Mortgage News

Home Appraisal Tips For Buyers, Sellers And Refinancers

Appraisals are almost always a required part of the home buying and refinancing process. If you’re buying a home, your lender will order an appraisal of the property to ensure you don’t overpay for the home. If you’re refinancing, an appraisal is needed to ensure that you have enough equity to borrow against. Let’s take a look at what an appraisal is, why lenders require them and some tips for sellers, refinancers and buyers. What Does A Home Appraisal Determine? A home appraisal is an unbiased estimate of what a home is worth. You might hear your real estate agent or lender refer to this estimate as the fair market value of the property. Lenders require an appraisal because they can’t lend more money than the property is worth. Home appraisers are licensed professionals who assess real estate and calculate the worth of a specific property. The appraiser doesn’t work for the lender, and they don’t work for you. By law, they’re required to be a neutral third party in the mortgage transaction. This ensures they’re not biased toward any of the other parties involved. Appraisers consider factors like the home’s location, size and living condition when determining the value. Your appraiser won’t be assessing your home based on your furnishings or paint colors. Instead, they’ll be looking at your home’s structure, appliances and fixtures to make sure there aren’t any defects. The appraisal isn’t the same thing as the home inspection. A home inspector’s primary job is to protect the buyer by identifying any problems the home may have. They’ll test outlets, flush toilets and make sure appliances are in working order, so you know what repairs need to be made. The appraiser, on the other hand, is simply assessing the condition to determine a fair price for the home. What Happens During A Home Appraisal? First, the appraiser visits the home to inspect the property. During this inspection, they’ll walk through the home and take pictures and measurements of each room. They’ll also make notes about the condition and features of the house. Next, the appraiser will select comparable properties to compare the home to. When choosing comparable properties (sometimes called real estate comps), they look for homes similar in location, size and features to the one they’re appraising. The comparable homes usually need to be within a mile of the property (except in rural areas), and they need to have sold within the past 6 months. Home Purchase Appraisal Vs. Refinance Appraisal When going through the refinance process, your lender will order a refinance appraisal, which is slightly different from a standard home appraisal. This step is required because your lender wants to ensure your home’s value is accurate for the new mortgage. However, they won’t focus on broken appliances or fixtures in the house as the lender only needs the fair market value to continue finalizing your refinance. Tips For A Home Appraisal No matter if you’re a buyer, seller or refinancer, there are plenty of ways you can prepare for a home appraisal. While you might feel like you won’t be able to make much of a difference, the following tips could help streamline this crucial process. Home Appraisal Tips For Sellers As a current homeowner, you’ll be able to make the most significant impact on the estimated value of your property. Consider completing the following tasks to avoid getting a low appraisal. 1. Get Your Own Assessment Before you have a licensed appraiser visit your home, you can ask a real estate agent to tour the property. They’ll be able to look at each room objectively and provide you with ideas for possible improvements. It’s also a good time to double-check health and safety features, like smoke and carbon monoxide detectors, security systems, cameras or any fireplaces that may be in the home. Make sure to run your HVAC system as well and get it serviced by a professional technician, if you haven’t done so already. 2. Research Possible Comparables If you haven’t already researched the local real estate market, now is a perfect time. Take the opportunity to look at public records in your local assessor’s office for any recent sales that took place in the last 6 months. There’s a chance your agent has already done this when they created a comparative market analysis (CMA). So, if you’re having a hard time finding similar properties, you could ask them to provide you with some MLS listings to look at. 3. Complete Small Repairs Since you’re currently in the process of selling your home, there’s no need for you to make major repairs unless the buyers require it after the inspection. In most cases, you can primarily focus on aesthetics at this point in the appraisal process. Your goal should be to make the home look spotless. That could mean painting scuffs marks on the trim, tightening crooked handles and knobs, patching holes in the wall, emptying the gutters or even power washing the siding. Whatever you do to make the home feel well-maintained could increase the appraised value in the long run. 4. Do A Deep Clean Besides repairing minor defects, you should also tidy and declutter your home. Removing extra pieces of furniture or putting away unnecessary items can help your house feel bigger, no matter what its square footage is. Countertops should be cleared off and polished or resealed. You can hang up new artwork or mirrors to reflect the sunlight in darker rooms. If your curtains are looking dingy, you should also replace them. As long as you’re able to create a bright and clean home, the appraiser will be able to better see and appreciate the property’s unique features. 5. Make A List Of Offers If you received multiple offers on your house, you could use them as evidence of your home’s current value. Getting several bids shows that your property’s sale price was appropriate for your area, which may help the appraiser determine its present worth. Home Appraisal Tips For Refinancers Even though you’re not selling your home, it doesn’t mean you should

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What Should You Do If The Home Appraisal Value Is Lower Than The Offer Price?

