| What
is an appraisal and who completes it? |
| What
types of things will an underwriter look for when they review
the appraisal? |
| Will
I get a copy of the appraisal? |
| Are
there any special requirements for condominiums? |
| I'm
purchasing a home, do I need a home inspection AND an
appraisal? |
| I've
heard that some lenders require flood insurance on properties.
Will you? |
| How
long does it take for the property appraisal to be
completed? |
| Does
Universal Lending Corporation provide financing for
manufactured homes? |
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| What is an appraisal
and who completes it? |
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| Top |
To determine the value of the property you
are purchasing or refinancing, an appraisal will be required.
An appraisal report is a written description and estimate of
the value of the property. National standards govern not only
the format for the appraisal; they also specify the
appraiser's qualifications and credentials. In addition, most
states now have licensing requirements for appraisers
evaluating properties located within their states.
The
appraiser will create a written report for us and you'll be
given a copy at your loan closing. If you'd like to review it
earlier, your Loan Officer would be happy to provide it to
you.
Usually the appraiser will inspect both the
interior and exterior of the home. However, in some cases,
only an exterior inspection will be necessary based on your
financial strength and the location of the home. Exterior-only
inspections usually save time and money, but if you're
purchasing a new home, your Loan Officer will contact you to
determine if you'd be more comfortable with a full inspection.
After the appraiser inspects the property, they will
compare the qualities of your home with other homes that have
sold recently in the same neighborhood. These homes are called
"comparables" and play a significant role in the appraisal
process. Using industry guidelines, the appraiser will try to
weigh the major components of these properties (i.e., design,
square footage, number of rooms, lot size, age, etc.) to the
components of your home to come up with an estimated value of
your home. The appraiser adjusts the price of each comparable
sale (up or down) depending on how it compares (better or
worse) with your property.
As an additional check on
the value of the property, the appraiser also estimates the
replacement cost for the property. Replacement cost is
determined by valuing an empty lot and estimating the cost to
build a house of similar size and construction. Finally, the
appraiser reduces this cost by an age factor to compensate for
depreciation and deterioration.
If your home is for
investment purposes, or is a multi-unit home, the appraiser
will also consider the rental income that will be generated by
the property to help determine the value.
Using these
three different methods, an appraiser will frequently come up
with slightly different values for the property. The appraiser
uses judgment and experience to reconcile these differences
and then assigns a final appraised value. The comparable sales
approach is the most important valuation method in the
appraisal because a property is worth only what a buyer is
willing to pay and a seller is willing to accept.
It
is not uncommon for the appraised value of a property to be
exactly the same as the amount stated on your sales contract.
This is not a coincidence, nor does it question the competence
of the appraiser. Your purchase contract is the most valid
sales transaction there is. It represents what a buyer is
willing to offer for the property and what the seller is
willing to accept. Only when the comparable sales differ
greatly from your sales contract will the appraised value be
very different. |
|
| What types of things
will an underwriter look for when they review the appraisal?
|
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| Top |
In addition to verifying that your home's
value supports your loan request, we'll also verify that your
home is as marketable as others in the area. We'll want to be
confident that if you decide to sell your home, it will be as
easy to market as other homes in the area.
We certainly
don't expect that you'll default under the terms of your loan
and that a forced sale will be necessary, but as the lender,
we'll need to make sure that if a sale is necessary, it won't
be difficult to find another buyer.
We'll review the
features of your home and compare them to the features of
other homes in the neighborhood. For example, if your home is
on a 20-acre lot, or has a large accessory building, we'll
want to make sure that there are other homes in the area on
similar size lots or with similar outbuildings. It is hard to
place a value on such unique features if we can't see what
other buyers are willing to pay for them. In some areas,
additional acreage or outbuildings could actually be a
detriment to a future sale. Finding comparable properties can
be more challenging in rural areas where it is more difficult
to find homes that have similar features.
We'll also
make sure that the value of your home is in the same range as
other homes in the area. If the value of your home is
substantially more than other homes in the neighborhood, it
could affect the market acceptance of the home if you decide
to sell.
We'll also review the market statistics about
your neighborhood. We'll look at the time on the market for
homes that have sold recently and verify that values are
steady or increasing. |
|
| Will I get a copy of
the appraisal? |
top |
| Top |
| As a standard practice we will provide a
copy of your appraisal at closing. |
|
| Are there any special
requirements for condominiums? |
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| Top |
Since the value and marketability of
condominium properties is dependent on items that don't apply
to single-family homes, there are some additional steps that
must be taken to determine if condominiums meet our
guidelines.
One of the most important factors is
determining if the project that the condominium is located in
is complete. In many cases, it will be necessary for the
project, or at least the phase that your unit is located in,
to be complete before we can provide financing. The main
reason for this is, until the project is complete, we can't be
certain that the remaining units will be of the same quality
as the existing units. This could affect the marketability of
your home.
