It’s time to buy your first home! Hooray! This is a big deal and a major milestone in your life. It’s definitely not something to do on a whim. There are a gazillion things you should know before you take the plunge.

We want to make sure you have all the information you need to make a smart decision, not only on which home is the best choice for you, but also on which financing option will best fit your unique situation.

Our own Clayton Closson wrote a very helpful post a few years ago, and much like the man himself, it is still relevant today. Did he use a few words you haven’t heard before? Check out our mortage glossary for a quick explanation.

We’re obsessed with finding a better way to do things. Because of this, we’ve added a new section to Zing! to help you, our dear readers, find your way through the maze of financing your home. Check out our Learning Center, which can be found through a tab on the Zing! homepage.

Still looking for a real estate agent? In-House Realty will pair you with an experienced agent who is knowledgeable in your area, and that suits your personality and house-hunting style. Speaking of realtors, did you know things you say to your realtor could slow down the process?

Already out looking at houses? We’ve got an app that can help you keep track of your options. Try out our Mortgage Calculator to figure out monthly mortgage payments, take pics of homes you see, and compare your options side by side. But, that’s not all this app can do – see for yourself!

Let’s see here… There’s so much to tell you. Fellow Zinger Gabriela is currently shopping for a new home and has been writing a series about her experiences. Try these subjects for starters: home inspections, appraisals, making an offer, new construction vs. older homes. She even lists top websites for home buyers. She’s been there and done that, so learn from her experience!

And, mortgage rates just hit record lows again today! You’ve picked the best time to buy your first home. If you’ve been waiting for a sign that you should take the plunge, you got it!

Don’t forget, we’re America’s Home Loan Experts! We’re here to help you out through this entire process – from your pre-approval to your closing. Give us a call today at (800) 687-0522, and we’ll get you started!

With mortgage rates amazingly low right now, it’s no surprise that many homeowners are looking to refinance to a mortgage with a lower rate to save cash and stretch their hard-earned money further.

One of the most important factors regarding your ability to refinance is your home appraisal.

Knowing how home appraisals work may be the key to understanding how the value of your home is calculated.

Here is a quick recap of the appraisal process.

What is an appraisal?

An appraisal is an opinion of value that is completed by an independent professional appraiser who visits and inspects the size, condition, function and quality of the home. There are a few steps in the process. First, a licensed appraiser comes to the property and inspects the home. Next, the appraiser will research similar homes in the area and compare recent sales to determine a fair market value. The appraiser will then give a final appraisal report with all the data and research to issue a final “opinion of value.”

Why do I need an appraisal to get a home loan?

A real estate appraisal helps to establish a property’s market value – the likely sale price it would bring if offered in an open and competitive real estate market. Appraisals protect both the lender, and the client, so they don’t overpay for a home.

How is the appraiser selected?

Since by law Quicken Loans cannot do appraisals, a licensed, independent professional appraiser selected by an appraisal management company (AMC) conducts the appraisal. By law, the appraisal must be done by a third party who has no interest in the outcome of the appraisal.

Now that you have a good understanding of the appraisal process, check out this helpful video summarizing the procedure.

One of the most important factors regarding your ability to refinance is your home appraisal. In order to determine your loan-to-value ratio, your lender needs to determine the current market value of your home. This value will be compared to the amount that you owe on your home.

The maximum loan-to-value ratio can vary by loan type, and there are some loan programs that allow you to refinance even if your home appraisal shows that you owe more than your home is worth. However, a low appraised value can present a roadblock when it comes to refinancing your mortgage.

If you’re thinking about refinancing in order to take advantage of today’s low mortgage rates, there are some things you can do before you get your home appraisal. The first step is to get a rough idea of some recent comparable home values. Keep in mind, you will never be able to pinpoint your home’s value until an actual appraisal is done. But if you’re going to do some research on your home’s value, make sure you’re comparing apples to apples. Looking at recent home sales in your neighborhood can be misleading. If you have a small, 2-bedroom ranch, it’s probably not a good idea to use the sale price of your 5-bedroom, bi-level neighbor as a comparison.

Additionally, it’s important to know that in the post-bubble lending market many home loan and appraisal guidelines are government regulated and much stricter. These guidelines are put in place to protect you, the consumer. The government wants to protect people from getting mortgages they can’t afford, or large loans on houses that don’t have value. That being said, appraisers tend to be very fair, or maybe even a little conservative in today’s market. Beyond the condition of your home, age, home type, location and foreclosures in your area all factor in to your home’s value.