The process of buying a home has a lot of different steps. It can feel like a juggling act, trying to maintain momentum and make sure every piece of the process comes together. Appraisals can be especially nerve-wracking given how they can affect your mortgage and whether the sale is completed or falls through. We’ll help you understand the impact of a low appraisal and discuss your options if your home or the home you’re buying receives a low appraisal. We’ll also cover scenarios that occur when an appraisal comes in low, and provide tips for buyers and sellers to navigate this situation. Let’s start by breaking down what a low appraisal means. What Does A Low Appraisal Mean? A “house appraises low” if the value assessed by the home appraiser is lower than the purchase price agreed to between the buyer and seller. The appraisal provides a snapshot of the appraiser’s opinion of the current market value based on similar closed sales in the area. When the appraised value comes in below the contract price, it limits the amount a lender will finance because they base the loan on the appraisal. A low appraisal might delay or even derail your closing. What Causes Low Appraisals? When a low appraisal occurs, it’s important to ask what information was used to determine that value. It’s important to confirm that the most recent information on comparable properties was used. This is especially true in competitive markets, since homes can regularly sell over asking price. Keep in mind that the appraiser can only use sales that have closed, and that they should choose comparable that are as similar in gross living area, bedroom/bathroom count, and location as possible. An appraisal could also come back low if an appraiser leaves out information on significant home improvements or cannot find adequate comparable in the area. What Are Some Common Appraisal Problems? Low appraisals can be a problem in neighborhoods with homes that are rapidly appreciating. That’s because homes in overheated real estate markets have appreciated in value so rapidly that comps might not reflect the prices sellers are currently being offered. Another common appraisal problem occurs in rural areas, where homes and properties can’t easily be compared to one another. There are many factors that can hurt a home appraisal, such as the home being in a specific neighborhood, school district and varying market conditions. Know that, if your appraisal comes back low and you think it’s inaccurate, there are ways you can appeal. What Happens If The Appraisal Is Lower Than The Purchase Price? If an appraisal comes in lower than the purchase price when a property is being bought, it can be bad news for the buyer and the seller. When an appraisal comes in low, the buyer’s mortgage lender will not lend more than the appraised value. Another part of why lenders do not exceed the appraised value has to do with loan guidelines. Lenders use the appraised value to calculate your loan-to-value (LTV) ratio. How To Negotiate With A Seller After A Low Appraisal Sellers don’t want the sale of their home to fall through, and they know that if a home appraises low it will be difficult to get the price they’re asking. On top of that, if there’s an appraisal contingency in the purchase agreement, a buyer can back out of the sale no questions asked without losing their earnest money deposit. In this situation, negotiating is the best option for the buyer and seller. Here are a couple things you can do to start negotiations: Tips To Avoid A Low Appraisal While low appraisals may be uncommon, they do occur. It’s best to be prepared for the possibility of this situation so you’re not caught off guard. Whether you’re selling or buying, be prepared. Review these home appraisal tips so you know what to do to keep the process moving and not have the transaction fall through. Tips For Sellers The work you can do as a seller to avoid a low appraisal is all about being prepared. Make it easy for the appraiser and be engaged in the process. Here are some tips on how to start the process on the right foot: Tips For Buyers If you’ve signed a purchase agreement and put in your good faith deposit, you’re already invested in the property. It can really wreck your plans if the appraisal comes in low and you don’t have a back-up plan in place. Being ready for this possibility will make the process smoother should a low appraisal scenario occur. Here are some tips on how to deal with a low appraisal: Related articles:1. ADVANTAGES OF BUYING A HOME OVER RENTING2. Can My Spouse Help Cosign My Mortgage? Here’s How! Stay tuned for more fascinating insights on UAE Mortgage trends:Website | Linkedin | Instagram | Facebook

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Is A Mortgage Secured Or Unsecured Debt?

