Posted: Mon May 18, 2009 8:44 am Post subject: Why is lender asking for in-home appraisal for our loan modi
Hi, we're trying to get a loan modification and our lender is asking that we get an appraisal. We wonder if the appraisal is for THE LENDER'S benefit or OURS. Why would they request an in-home appraisal? Why not get comps online? And who's supposed to pay for this appraisal? Is it in our best interest to comply? Any help would be much appreciated.
The lender wants to know the present value of the property before offering a loan modification. That is the result why he is asking for an appraisal. If it's a lender's appraiser, then he would pay for it. It would be better if you could speak to your lender and clarify as to who would pay for the appraiser.
If it's a rule of your lender to appraise the property before accepting a modification, then you would have to comply with the rules of your lender.
The main purpose a lender is requiring an in-home appraisal is that they are making sure the property meets the guidelines as adequate collateral for the loan, both in terms of value and the condition of the property. It is more than just looking for "comps" online especially since many online resources are unreliable for obtaining accurate information. Also if the loan is FHA, there are additional guidelines that must be followed by the appraiser which includes testing of mechanical, electrical, and plumbing systems. This is to ensure that the house meets minimum standards for FHA mortgage insurance.
As far as payment is concerned, you can request that the lender cover the cost for the appraisal up front, but most likely, you will be paying for it in the end as part of your closing costs. You are also legally entitled to a copy of the appraisal, however, the lender is allowed to require payment for the appraisal first. Many lenders are now asking for the payment up front to avoid the rising appraisal costs for loans that do not close. When given the opportunity, I always advise people to be prepared to pay for some things up front when they make a loan application, usually the appraisal, title search, and possibly some processing fees. Then if your lender does not require these upfront costs, you should still be prepared to cover these costs at closing. Given that your situation is for a loan modification and not a standard loan application, the lender will most likely require payment for the appraisal up front. At least that has been my experience doing loan modification appraisals.
I hope this helps! _________________ Benjamin Smith
Atlanta Area Appraiser
Apex Appraisals & Consulting, LLC
www.appraisalapex.com
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