The appraisal is an important part of the refinance process and can often make or break your ability to refinance. If an appraisal comes in low, you may be tempted to blame the lender, but by law the lender cannot have any influence or conversation with the appraiser regarding the valuation of the property. This is another government regulation that was put in place for your protection. The government wants to make sure that lenders aren’t influencing the value of a home in order to put someone in a mortgage.

If you’re home appraisal comes in low, there are still some options available to you if you want to refinance. You can pay the difference in your closing costs, but if the appraisal is much lower than the loan amount, this may not be an affordable option. Unfortunately, if there isn’t a loan available for your loan-to-value, you may have to wait until the values in your neighborhood start to bounce back. The good news is that mortgage rates are still incredibly low, so hopefully the market will continue to be in your favor when your property value meets your needs.

If you have questions about the appraisal process or any home loan questions in general, feel free to contact us at content@quickenloans.com.

Amber Hunt is a writer for Quicken Loans, an amazing place to work.  Find out more about being a part of our team at Quicken Loans and learn how we Amaze our clients.

Happy Wednesday! Did you know that on this day in 1894, The Hershey Company was founded? The company that brought us the magic of the Hershey’s Kiss was founded on the same day as this week’s Watch-It Wednesday, Quicken Loans weekly video blog where we answer YOUR mortgage questions! What a lovely coincidence. This week, Austin Niemiec returns to answer a common question: Why does Quicken Loans require a deposit?

If you can’t see the embedded video, watch our Quicken Loans Deposit video here.

Got something to say? We’d love to hear from you! Email us at content@quickenloans.com and we just might feature your question or comments in an upcoming blog post!

Video Transcription:

Hi, my name is Austin Niemiec. I’m a Senior Mortgage Banker at Quicken Loans and I’m here today to discuss our deposit policy. One of the biggest questions I get is “Why does Quicken Loans accept a deposit?” And it’s very simple. We want to make sure you’re committed to do business with us as we are committing ourselves to doing business with you. The point of the deposit is that Quicken Loans is going to cover some of your cost out of pocket initially. Things like paying for your appraisal, paying for your credit report and we spend a lot of time processing and underwriting your loan very, very efficiently.

Now once we close your mortgage, you will be refunded the deposit in full. We’ll either credit it back to your closing costs or we may even be able to write you a check depending on your situation. The only way that you would lose or forfeit that deposit is if you were to back out of the loan or if there’s an issue with an appraisal or some sort of underwriting process that couldn’t get the loan closed.

Be sure to ask your mortgage expert any other questions or concerns you have on the deposit, I’m sure they’d be glad to help you out. Thank you.

Welcome to the first Watch-It Wednesday of 2011! With a lot of people looking to refinance their mortgage in the new year, we’ve been getting questions about a crucial aspect of the mortgage process: the appraisal. People want to know how their home’s appraisal value is calculated.  Clint Bonkowski explains:

If you can’t see the embedded video, watch our Home Appraisal Value video here.

Got something to say? We’d love to hear from you! Email us at content@quickenloans.com and we just might feature your question or comments in an upcoming blog post!

Video Transcription:

Hello, my name is Clint Bonkowski from Quicken Loans. I’m the Divisional Vice President of Underwriting and today I want to talk real quick about one of the questions we get asked most often, and that is: How is my appraisal value calculated?

A lot of people feel that their house should be worth what they paid for it or what improvements they’ve put into it. Really, the value of your home is determined by the market. Like all markets, values can go up and down, as we’ve seen in the most recent past. So, how do you figure out what your home is currently worth?

What you want to do is look at your local market and how your local market is acting. So, look at comparables in your neighborhood. Look for homes that are similar in size, style and location. And what we mean by style is, make sure you’re comparing your home to other homes that are similar. Do you have a ranch? Then look for comparable ranches. Do you have a colonial? Then look for comparable colonials. Size- make sure you’re comparing your home to homes that are similar in size and square footage. A thousand square-foot ranch be compared to a thousand square-foot ranch. Lastly, location. Make sure in location, you’re looking at homes that have sold or are currently listed in your market that are no more than a mile away. If you check off on all three of these things, you can get a pretty good idea on what your home is currently worth and therefore, give you a good starting point on getting a new mortgage.

You have researched the options available to you and realized the benefits of moving forward with a refinance. The paperwork has been processed, the home loan has been conditionally approved and the next step is the appraisal.