In general, loans fit into either the “secured” or “unsecured” category. But what exactly is secured vs. unsecured debt? And is a mortgage secured or unsecured debt? It’s a good idea to understand the differences between these two types of debt because it can have a major impact on the loans you choose and how you fulfill your financial obligations as a borrower. Secured Vs. Unsecured Debt Secured debt is backed by collateral, or assets that you have in your possession. Mortgages, home equity lines of credit, home equity loans and auto loans are four examples of secured loans. Put simply, your lender will ask you what type of collateral you’ll “offer up” to back the loan. It’s a great incentive to encourage you to make your payments. Unsecured debt, on the other hand, is not backed by collateral. Examples of unsecured debt include personal loans, credit cards and student loans. Collateral As a borrower, collateral is an asset or property that you offer to your lender as security for a loan. A lender has a lien on this asset, which means they have the legal right to seize and sell your collateral to pay back the loan if you do not fulfill your obligations as a borrower (i.e., if you do not make your monthly payments). The lien stays in full force until you fully repay your loan. Risk Level A lender considers an unsecured loan riskier than a secured loan because they can only rely on a check of your credit score and the fact that you’ve agreed to repay your loan. As a result, to qualify for an unsecured loan, you often must have a higher credit score and often must accept a higher interest rate to qualify. Your credit score is a three-digit number that proves how consistently you’ve paid back debt in the past and how well you currently handle debt. Credit scores range from 300 – 850. The higher your score, the more likely it is that a lender will want to work with you. Your interest rate is the rate charged to you as a percentage of the principal, or original amount, of your loan. Requirements Unsecured loans typically have more stringent requirements for borrowers because of the risk to the lender. This means it’s usually harder to qualify for an unsecured loan, but that also does depend on individual borrowers’ qualifications. However, it’s worth noting that if you’re trying to rebuild your credit or have a lower credit score than you’d like, you may have an easier time getting a secured loan. Is A Home Loan Secured Or Unsecured Debt? Is a mortgage secured or unsecured debt? Mortgages are “secured loans” because the house is used as collateral, meaning if you’re unable to repay the loan, the home may go into foreclosure by the lender. In contrast, an unsecured loan isn’t protected by collateral and is therefore higher risk to the lender. In the same vein, second mortgages are considered secured debt, which means that they have collateral behind them (your home). What About Home Equity Loans And Home Refinances? A home equity loan is a type of loan that enables you to tap into the equity of your home to borrow money. They are often called second mortgages because you have two loan payments to make – your original payment and your second mortgage payment on top of that. A home refinance means you get a new home loan with different terms. For example, you might swap out your 30-year mortgage for a 15-year one. You might also decide to go for a lower interest rate. We mentioned earlier that home equity loans, and home refinances are considered secured loans. They are both secured loans because in both instances, you put your home up for collateral. Are Interest Rates Lower On Secured Or Unsecured Debt? Interest rates are generally lower on secured loans because the lender inherently assumes less risk for a secured loan. What Happens When You Can’t Pay Off A Loan? If you can’t pay off your home loan, what actions will your lender take? Secured Loan If you have too many delinquent payments with a secured loan, your lender will file a notice of default on your property. A homeowner can take advantage of time to work out a payment plan with the lender before they get to the foreclosure stage. However, after too many missed payments, the bank will become the owner and will try to sell the property for an amount necessary to pay off the outstanding loan amount as well as costs associated with the foreclosure and sale of the property. Unsecured Loan Since unsecured loans don’t require collateral, the lender has to take an alternative recourse. They have the right to report your delinquent payments to the credit reporting agencies, file a lawsuit against you or send your account to collections. If you think you can’t make payments for a secured loan, it’s a good idea to talk to your lender before you think you’ll run into trouble. Related Articles Best Way to Get a Loan Against Property in UAE Increase Your Mortgage Pre-Approval Amount

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ADVANTAGES OF BUYING A HOME OVER RENTING

