Why Do Lenders Require a Real Estate Contract?

     

Why Do Lenders Require 

a Real Estate Contract?

     One of the Loan Officers in my office had a Seller's Attorney recently ask him ... 

     "Why does a Lender need a copy of the Real Estate Contract?"

     Admittedly, I was somewhat taken aback by this basic question.  First, because it was an indication that this attorney was unfamiliar with this request.  

     Secondly, it made me wonder ... how many real estate transactions had this attorney performed?  (Clients take note:  Make sure the attorney you hire to assist you with your real estate transaction has in-depth experience in real estate transactions.)

    I believe my LO handled the question asked by this attorney pretty well.  He responded with 2 questions of his own:  

• How else would a Mortgage Lender be able to confirm the actual terms of a real estate sale?
• What Appraiser would accept an Appraisal Order without receiving a copy of the Contract in a Purchase Transaction?

     Below is what Fannie Mae has to say regarding this issue:

     Fannie Mae's policy is intended to help ensure that the appraiser is aware of all relevant aspects of the transaction.  The sales contract provides important sales and financing data, including whether there are any concessions as part of the transaction.  

     If the contract is amended, the Lender must provide the updated contract to the appraiser to ensure that the appraiser has been given the opportunity to consider any changes and their effect on value.  If the appraiser determines that there is no impact to value, then no additional commentary is required from the appraiser. 


      This fact may be unknown to clients and others within a transaction:  But when a Mortgage Lender prepares a Loan Application and/or Good Faith Estimate for a Purchase Transaction, they MUST correctly disclose the effect of Real Estate Transfer Taxes, as dictated by the terms of the Contract.     
     

     
     Participants within a transaction must be aware that:  Every transaction is uniquely agreed to by the parties involved ... and every community, county, and state is different in this regard. 

     Facts are:

1.  Not all municipalities or jurisdictions charge such fees.  Some charge the Buyer.  Others charge the Seller. 
2.  Entities such as Fannie Mae, Freddie Mac, FHA, VA, and others simply are exempt from paying Transfer Taxes.  

     Lenders and Appraisers need to know:

• Are there any Closing Cost Credits?
• Are there any Concessions being offered by the Seller?
• If Concessions are involved, do they impact Value?
• Is the transaction an "Arms-length Deal"?       
  

     and very importantly, they also need to know:

• Contingency dates for financing
• Closing Dates
• Real Estate Tax Proration Agreements
• Names of the participants in the transaction, including but not limited to the obvious ones 

     
     The Lender's ultimate task is to Close the transaction and provide the funding.  But in order to do that ALL the relevant data must be made available ... and/or be tracked down. 

     It's important to be aware and understand why this information is needed.  It's more important to comply.  The financing process will meet challenges and delays if the information is missing ... 




     *  Hoping to Buy a home in New Lenox - Will County, the Greater Chicagoland area/IL/WI?

     Contact Me Today!  I'll put my 40 years of Mortgage experience hard to work on your (or your clients') behalf.
     I'm easily found at:

Gene Mundt

Mortgage Originator  -  NMLS #216987  -  IL Lic. #031.0006220  -  WI Lic. #216987

American Portfolio Mortgage Corp.

NMLS #175656

Direct:  815.524.2280

Cell/Text:  708.921.6331

eFax:  815.524.2281

gmundt@goapmc.com

www.genemundt.com

 

              

            

Gene Mundt, Mortgage Originator, an Originator with 40 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region including:  The Lincoln-Way Area, 
Will County, (New Lenox, Frankfort, Mokena, Channahon Manhattan, 
Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), 
DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI. 

Referrals are Welcomed!

           

Fannie Mae's Recent Appraisal Guideline Updates

     

 Fannie Mae's Recent Appraisal Guideline Updates

    

      Fannie Mae recently updated some of their Appraisal and property-related guidelines ... 

     It's important to note that these updated Fannie Mae guidelines/points are NOT necessarily the policies of Lenders, Banks, and other entities ... and can NOT be applied universally for every scenario or every transaction.

     For instance:  It's been common practice for Appraisers to use Comparable Sales within 6 months of the appraisal date.  

     Fannie Mae states that it is acceptable to consider and include a sale from OVER 12 months ago, as it MAY be more appropriate than other more recent sales, which are actually less similar to the Subject Property.  The Appraiser must provide an adequate explanation and support for using such a sale ... and of course, reflect any increases or decreases in value (if any) from that time period to the present.  

     Please keep this in mind when transacting in smaller communities or rural locations where the number of recent and truly similar comparable sales are limited.   

     In this extreme case where appropriate, such as smaller housing markets or rural locations, it's also allowable for an Appraiser to use Comparable Sales and Listings located OVER one mile away.  But those sales and listings must be thoroughly and satisfactorily explained to Underwriters however.

     In rare and extreme cases: Appraisers can actually use and adjust for sales that otherwise are not truly comparable. Again, in those instances the Appraiser must fully-explain those Comparables as the best and most appropriate available at the time the Appraisal is performed.  

     Also keep in mind:  Guidelines have been put in place to address the comparability of sales by measuring the percentage of dollar adjustments made by the Appraiser to and from the respective Sales Prices of the Comparables.

     New Information Available:  Fannie Mae will okay a loan on a property where the utilities were not turned-on at the time of the Appraisal.  