There are several questions surrounding the appraisal process and what to expect. The appraisal is ultimately your safeguard against spending more on your home than it’s worth. It’s also a safeguard for your mortgage company to not lend out more on a property than it’s currently worth. Appraisers are always 3rd parties in the mortgage process (it’s illegal for the appraiser to work directly with or for the mortgage company) and they have only one purpose – to realistically judge a property for its actual worth at the time of the appraisal.

Watch our Real Estate Appraisal Video Series on YouTube. We’ll walk you through an entire appraisal in this six-part video series, which will certainly answer any questions you may have about mortgage refinance appraisal inspections.

If you’d rather continue reading than watch a video, below are the top things to understand about an appraisal. These should answer most of your questions regarding the appraisal process during a refinance, but in case you still have a questions, please call us at (800) 863-4332 or email help@quickenloans.comand we’ll answer all your concerns.

1. How long will an appraisal inspection take?
   The physical appraisal inspection usually lasts anywhere from 5-30 minutes, depending on the size and complexity of the home. The appraiser will make note of the floor plan or any significant upgrades and features.
2. Measuring the House
   • An appraiser has several different ways of obtaining measurements to the house.
     • Physically measure the property
     • Obtain measurements from a prior mortgage survey
     • Obtain measurements from a previous appraisal
     • Obtain measurements from county or city assessor’s records
   • Square footage is generally determined from exterior measurements.
   • Please keep in mind that proper county permits are required in order to include any square footage that had been added on to the home.
3. Finished Basements and Gross Living Area
   • Basements, below grade or partially below grade area are typically not considered part of the square footage or room-count on an appraisal, regardless of window size, ceiling height or walk-out features.
   • Adjustments to value may be made in favor of finished basements
4. Cost Improvements
   Improvement costs are not usually recovered in the market. For example, one may have spent $45K in remodeling their kitchen. The remodel may have included granite countertops, tumbled marble backsplash and glazed porcelain flooring. However, the additional value given by the appraisal will only be for the updated kitchen and will not take into account the separate materials and their cost. Also, improvements such as a new roof, new furnace, new windows, etc. are considered a part of typical wear and tear and do not typically bring additional value.
5. Differences in Bedroom Counts The market recognizes very little difference between a 3-bedroom and a 4-bedroom home. Typically there is not an adjustment for this and the difference in square footage is adjusted under the Gross Living Area. There is usually a market difference between 1-, 2- and 3-bedroom homes and comparable sales for 1- and 2-bedroom homes are typically difficult to find.
6. Comparable Sales Data
   • Recently closed sales similar in location, size, style and features are used to help determine value during an appraisal. These sales must be closed and verified by a public data source at the time of the appraisal inspection. Comparable home sales should have taken place within the last 90 days, however that’s not always possible in slower markets. Additionally, the sale should have taken place within 1-mile of the home being appraised. Distance and time guidelines are usually exceeded for rural property locations. Comparable sales within your subdivision (if applicable) would be looked at first – however, not all homes sold in your neighborhood may be comparable. For instance, your home may be a ranch home with an unfinished basement and a two-car garage. The home next door to you may have just sold, but it is a 4-bedroom colonial with a fully finished basement and 300 more square feet of living space. These homes wouldn’t be considered comparables.
   • Evaluations must be based on the closest comparable homes. Similarly, appraisers must consider the most recent sales in your area, regardless of the value.
7. Appraiser Qualifications
   • To become an approved appraiser with Quicken Loans, all appraisers must submit a completed package to Quicken Loans vendor management for review. Each appraiser must provide their licenses, E&O insurance, fee schedule, coverage areas, three work samples, and a W-9 form. The first five orders are flagged for audit to determine if the appraisers are meeting our standards. All of these standards and requirements are put in effect for one simple reason – to make sure our appraisers provide excellent service and fair appraisals for our clients 100% of the time – no exceptions!
   • Certified trainees are allowed to complete appraisal inspections in many states. The supervisory appraiser must sign the report which will place full responsibility of the appraisal report and its contents on the supervisory appraiser. The appraisal is still valid.
   • The appraiser is NOT an employee of Quicken Loans. All appraisers who work with us are 3rd parties, licensed to perform appraisals in specific counties. The majority of the information in an appraisal comes from the MLS (Multi Listing System) which is available to licensed real estate professionals.
8. Appraisal Reassignment
   An appraisal CANNOT be reassigned to another mortgage company regardless of a consent form from the prior company. The exception to this guideline is an appraisal completed for the purpose of an FHA loan within the specified time frame allowable by FHA.
9. Appreciating/Depreciating Values
   In general, homes across the county are experiencing a decrease in value. This could lead to varying reported values in a short period of time. For example, a home appraised 6 months ago at $200, 000 could now be valued at $150,000 depending on how homes sold in the recent months following the original appraisal.