A home is much more than just four walls and a roof. The key advantages of buying a home over renting. Build equity, enjoy stability & secure your future with homeownership It kindles a range of emotions and thoughts in us. To some, it is a sense of security; to some, it is about comfort and to others, it is a symbol of status and accomplishment. HERE ARE 9 REASONS WHY OWNING A HOME IS MORE ADVANTAGEOUS THAN LIVING ON RENT: 1.NO LANDLORD HASSLES: When you have a home– of your own, you are in control. You do not have to deal with a landlord; be it minor repairs or a complete overhaul of your entire home, living on rent is a pain in many ways. You are dependent on the landlord for water, electricity, maintenance and almost everything else. 2.EMOTIONAL SECURITY: When you purchase a house, you provide your family their very own space; a home. At the end of a long day at work coupled with tiresome commute and continual stress, returning to your own nest brings alive a sense of security and comfort which is simply irreplaceable. After all, there is no place like ‘home’ where you can be truly at ease and just be yourself. 3.NO UNCERTAINTY: With your own home, there are no fear and anxiety that is caused by the possibility of an untimely termination of the lease agreement by the landlord. To add to this, there is no hassle of renewing the rent agreement every year and renegotiating on rent repeatedly. 5.NO COMPROMISE: Rent is an expense and the general tendency is to reduce expenditure. Therefore, you may end up compromising on several aspects such as location, size and amenities. On the other hand, when you buy a house, you will ensure that your chosen property meets your expectations. 6. EASY FINANCING OPTIONS: Owning your dream home has become easier now with the availability of easy finance options. You need not wait till your 40s and 50s to accumulate money for your dream home. You can buy it in your 20s and be a proud owner of a fully paid off home by the time you turn 50 or even before. You need to judiciously choose a home loan lender who can offer you flexibility in managing your home loan repayment by tailoring your home loan EMI to suit your present and future income patterns. 7. BUILDING YOUR OWN ASSET: Instead of paying rent which is a pure expenditure, you may pay the home loan EMI thereby building your own asset over time. Effectively, with every EMI that you pay, your equity in your home goes up. 8. HOME AS AN INVESTMENT: When you are likely to live in a particular city for long, it makes sense to buy a house so that you have a feeling of belonging and permanency. You get to identify with the city and its lifestyle. You feel that you have finally settled in life. Besides property prices usually appreciate over the long term. Buying a home means you are also enhancing your wealth over time. Delaying your property purchase will result in having to invest a higher amount (in addition to having paid rent over an extended period of time). Our expert team can also guide you through the process, ensuring you get the best rates and terms for your business goals. Contact us today for a personalized consultation and take the next step toward financial growth and success. Related articles:1. Is A Mortgage Secured Or Unsecured Debt?2. How do Islamic and conventional mortgages differ from one another? Stay tuned for more fascinating insights on UAE Mortgage trends:Website | Linkedin | Instagram | Facebook

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Exploring the Benefits of Islamic vs. Conventional Mortgages

A mortgage is a loan obtained to purchase real estate or land. Your home or land is used as collateral for the loan, so if you don’t make your payments as agreed, the lender may compel you to sell one or both in order to recover their investment. There is typically only one option available when looking for mortgages: the traditional one. But you can notice lenders giving you multiple mortgage services in Islamic countries like the UAE. This article will walk you through the two widely used types of mortgages in Dubai, conventional mortgages and Islamic mortgages, as well as the advantages of Islamic home financing in Dubai. Defining Conventional Mortgages The majority of banks and financial institutions in Dubai and around the world offer conventional mortgages, which are the most prevalent type of mortgage. Financial organizations and mortgage lenders offer loans for the purchase of new homes at a set interest rate. Conventional mortgages include two components: the principal amount, or the amount borrowed, and the interest rate. The principal and interest must be repaid within a maximum of 25 years. Defining Islamic Mortgages An Islamic mortgage generally called a Shariah-compliant mortgage, is a type of mortgage that complies with the Shariah law. It works in a completely different way as Islamic financial laws prohibit charging interest. For Islamic financing or mortgages, several models exist, but Ijarah and Murabaha are two of the most commonly used models for Islamic Home Finance in Dubai. What Sets Them Apart? Since Islamic mortgages have no interest rates, the prevailing consensus is that they are preferable to traditional mortgages and that non-Muslims must get Islamic mortgages in Dubai. But before you submit an application for an Islamic mortgage, allow us to explain how it differs from a normal mortgage. Purchase & Lease Back Arrangement The most significant difference is that the loan is not a debt with Islamic Mortgage. Instead, it is a partnership between the borrower and the lender, sharing the profits or losses of the property. This is helpful when you’re buying a property off-plan, as you don’t have to pay anything until the property completes. No Interest Rates or Late Payments Another significant difference between an Islamic and conventional mortgage is that there is no interest charged on Islamic loans. Instead, a profit rate is applied, which is calculated based on the value of the property at the time of sale. This is because a loan is supposed to be a helping hand from a person to aid another as a kind gesture of charity and the lender can only expect to receive the amount of money they lent out. The bank or the lender buys the property on your behalf and then resells it to you at a profit. The buyer or the customer then pays back to the bank in monthly installments. Shorter Mortgage Terms Finally, Islamic mortgages typically have a shorter term than conventional mortgages, with most being repaid over 5-7 years. This is because Shariah law prohibits the lending of money for longer periods. Conclusion If you’re thinking about getting a mortgage in Dubai, it’s crucial to weigh your options and select the mortgage that best meets your needs. If you want to avoid paying interest and have the financial means to pay off your mortgage in 6-7 years, you should consider Islamic home financing in Dubai. Islam forbids the purchase or sale of anything that is worthless on its own. You also cannot buy it because you must take out loans, which cost additional money, and because money has no intrinsic value. As a result, Islamic banks exclusively aim to promote economic growth that is halal and in compliance with Sharia law. Related Articles Your Guide to Commercial Mortgage in UAE How to Increase Your Mortgage Pre-Approval Amount Stay tuned for more fascinating insights on UAE Mortgage trends:Website | Linkedin | Instagram | Facebook

