Archive for May, 2011

Freddie & Fannie Loan Limits – Reprint

This comes from the National Association of Realtors:

Legislation Introduced to Make Loan Limits Permanent

Reps. Gary Miller (R-CA) and Brad Sherman (D-CA) have introduced H.R. 1754, the “Preserving Equal Access to Mortgage Finance Programs Act”. This legislation will make the current loan limits permanent. The current GSE limits range from $417,000 to $729,750, depending on local area median home price. The FHA limits range from $271,050 to $729, 750, also based on 125% of local area median home price. Both of these limits are set to expire on September 30, 2011 and will reset to 115% of local area median up to $625,500. This bill has been referred to the House Financial Services Committee.

Home Appraisals – Reprint from National Assn Realtors

What You Must Know About Home Appraisals

By: G. M. Filisko

Published: March 12, 2010

Understanding how appraisals work will help you achieve a quick and profitable refinance or sale.

1. An appraisal isn’t an exact science
When appraisers evaluate a home’s value, they’re giving their best opinion based on how the home’s features stack up against those of similar homes recently sold nearby. One appraiser may factor in a recent sale, but another may consider that sale too long ago, or the home too different, or too far away to be a fair comparison. The result can be differences in the values two separate appraisers set for your home.

2. Appraisals have different purposes
If the appraisal is being used by a lender giving a loan on the home, the appraised value will be the lower of market value (what it would sell for on the open market today) and the price you paid for the house if you recently bought it.

An appraisal being used to figure out how much to insure your home for or to determine your property taxes may rely on other factors and arrive at different values. For example, though an appraisal for a home loan evaluates today’s market value, an appraisal for insurance purposes calculates what it would cost to rebuild your home at today’s building material and labor rates, which can result in two different numbers.

Appraisals are also different from CMAs, or competitive market analyses. In a CMA, a real estate agent relies on market expertise to estimate how much your home will sell for in a specific time period. The price your home will sell for in 30 days may be different than the price your home will sell for in 120 days. Because real estate agents don’t follow the rules appraisers do, there can be variations between CMAs and appraisals on the same home.

3. An appraisal is a snapshot
Home prices shift, and appraised values will shift with those market changes. Your home may be appraised at $150,000 today, but in two months when you refinance or list it for sale, the appraised value could be lower or higher depending on how your market has performed.

4. Appraisals don’t factor in your personal issues
You may have a reason you must sell immediately, such as a job loss or transfer, which can affect the amount of money you’ll accept to complete the transaction in your time frame. An appraisal doesn’t consider those personal factors.

5. You can ask for a second opinion
If your home appraisal comes back at a value you believe is too low, you can request that a second appraisal be performed by a different appraiser. You, or potential buyers, if they’ve requested the appraisal, will have to pay for the second appraisal. But it may be worth it to keep the sale from collapsing from a faulty appraisal. On the other hand, the appraisal may be accurate, and it may be a sign that you need to adjust your pricing or the size of the loan you’re refinancing.

More from HouseLogic
How to use an appraisal to eliminate private mortgage insurance

Understanding the assessed value of your home for tax purposes

Understanding the amount at which to insure your home

Other web resources
More information on appraisals

How to improve the appraised value of your home

G.M. Filisko is an attorney and award-winning writer who’s had more than 10 appraisals performed on her properties in the past 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Preventing Water Penetration – Reprint from Housemasters

In many regions spring rains increase the chance of water infiltration into basements and crawlspaces, and can even affect homes constructed on slabs. If you are in an area that is also subject to the melting of winter snow, the potential for springtime problems only increases.

Aside from river or coastal flooding, the two most common ways water affects a home are surface runoff and a rise in the water table (the underground water level).

Surface run-off includes any rainwater that flows toward a foundation from the site the home is located on or neighboring properties. It doesn’t matter whether it is water that flows off the roof, or from finished surfaces such as driveways and patios, or from the yard. Any water that accumulates near or along the foundation has a potential to seep in or cause other problems such as soil erosion or foundation movement. If the roof and site drainage systems aren’t in place or aren’t doing the job they should, even with a half-inch rainfall hundreds or even thousands of gallons of water can be directed toward your foundation – and seep into your home.

To help reduce the chance of surface water from affecting your home, attention should focus on the grading and drainage provisions. This includes features that are present and in need of maintenance or upgrading, as well as additional drainage features that may need to be installed.

To start, take a look at your roof drainage system (the roof drains, gutters (eavestroughs), and downspouts):

Do all sections appear secure?
Do the roof drains slope toward the downspouts?
Is there any staining that may indicate chronic overflow?
Do the downspouts extend at least 3 feet away from the foundation?
Have they been checked/cleaned on a regular basis?

Some roof drainage systems may typically only need cleaning a few times a year; others may require monthly cleaning to keep them clear. Many different types of gutter guards are now available offering claims that they will eliminate the need for regular cleaning. Be aware that while many of these devices may help cut down on cleaning needs; rarely do they provide full protection from blockage.

The further away from the foundation downspouts discharge the roof run-off, the less likely the runoff will impact on the foundation. Downspout water should not discharge onto surfaces where it could create a potential slip hazard from water freeze in the winter. You should also make sure downspout splash blocks or extensions don’t present a trip hazards. In some situations, the only option to prevent these hazards may be to install underground drain lines that run to the street or an underground drainage system.

Next, look at the property conditions:

Do any large areas of your property or a neighbor’s property slope toward your home?
If so, is any potential water runoff diverted by swales or collected by drains so that it does not flow near or accumulate at the foundation?
Are surface drain grates clear of debris? Are the drains free flowing?
Is the soil along the foundation sloped so that water drains away from the foundation?

The installation of swales (slight depressions in the ground) to funnel water around or away from the foundation may help in lieu of a more expensive drainage pipe system. In some cases, though, a catch basin and underground drainage system may be the only answer for control of surface water.

With time, the soil around most homes will often settle and develop depressions or a negative slope, allowing water to accumulate at the foundation. All areas need to be built-up so that there is a slope away from the foundation, ideally extending about five feet out. Mulch added at planting areas may give the impression of a positive slope away; however, it is important to make sure the soil under the mulch is sloped away as well, particularly if the soils is a clay mix.

Look for tips on addressing high water table conditions in next month’s eNewsletter.

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