It is time to talk about what we have learned about Mortgage News for The End of July 2021. The reason is that I just did a search for some news within mortgage lending regarding rates, housing prices, and the like.
What I found was surprising with regard to sellers not wanting to deal with FHA/VA buyers as housing prices increase. Let’s move forward with some details…
Why Are Seller Rejecting FHA/VA Loans
It is always important to read the honest presentations of those who report the truth. Mortgage News Daily has reported that some sellers have declined FHA/VA buyers due to the appraisal coming in lower than the sales price. So what does that really mean?
It actually means that since the housing prices are going up, and some sellers are not wanting to deal with FHA/VA buyers because they may not have the money to pay more than the house is worth… Oops, sounds rather ridiculous to me as a prior underwriter.
My question is…did we not learn anything from the prior mortgage crisis? It seems that it is possible that some people may not have. Of course, if the seller is getting what they want, who cares?
There may be more than one explanation for some individuals. However, it is important for buyers to know that if the appraisal and the sale price are greatly divided the house may be over-priced.
What The Appraisal Should Tell You
The appraisal is completed for a definite purpose. That purpose is to tell you that the house is worth a certain amount of money. It is to inform you of any deterioration, or repairs that are needed, and what overall the conditions the entire house is in.
To be acceptable for any lender, for any loan type, it must be appraised as in acceptable condition for the lender to approve the loan.
The appraisal must be compliant with the lender’s guidelines which are usually Fannie Mae, Freddie Mac, or FHA guidelines. If there are repairs that are needed, then the repairs should be done prior to closing. Those repairs should be paid for by the seller.
Yes, FHA has more compliances than Fannie and Freddie. However, if a property appraisal comes in lower than the Sale Price, the buyer should want to know why.
The appraisal for a house is compared to the homes within the subject’s immediate area. Meaning, if it is a subdivision, the sale price should be within the range of the other houses within that subdivision.
For property that is located outside of a subdivision, it is still to be compared to those homes nearest the subject property. *sometimes the appraisal has to go with sales that are not as close as those in a subdivision or nearby. For instance when a property is located in the country area, or rural.
The appraisal has to sign a certification that he/she has complied with all the standards that are subject to the appraisal review.
Normally, appraisers DO NOT usually understate the value of a property, and this is mortgage news for the end of July 2021 that is very accurate and known.
What Else Is Going On In Mortgage News for The End of July 2021?
Purchase homes transactions declined within the last week, however, applications picked up due to borrower refinances per The Mortgage Bankers Association re: Reuters.
Housing interest rates are still tending low with a 30 year tend of around 2. 750% high down to 2.375%, with one lender @ 3.750%. So… those rates are just tending and not quotes. Also, Reuter indicated their analysis for compared rates was that of 3.01% for the down from 3.110% the last week.
Rates depend upon the lender, the credit scores, the loan to value, the mortgage product, and more. Some borrowers may pay discount points to get a lower rate, which is an acceptable practice.
The Feds are meeting today, and we will know exactly if mortgage interest rates will go higher.
Forbearance Covid-19 FNMA & Freddie
Per Housing Wire, the Covid-19 forbearances drop to lower percentages. They stated that the pandemic-related forbearance ban that was in place, is expected to be lifted at the end of this month.
According to reports, there are still over one and three-quarter million homeowners who are still in their forbearance plans. However, Mortgage Bankers Association (MBA) reported on Monday that the number of forbearances has declined by .02 basis points from 3.50% to 3.480% of the prior week.
Personal Finance-Mortgage Loan Facts Suggestions
For anyone who wants or needs to refinance, it is probably time to do it. If your current interest rate is at least 2.000% above the now trending rates, it is in your favor.
If you need to refinance your mortgage and home equity loan into one loan, this is probably as good a time as many are suspecting the rate to start to increase.
What to remember before a refinance loan…
- If you do not pay for the closing cost out of pocket, this will be added to the principal balance, and your loan amount will increase.
- When or if you do not decrease either your mortgage payment, interest rate, or term, ask yourself what have you really accomplished?
- What is the genuine purpose for refinancing your mortgage loan?
If you simply want to pay off your mortgage early, you can do that without increasing your loan amount if you add in the closing cost. The interest rate stays the same, the payment is the same, but you can reduce the term/years and principal balance.
You can do this simply by paying/adding an additional $50, $100, or whatever to your monthly payment. This decreases the term/principal balance as you make those additional principal balance reductions.
EndNote:
For a purchase transaction where the appraisal comes in lower than the sales price, this is important to think about.
It is not wise to buy a home that is overpriced. Unless of course, you have sufficient money to pay the difference and you want to do that. It is still wise to know why the appraisal came in lower than the Sales Price. As stated above; the home’s price should be within the market value of the surrounding properties.
I can see if there are a couple of thousand dollars (+-). However, remember that if the seller is paying the closing cost…it is added to the sales price. This actually means that you are still paying the closing cost. The sales price is always adjusted for the cost that the seller pays. *just being honest here with facts.
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