Understanding the appraisal process is a very important part of getting the right home refinance mortgage. Knowing how appraisals work will allow you to work closer with your mortgage banker to find the best possible mortgage for your situation. If you have any questions about appraisals or buying a home in general, please call us at (800) 251-9080. If we can make your experience better or easier to understand, we are doing our jobs!

What’s the difference between an appraisal and a comparative market analysis? Good question!

An appraisal is a certified appraiser’s calculation of the value of your home at a given point in time. In order to get the approximate value of your home, the appraisal takes into consideration such things as:

• Your home’s square footage
• Construction quality
• Home design
• Your home’s floor plan
• The neighborhood your home is located in
• Availability of transportation, shopping and schools
• Lot size, topography, view and landscaping

Where can I get the approximate value of my home?

A comparative market analysis is more of an informal estimate of your home’s market value. A real estate agent makes an analysis based primarily on sales of comparable homes in the neighborhood. Compared to home appraisals, which typically cost between $200 and $300, a comparative market analysis may be obtained at no cost.

What’s the difference between the estimated value of my home and my house worth?

While a home’s “estimated value” is most commonly determined by either an appraisal or a comparative market analysis , its “worth” is ultimately established by what prospective buyers are willing to pay for it.

Can I find the value of my home through the Internet?

Use a home value tool  to get home value estimates. There are also a number of other websites and services that can crunch the numbers and calculate your home’s estimated value.

While these calculators rely on recent home sales and refinance transactions in your area to produce a value estimate, an appraisal or comparative market analysis may still provide you with the most accurate assessment.

If you still have questions, please call us at 800-251-9080 to talk to a refinance expert today. We can help you determine which refinancing option is best for your situation.

In this week’s Watch-It Wednesday, Home Loan Expert Allison Snell walks us through the appraisal process:

Can’t see the embedded video? Click here to learn more about the home appraisal process.

Video Transcription:

Hey everybody, I’m Allison Snell from Quicken Loans and I’m here to give you some important new information on appraisals.  It seems like everyone is talking about appraisals these days and a lot of people have questions about the whole process.

So what’s an appraisal? An appraisal is what determines the fair market value of your property. The appraisal is performed by a licensed appraiser who provides a professional opinion of the value of your property based on a variety of factors. It’s an important part of the mortgage process that needs to happen before the transaction can be finalized.

It’s easier to understand the whole process by breaking it down into three main parts. There’s the Real Estate Inspection, the Comparables and The Final Report of Value.

The real estate inspection will take anywhere from 10 to 30 minutes based on the size of your home. The appraiser will record things like square footage, the dimensions of your property and the number of rooms in your home. He’ll verify his findings with information provided by third parties such as the real estate multiple listing service and county records.

The next step is for the appraiser to evaluate Comparables. Comparables are recent home sales in and around your neighborhood. Analyzing these recent past sales helps an appraiser determine the current market value of your home. And when I say recent, I’m talking 3 to 6 months. This is important because comparable sales from many years back may not reflect true home values today.

When selecting comparable properties, the appraiser is looking for some very specific things: Homes that have recently sold, homes that have sold near where you live, homes that are similar to yours in terms of size, age and style – such as ranch, colonial or tri-level , for example.

You should also know that home values from Real Estate websites do not give you accurate comparable values. The information they provide may be outdated and isn’t verified by third parties such as real estate multiple listing services. Basically, an accurate appraisal can only come from a licensed appraiser.

Here’s a question a lot of people are asking these days: Will a foreclosed house in my neighborhood affect the appraised value of my property? The answer is that it depends on the amount of foreclosed properties that have sold in your area. Much like artwork, baseball cards or any other product, the value of a house is based on what people are willing to pay for it. And the bottom line is that foreclosed homes sell for less than other homes.  And the more foreclosures in your area, the more average home prices will fall.

The important thing to remember is that appraisers can’t treat foreclosure sales any different than non-foreclosure sales. A sale is a sale regardless of whether a comparable property happens to be in foreclosure. But here’s the good news: By keeping your property well-maintained and up-to-date, you’re doing what you can to increase the appraised value of your property.

Next, an appraiser will move on to the final step: Preparing a Final Report of Value. This report will detail the appraiser’s analysis of the value of your property based on a combination of the inspection and the comparables. Also, if you’ve done home improvements and upgrades to your property, the appraiser may take these things into consideration when writing his final report of value. Both you and your mortgage lender will get a copy of this report.