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How To Increase Your Mortgage Pre-approval Amount

Buying a house is a major financial commitment. Striking the right balance between the dreams you have for your future home with the reality of your monthly mortgage payment can take some time. But without the right mortgage preapproval amount, it can be even more challenging to find the perfect fit. If it makes sense for your finances, increasing your mortgage preapproval amount might be possible. Let’s dive into how to increase your mortgage preapproval amount for a smoother home search. What Is A Mortgage Preapproval? A mortgage preapproval is a process that determines how much money you can borrow for your home purchase. Before a lender grants a preapproval, it will look at your complete financial picture, including information about your income, assets and credit score. To do this, you’ll need to submit specific documents that are required by your lender as proof that you can afford the loan’s monthly payments. What the lender finds on its deep dive into your personal finances will impact the preapproval amount it grants you. Beyond how much you can borrow, your preapproval typically includes information about what your interest rate might be. Can You Increase Your Preapproval Amount? The amount you are preapproved for is not necessarily the final maximum you can afford on your home purchase. If you think that your finances can handle more mortgage, you can take action to increase your mortgage preapproval amount. Here’s how: Tips To Help You Get Approved For A Higher Mortgage Loan If you aren’t satisfied with your initial preapproval amount, you can take steps to possibly unlock a higher mortgage loan amount. Before you jump into increasing your mortgage loan amount, consider whether you can truly afford the bigger payments. Take the time to realistically assess your budget before attempting to increase your preapproval amount. If you decide that a larger preapproval amount is the right move for your finances, you have several ways to give that amount a boost. Consider these actionable steps to get approved for a higher mortgage loan: 1. Improve Your Credit Score A good first step is to look at your credit report. If you already have a great credit score, you can’t do much to raise it significantly. But if you have a credit score that could stand some improvement, then take action. When you improve your credit score, a lender may be willing to increase your preapproval amount. Additionally, a higher credit score may be able to lower your interest rate. 2. Generate More Income A bigger income can lead to a larger preapproval amount. That’s because you’ll be able to handle a larger mortgage payment with more money coming in every month. Of course, generating more income can be easier said than done, so it pays to think through all of your income sources. Chances are that you only included your W-2 income on your application. But you can go back to include other sources of income. A few easily overlooked sources of income include alimony, child support, disability income, VA benefits, retirement benefits, side hustles, and bonuses. If your household receives compensation in any way, you may be able to include that income on your application. 3. Pay Off Debts When determining how much you can borrow, a lender will compare your monthly debt payments to your gross monthly income to determine your debt-to-income ratio (DTI). If you have an extensive monthly debt burden – i.e., a high DTI ratio – your preapproval amount will be lower. But if you can eliminate some of these debts – such as credit cards or personal loans – from your books, then a lender may be willing to increase your preapproval amount. 4. Apply For A Longer Loan Term A loan with a longer term allows you to stretch out your mortgage balance over more payments. In most cases, a longer term – such as a 20-year fixed-rate mortgage – will calculate into more affordable monthly payments. As a result, a lender may be willing to lend you more if the loan is set for a 20-year versus a 15-year term. 5. Find A Co-Signer Closing a mortgage with a co-signer is typically not ideal for the co-signer. Although you’d be living in the house, their assets would be on the line if you couldn’t keep up with your mortgage payments. As such, it can be challenging to find a willing co-signer. While it may be difficult to lock down a co-signer, if you can recruit a willing family member or friend with a high enough income, then you may be able to give your preapproval amount a boost. Begin your mortgage application with a team of trusted mortgage advisors If you want to begin your mortgage application process, choose Capital Zone Mortgage Brokers. We are a team of trusted mortgage advisors and we will guide you every step of the way. Contact Us Now – +971 45 47 1111 Related articles:1. Can My Spouse Help Cosign My Mortgage? Here’s How!2. Should I pay off my mortgage in Dubai early? Stay tuned for more fascinating insights on UAE Mortgage trends:Website | Linkedin | Instagram | Facebook

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