situation, you want your offer to stand out among all the others. The best way to do this is to submit your pre-approval letter with the offer. At a minimum, the pre-approval letter should tell the seller that the lender has reviewed your credit, income and assets.

2. Seller concessions. For a long time, seller concessions (i.e. a clause where the seller contributes to the buyers closing costs and prepaid costs) have been common place. However, in this market, sellers are getting more reluctant to except those terms. Aside from this reducing the net proceeds to the seller, sellers understand that many appraisals are not coming in at the contract price. Until comparable sales catch up with the market, this may prove to be an issue.

3. Large earnest money deposit. Another attractive strategy for buyers is to put down a large earnest money deposit. This says to the seller that you are serious about their house and are willing to put money on the table. If The buyer decides to walk away from this agreement, they would lose those funds. I have also recently seen buyers agree to have an earnest money deposit being non-refundable for any reason if buyer does not obtain financing.

4. Quick close date. Buyers are offering to close their transaction faster than other offers. This is attractive to a seller that is trying to purchase another property. Unfortunately, those promises are dependent on more than just the lender. To get from start to finish on a closing, there must be cooperation from appraisers, title companies, realtors, borrowers, sellers, as well as the lender. Nevertheless, in this market it has never been more important to have a lender that has all of their ducks in a row so that the buyer can get to the closing table as quickly as possible.

5. The added phone call. For many of my clients, I will personally call the listing agent after I send a pre-approval letter to let them know that this buyer is good to go. It’s amazing how far that will go to get your offer excepted.

6. Out of town or unknown lender. I’ve heard multiple realtors tell me that they do not except pre-approval letters from lenders they are not familiar with. Right or wrong, this is an important reason to get approved from a local reputable lender.

In a market where your pre-approval is more important than ever, it is imperative that borrowers connect early and thoroughly with the right lender. We’re here to help!

Assuming that you are good to go on the mortgage front can be risky.

Unless you are an individual financing the transaction with cash, your mortgage will dictate the home shopping process itself.

Don’t put the cart before the horse.

Without a mortgage from a reputable and trusted lender, you may not get a house in today’s market. While shopping with a reputable realtor is important, make sure you allot the time and attention to your home loan first.

A new study from Fannie Mae revealed that there is a “lack of mortgage focus” out there and that lack of focus is more prevalent among low and moderate-income borrowers.

In about half of the cases in the Fannie Mae study found that lack of research and planning meant they didn’t qualify for a loan at all. Those people were forced to go back to the drawing board. Some were asked to improve their credit score and other needed to add to their savings to qualify.

We get it! The loan process – and the work it may take to get you approved for a mortgage – isn’t anything like the fun of going out shopping for a new home. Picking out a neighborhood, paint colors, kitchen counters are WAY more fun than looking at your credit, your savings and your current and past job situation. Analyzing the not-so-fun stuff is necessary to avoid being sorry when you can’t buy the house of your dreams.

Remember, wasted time can actually end in a higher mortgage rate, a potentially higher home price and the possibility of missing out on a house that you really, really want.

The time you put in upfront can reduce the overall amount of legwork through the process and will increase your chance of getting the right mortgage and the right house…the first time around.