3 Tips for a Higher Home Appraisal

It may seem that homebuyers and sellers don't agree on much, but they share one important concern: that the transaction is successful. This comradery is never more evident than during the appraisal process. It's only natural, since the results of the appraisal can send the deal spiraling out of control.  Appraisers take into account many factors when determining the worth of a home. While some of these, such as location, can't be helped, there are things a homeowner can do to ensure that the home is appraised for maximum value.  1. Information is King  Appraisers don't spend a lot of time in the home. In fact, Brian Coester, chief executive of appraisal firm CoesterVMS, tells CNBC that the interior inspection typically takes 30 minutes or less.  "After inspecting thousands of homes, it does become quite easy to quickly assess the amenities in a home," reiterates Ryan Lundquist on Sacramento Appraisal Blog. That isn't much time to make a good first impression, so line up those ducks in advance of the appraiser's visit. The first one should be a packet of information that you can hand the appraiser as he or she speeds out the door after the inspection. This packet should contain not only the basics about your home but anything that will help back up the buyer's offer.  Include a fact sheet about the home with the address, the year the home was built, the square footage, number of bedrooms and bathrooms, and the size of the lot. Also include a listing of recent sales in the area, especially if you know of any for-sale-by-owner homes that have sold or homes that sold for less than they should have for any reason. For example, a home may have been sold to a relative, or the owners may have sold quickly to take a job out of town. Yes, the appraiser has access to recent home sales, but there's always a chance he or she may miss something.  Create a list of any improvements you've made to the home. List them by date and include contact information for the contractor who did the work.  2. If It's Broken, Fix It  The appraiser will assign the home with what is known in the business as an "effective age."  It's largely based on the condition of the home and how well it has been maintained. This age may be older or younger than its actual age. "Say you have a cracked window, thread-bare carpet, some tiles falling off the shower surround, vinyl torn in the laundry room, and the dog ate the corner of the fireplace hearth, these items could still add up to an overall average condition rating as the home is still habitable, however your effective age will be higher resulting in comparables being utilized which will have the same effective age and resulting lower value," Doreen Zimmerman, an appraiser in Paradise, California, tells the Wall Street Journal.  Fix anything that will age the home in the eyes of the appraiser.  3. Give the Home a Quick Cleaning  Most appraisers will tell you that it doesn't matter if your home is clean or dirty - it has no bearing on its value. We, on the other hand, know how illusions can sell, and if a clean house gives the illusion that the home has been well-maintained, what harm can it do to clean it before the appraiser's arrival? I don't know about you, but before I trade in a car at the dealership, I give it a good cleaning.  "Things like overgrown landscaping, soiled carpeting, marks on walls - those do affect value and are part of the property's overall condition rating," Dean Zibas, of Zibas Appraisal in San Clemente, California, tells the Wall Street Journal.  While some things impact a home's value more than others, the bottom line is that the process can vary by appraiser. Anything you can do in the three areas listed above has the potential to streamline the appraisal process and increase the value of your home. Plus, going through these steps prior to listing your home will only help increase the number of potential buyers. And ultimately, selling your home is what it's all about.

Loan Apps: What You Need to Know!

Applying for a home loan sometimes feels as long, complicated and arduous as astronaut training. But, this is the first and most important step in the home buying process.  The process is not that difficult if you choose a lender who will walk you through the steps and an agent who knows and recommends the lender. With some preparation, applying for a mortgage loan can even be fun! (Okay, that’s a lie, but at least being prepared will make the process less painful.)

Before we gather up the substantial amount of paper you’ll need, there are a few things you should find out. First of all, ask how long the loan approval process will take. These days it generally takes a week to two weeks depending on how simple your finances are.  This is important, because if you have a mortgage contingency clause in your purchase contract, your lender needs to know it so they can help you meet your deadline.

Next, you need to be aware that you’ll have to disclose where you got the money for your down payment. If you borrow the money, that debt will be considered in the approval process (it could even increase your interest rate or prevent you from being approved at all.) If relatives are providing the money, you need proof that the down payment is a gift—in other words, that you won’t have to pay it back.

Some states allow mortgage prepayment penalties. Wisconsin generally allows you to pay off your mortgage with no penalties. You need to be aware that if these are legal where you are, there will be a charge if you pay off your mortgage early through refinance or multiple principal payments. Avoid mortgages that require a prepayment penalty beyond the third year.

Now get ready—the following is what you’ll need when applying for that loan:

Asset items

l Bank statements for previous two months (sometimes three) on all accounts. All pages, even if you don't think them important l Statements for two months on all stocks, mutual funds, bonds, etc. l Copy of latest 401K statement (or other retirement assets because they can count as reserves) l Explanations for any large deposits and source of those funds l Copy of HUD1 Settlement Statement on recent sales of homes l Copy of Estimated HUD1 Settlement Statement if a previous home is for sale, but not yet closed l Gift letter (if some of the funds come as a gift from a family member - the lender will supply a blank form) l Gifts can also require: 1. Verification of donor’s ability to make the gift (bank statement) 2. Copy of the check used to make the gift 3. Copy of the deposit receipt showing the funds deposited into bank account or escrow

Note: many get their statements of various kinds over the internet and these are not always acceptable to lenders, especially when the printed version does not contain the borrower's name, account number, and the name of the institution.

Credit items

l Landlord’s name, address, and phone number (if you rent - for verification of rental) l Explanations for any of the following items which may appear on your credit report: Late payments; Credit inquiries in the last 90 days; Charge-offs; Collections; Judgments; Liens l Copy of bankruptcy papers if you have filed bankruptcy within the last seven years

FHA loans

l Copy of Social Security Card (or other documentation of social security number) l Copy of Driver’s license

Income items

l W2 forms for the last two years l Most recent pay stubs covering a 30 day period l Federal tax returns (1040’s) for the last two years, if: you are self-employed; earn regular income from capital gains; earn sizable interest income, etc.; earn more than 25% of your income from commissions or bonuses; own rental property; or are in a career where you are likely to take non-reimbursed business expenses). l Year-to-Date Profit and Loss Statement (for self employed) l Corporate or Partnership tax returns (if you own more than 25% of the business) l Pension Award letter (for retired individuals) l Social Security Award letters (for those on Social Security)