     However:  Lenders, Banks, End Lenders, or others involved in the transaction MAY insist on the utilities to be turned-on and noted to be functional.  There is no one answer to this question or issue.  

     Please consult your Lender for guidance ...

     *  For answers to Mortgage questions and Mortgage assistance in the Chicago-area, please contact me.  I'll put my 37 years of Mortgage experience and expertise hard to work on your (or your clients') behalf.
     I can be easily found at:

Direct:  815.524.2280

Cell/Text:  708.921.6331

eFax:  815.524.2281

gmundt@goapmc.com

www.genemundt.com

 

              

             

Gene Mundt, Mortgage Lender, a Lender with 36 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including:  The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL. 

Referrals are Welcomed!

    

 

Recycle Old Non-Working Holiday Lights at the Plainfield Public Libary in Plainfield, IL

Recycle Old Non-Working Holiday Lights at the 

Plainfield Public Libary in Plainfield, IL

 

 

         

     It seems, that no matter how carefully I wrap our holiday lights the previous season , there's always a strand or two that doesn't survive ...  

     It's why I was so happy to find out that the Plainfield (IL) Public Library is again offering a holiday light recycling service now through February 22, 2015.  It's so much better to recycle the old lights than add them to a landfill.

    The following lights (all lengths and colors) can be dropped of at the Plainfield Library (whether open or closed) to be recycled: 

• Mini-holiday lights (or Italian Lights) 
• C7 lights 
• C9 lights 
• Rope lights 
• LED lights 
• Old extensions cords 

   

     The Library will see that they are re-purposed or recycled by Elgin Recycling.

     The Library receives (15 cents/per lb.) for every pound of lights collected.  The proceeds will be used to fund "Go Green" events for the Plainfield area ... and activities for the community. 

     All drop-offs can be made at the Plainfield Library, located at:    15025 S. Illinois St., Plainfield, IL.   

     Collection boxes are located next to the Book Return Window at the Library and will be available now through February 22, 2015.  

    
 *  Looking to Buy, Build, or Refinance a home in Plainfield, Will County, or elsewhere in the Chicagoland area?  Contact me!  I'll put my 37 years of mortgage experience, knowledge, and expertise hard to work on your behalf.
     I can be found at any of the following:

Direct:  815.524.2280

Cell/Text:  708.921.6331

gmundt@goapmc.com

www.genemundt.com

eFax:  815.524-2281    

 

              

             

Gene Mundt, Mortgage Lender, a Lender with 36 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including:  The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL. 

Referrals are Welcomed!

How Is the Mortgage Process Like and Differerent From a Roller Coaster?

How Is the Mortgage Process Like 

and Different From a Roller Coaster?

     Going through today's Mortgage Process can be much like being on a racing roller coaster.  The similarities and parallels between the two are endless.
    

     Examples:  Both have highs.  Both have lows.  

     At times, each has uphill climbs that seem incredibly slow.  Still at others, both can seem white-knuckle fast.  And to an extent, the entire experience ... the success and enjoyment of both roller coaster ride and Mortgage Process ... are determined by the choices of the individual entering it.   

     How's That?  It's wise to listen to your Mortgage Lender, just as you listen to those running the roller coaster ride.   Not heed the advice or follow the instructions provided upon entrance, and there will be consequences. 

     There are great differences that exist too ...  

     Roller coasters have a set course that is followed each and every ride.  The same path, the same turns ... each taken at the very same point in the ride ... all performed at the same prescribed speed.

     And then there's the modern Mortgage Process ...

     Although there are requirements, documentation, questions, etc. that remain much the same (no matter the Borrower, no matter the Lender), each and every transaction has elements dictated by unique variables.  Variables that are personal only to the Borrower and make their process one-of-a-kind.  

     What are some of those variables? 

• The property being purchased (or refinanced) 
• The Mortgage Program
• Property Taxes 
• Income
• Credit/Credit Scores/Credit History
• Debts
• HOA Fees
• Municipality Fees, Stamps, etc.
• Lenders/LO's
• Much More

     I've made the analogy before.  Today's Mortgage Process is exactly like a fingerprint or snowflake.  It's totally unique and belongs only to the individual Mortgage Applicant(s) involved.

     Because of this uniqueness, I advise my hopeful Buyers turn a "deaf ear" to the tales and experiences of others that have navigated a Mortgage Process.   

     No matter how similar the circumstances or transactions may seem on the surface, you cannot compare them.  Even seemingly minute differences can make a huge impact ... and change the outcome.

     No, YOUR Mortgage Process will be yours and yours alone.  The path, the speed, the twists and turns, the hills climbed, even the price of the "ticket" for your Mortgage Process ride ... your entire experience will be completely personal and unique to you.

     Your goal as a Buyer/Borrower should be:  Choose your Mortgage Lender wisely.  This will help you navigate and experience a "ride" that's safe, swift, and thrilling.  One that will leave you smiling at the Closing Table and enjoying your successfully-financed new home ...

      
*   Make your Mortgage Process and Chicagoland home buying experience successful and enjoyable.  Contact Me Today!  I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
      I can be easily found at:  

Direct:  815.524.2280

Cell/Text:  708.921.6331

eFax:  815.524.2281

gmundt@goapmc.com

www.genemundt.com

 

              

             

Gene Mundt, Mortgage Lender, a Lender with 36 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including:  The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL. 

Referrals are Welcomed!