YOUR PROPERTY

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.

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.

Licensed apprais­ers who are famil­iar with home val­ues in your area per­form appraisals. We order the appraisal as soon as the appli­ca­tion deposit 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.

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.

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.

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.

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.

As soon as we receive your appraisal, we’ll update your loan with the esti­mat­ed val­ue of the home. As a stan­dard prac­tice we will pro­vide a copy of your appraisal at closing.