In addition, we'll consider the ratio of
non-owner occupied units to owner-occupied units. This could
also affect future marketability since many people would
prefer to live in a project that is occupied by owners rather
than renters.
We'll also carefully review the appraisal
to insure that it includes comparable sales of properties
within the project, as well as some from outside the project.
Our experience has found that using comparable sales from both
the same project as well as other projects gives us a better
idea of the condominium project's
marketability.
Depending on the percentage of the
property's value you'd like to finance, other items may also
need to be reviewed. |
|
| I'm purchasing a home,
do I need a home inspection AND an appraisal? |
top |
| Top |
Both a home inspection and an appraisal
are designed to protect you against potential issues with your
new home. Although they have totally different purposes, it
makes the most sense to rely on each to help confirm that
you've found the perfect home.
The appraiser will make
note of obvious construction problems such as termite damage,
dry rot or leaking roofs or basements. Other obvious interior
or exterior damage that could affect the salability of the
property will also be reported.
However, appraisers
are not construction experts and won't find or report items
that are not obvious. They won't turn on every light switch,
run every faucet or inspect the attic or mechanicals. That's
where the home inspector comes in. They generally perform a
detailed inspection and can educate you about possible
concerns or defects with the home.
Accompany the
inspector during the home inspection. This is your opportunity
to gain knowledge of major systems, appliances and fixtures,
learn maintenance schedules and tips, and to ask questions
about the condition of the home.
|
|
| I've heard that some
lenders require flood insurance on properties. Will you?
|
top |
| Top |
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Federal Law requires all lenders to investigate whether or
not each home they finance is in a special flood hazard area
as defined by FEMA, the Federal Emergency Management Agency.
The law can't stop floods. Floods happen anytime, anywhere.
But the Flood Disaster Protection Act of 1973 and the National
Flood Insurance Reform Act of 1994 help to ensure that you
will be protected from financial losses caused by flooding.
We use a third party company who specializes in the
reviewing of flood maps prepared by FEMA to determine if your
home is located in a flood area. If it is, then flood
insurance coverage will be required, since standard
homeowner's insurance doesn't protect you against damages from
flooding. |
|
| How long does it take
for the property appraisal to be completed? |
top |
| Top |
| Licensed appraisers who are familiar with
home values in your area perform appraisals. We order the
appraisal as soon as the application fee is paid. Generally,
it takes 10-14 days before the written report is sent to us.
We follow up with the appraiser to insure that it is completed
as soon as possible. If you are refinancing, and an interior
inspection of the home is necessary, the appraiser should
contact you to schedule a viewing appointment. If you don't
hear from the appraiser within seven days of the order date,
please inform your Loan Officer. If you are purchasing a new
home, the appraiser will contact the real estate agent, if you
are using one, or the seller to schedule an appointment to
view the home. |
|
| Does Universal Lending
Corporation provide financing for manufactured homes? |
top |
| |
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We define manufactured housing as housing units that are
factory built with a steel undercarriage that remains as a
structural component and limits the structure to a single
story. These types of manufactured homes are sometimes known
as mobile homes. We do not consider other factory-built
housing (not built on a permanent chassis), such as modular,
prefabricated, panelized, or sectional housing, to be
manufactured housing. If your home is one of these types,
please complete the application indicating that your home is a
single family home.
In order to qualify for our loan programs a manufactured
home must meet the following requirements:
- A manufactured home is any dwelling built on a permanent
chassis and attached to a permanent foundation system.
- Be a one-family dwelling that is legally classified as
real property.
- The towing hitch, wheels, and axles must have been
removed and the home must be permanently attached to a
foundation system that meets state and local codes as well
as the manufacturer’s requirements.
- Foundation system must be appropriate for the soil
conditions for the site and meet local and state codes.
- The land on which the manufactured home is situated must
be owned by you. We do not provide financing for
manufactured homes located on rented or leased land.
- Must have been built in compliance with the Federal
Manufactured Home Construction and Safety Standards that
were established June 15, 1976. Generally, compliance with
these standards will be evidenced by the presence of a HUD
Data Plate that is affixed near the main electrical panel of
the home or in another readily accessible and visible
location.
- Must be at least double-width, 24 feet wide, and have a
minimum 600 square feet of gross living area. Must be
acceptable to typical purchasers in the market
area.
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Equal Housing Lender
Copyright 1998-2006 Universal Lending Corporation
All rights reserved
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6775 E. Evans Avenue |
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Denver, CO 80224 |
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(view map) |
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Phone |
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800-758-4063 |
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Email |
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info@ulc.com
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Hours of Operation |
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8:00 A.M. - 5:00 P.M. MST |
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