As previously mentioned on the last post I would talk a little about the appraisal and the title company.
First off on the appraisal all it does it gives you and the lender an idea of market value. The appraiser is to pull other properties that are similar in the market and that have recently sold and compare them to your home. Room count, square footage and home type are the 3 main things that are looked at. Then they compare things like decks, fireplace and market appeal. Obviously the process is more complex then this but this is the basics. When they are done making the comparison they come up with a value on your home. With a purchase it almost always comes in at the sales price. However with an appraisal and in this present market we are having tough times getting homes to appraise for what will help the financing work.
One major important thing is that the appraiser does not warrant the condition of the property...only the value.
Another 3rd party vendor as previously mentioned it the title company. The title company has an interesting job as they are warranting that the title work is free and clear. A title on a house is much like that of a car, but a lot longer as it entails the recorded history of real estate transactions for this property/home.
The title company has a few things that it needs to check out. The first is that they make sure that all of the recordings are correct so that there may not be another person out there claiming to have ownership. They check for liens and judgments against the property as well as potential easements and encroachments. It is their job to help correct any errors to protect you and the lender.
An encroachment is when part of your house/property or the neighboring property encroaches on the other. What this means is that somehow you are extended in to the next parcel of land. his could be because of a variety of reasons and is usually easily corrected.
A common easement is like when their is a utility running through your yard that is for major use. What this means is that you need to allow access to the company/person that has the recorded easement so that they can access it.
There are other scenarios that can pop up with title work but those are the 2 most common. Most people refer to title insurance as "peace of mind" insurance. It protects you against faulty title which is important. If the title company makes a mistake it is up to them to correct it for you or to take care of any issues due to financial loss based on their error.
Now there is a lot more that I have not covered on these items but having and idea or overview is always helpful to have. Any questions on this ....ask and I will answer.
The mortgage industry is in a huge state of flux right now. Part of it is that that it is waiting to see what will or will not happen with April 1 and compensation of loan officers. Right now large banks will be looking to make more money on each loan then they did before. How the heck is that good for consumers? What is hard is that the people that are attempting to create and enforce all of these new regulations do not really understand the business at hand. They think that they are doing all these good things when all they are doing is making things worse and hurting the consumer.
Whats next, regulating what a sales person selling suits can make or telling them how they can be paid?
The main idiots that messed things up are gone. With all of the new requirements for lenders as it pertains to NMLS there are many that could not be in the business and many that opted out of doing what was needed.
The industry itself has done a good job of cleaning things up and really does not need help from Mr. Dodd or Mr. Frank.
Rates are continuing to stay strong and getting a mortgage is still Simple-Fast and Hassle Free.
That's it for today and make sure to follow me either on facebook at http://www.facebook.com/pages/Toms-Wisdom-for-Mortgages-and-other-things/101866693225282
or on twitter @omsiguy.
Have a great week!
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