If you are considering the purchase of a property, your personal financial information is not the only important part of the mortgage process. The property itself is just as important as you. If either fails to meet the minimum requirements of the mortgage lender the deal is dead.
Getting a mortgage is a process that is completed thousands of times each working day. A borrower, with the help of a mortgage professional, applies for and receives approval of a mortgage. The borrower has supplied the mortgage investor what seems to be reams of copies of past federal taxes, pay stubs, bank statements and a copy of appraisal of the property the borrower wants to finance. The Underwriter then reviews all the information supplied and makes a determination as to the worthiness of the borrower’s application. The Underwriter also reviews the appraisal of the property that the borrowers seeks finance for.
If the borrower’s personal financial history does not meet the minimum requirements the file is denied. If the borrower’s personal financial information is approved then the review of the real estate is started. This is where the Underwriter evaluates the work of the independent real estate appraisal.
The first item the Underwriter looks at is the market value the real estate appraiser has assigned to the property in question. If the value is equal to or more than the contract price, they move on to the next item. If the value is less than the contract price, the review stops and the file is returned to the mortgage lender and their client. If the contract price can be reduced to the appraisal value, the deal can proceed. If the contract price can be reduced to the appraisal value, then we can get back to work on getting the deal completed.
Then the Underwriter looks at very specific items shown on the appraisal. They look to make sure there is a central heating system. They look at the condition of the property in general. They look at the description of the area in which the property is located. And they definitely look at the description of the location. The reason for this is that lenders have different rules for urban, suburban or rural properties. If the property is urban, most lenders will lend higher percentages to value than those properties that are in the rural category. A home or condo in Breckenridge, Keystone or Silverthorne has different lending guidelines than for a home in Kremmling, Fairplay or Alma.
It is strongly recommended you find a lending source that is located in the area. They will have better local contacts to appriasers who know and understand the local market. You will just have a smoother transaction.