So speaking of the mortgage lender, what’s our role in the whole appraisal process anyway? Here’s the simple answer: Mortgage companies like Quicken Loans, by law, cannot do appraisals.

Appraisals can only be performed by a state-licensed third party. That means that by law, we have no influence on the appraised value of your property.

In fact, if an appraisal on a property comes in too low, we won’t be able to write a loan on it. The bottom line is that we at Quicken Loans want what you want: A fair appraisal of your property that accurately reflects today’s market conditions.

An accurate appraisal is the best way to ensure that everyone’s interests are protected throughout the entire home refinance or purchase process.

I hope I’ve cleared up some of the questions you may have about the appraisal process and the role that Quicken Loans plays in it.  If you’re interested in learning more, just call your mortgage expert and they’ll be happy to answer any questions you may have.  Thanks again for tuning in.

 If you’re thinking about refinancing you may be hesitating because you are intimidated by the process.  The mortgage industry collapse and unpredictable financial markets have created some new obstacles for borrowers.  However, these hurdles can be easily overcome with a little research and preparation.  Here are some of the things to be ready for, and some tips on how you can prepare yourself to go through the refinance process with ease:

1)      Credit Score – Know your credit score and work to improve it before you refinance.  If your credit score has dropped since you got your mortgage it could have a drastic impact on your interest rate, or whether you’ll be able to refinance at all.  There are many ways to bring your credit score up, check out this article for some helpful tips on increasing your credit score.

2)      Appraisal – Your current home value is a key component of the refinance process.  Homeowners looking to refinance are often worried that their home will appraise for a lower value than they expected.  It’s important that you do your homework so you aren’t solely relying on the information provided by the appraiser.  More appraisers are working in areas they aren’t familiar with and that often means they are going to undervalue the property.

3)      Condos – Condo owners can be faced with additional challenges when they are looking to refinance.  If there are multiple foreclosures or short sales in a building it becomes very difficult to get a good appraisal for a property.  However, even with a poor appraisal, a condo owner still could have equity in their home and be able to qualify for a refinance. 

It’s important to work with a Home Loan Expert that you trust when you are looking to refinance.  The right person can help you navigate through the refinance process and help you find the option that works for you.  Now is a great time to refinance to benefit from low interest rates.  Refinancing and locking in a lower rate can easily save you thousands in the long run.

For anyone who is looking to refinance or buy a home, closing costs are a burden. Having to save up close to $5,000 or more is a pain, and a drain on your money. So why is closing so expensive? Why do some companies require a deposit? And most importantly, how do you get out of having to pay that much upfront?

Contrary to popular belief, closing costs don’t all go to your lender. For your own customized breakdown of what you need to pay for at closing, ask your banker for a Good Faith Estimate. In general, closing costs include the following:

• Appraisal ($225 – $450)
• Credit Report ($15 – $30)
• Closing Fee ($150 – $400)
• Title Company, Title Search or Exam Fee ($150 – $400)
• Survey Fee ($150 – $400)
• Flood Determination/Life of Loan Coverage ($15 – $25)
• Courier Fee ($30)
• Title Insurance (Lender’s Policy) (Varies – generally between $175 – $875)
• Title Insurance (Owner’s Policy) (Varies – generally between $175 – $875)
• Homeowners’ Insurance (Varies – $300 and up)
• Buyer’s Attorney Fee (Not required in all states – $400 and up)
• Lender’s Attorney Fee (Not required in all states – $150 – $500)

Check out Closing Costs and Fees Explained for more details on how and why each portion is necessary.

Because of the costs mentioned above, mortgage companies need to ensure a commitment from the client before moving forward on a loan. To do this, deposits are often required to cover these costs when the client decides against the loan midway through.

So how do you get out of having to pay thousands upfront? Seller concessions are a set dollar or percentage amount of the purchase price that the seller agrees to pay you. In other words, you can agree to bid a little higher, but the seller has to pay your closing costs. This way, the amount you bid will of course be part of the loan, while closing costs are paid by the seller. For FHA loans, seller concessions can be up to 6% of the loan amount, so be sure to check and see if this option is available for your loan program.

Related Information:

• Get started buying a home with the Quicken Loans Home Buying Center.
• Get started refinancing your mortgage with the Quicken Loans Home Refinance Center.
• Not sure of your credit score? Get a free credit report from Quizzle.