Home Buying in Brooklyn>Question Details

Byudkin, Home Buyer in Brooklyn, NY

How can I schedule an appraisal before submitting paperwork for a mortgage application?

Asked by Byudkin, Brooklyn, NY Thu Sep 20, 2012

I've been in contract to buy a condo since December, and I can't stay in the transaction any longer without knowing what the unit is worth.

So I'm planning to schedule an appraisal... Basically it can go a few ways:
-- Appraisal is bad and I walk
-- Appraisal is very good and I try to do a FM/FM loan without PMI
-- Appraisal is just "good" and I evaluate from there.

So I'd like to get the appraisal, and if it goes well, start a Fannie/Freddie loan application from there... Is there a bank who could assign me an appraiser now and fill in the application after the appraisal comes back? I need to get the appraisal scheduled ASAP!!!!

Thanks in advance!

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Answers

26
What would happen is that when you move into the condo in November, you then became a tenant in the property you're buying. In that case we're talking you would have to wait 6 months AFTER your November move-in date.

What you're reading from the handbook is refercing a scenario were you would have been living in the condo for at least 6 months, AND THEN you signed contracts.

If you'll do a FHA loan, you would unfortunetly be required to be a tenant for 6 months from the date you move in. If you'd like to finance sooner than that, you'd be subject to a lower loan-to-value, meaning a higher down payment.
1 vote Thank Flag Link Fri Sep 21, 2012
Byudkin,
As stated you can only get a FHA mortgage if the sponsor gets FHA approval for the development. You may not be able to get a Fannie/Freddie mortgage unless the condo is at least 75% sold to buyers planning to use it as their primary home. Usually the sponsor has a relationship with a lender that has agreed to do the mortgages. The sponsor can tell you which lender it is.
I am assuming you have not used a realtor in this transaction. Part of the value of the unit is when the offering plan is approved by NYS. If it takes 6 months longer (and it can), then any appraisal you do now will not show the true value. If you are nervous about overpaying, hire an appraiser, it will worth the money to not worry about the value.
1 vote Thank Flag Link Thu Sep 20, 2012
Trevor you're crossing the line with me. Pay attention. No where in my responses did I ever say I or the consumer would speak directly to an appraiser. In fact I specifically said MANAGEMENT COMPANIES. Secondly, if you read the borrower's question you would know that they've been under contract for about 10 months now. Finally, if you read my last message, you would see I said THE BORROWER CAN ORDER A PRE-EVALUATION REPORT WHICH WOULD NOT BE THE SAME AS THE REPORT THAT NEEDS TO BE ORDERED WHEN THE BORROWER DECIDES TO SUBMIT A MORTGAGE APPLICATION. IT WOULD ONLY BE A REPORT TO GIVE THE BORROWER AN IDEA OF WHAT THE PROPERTY IS WORTH. I ALSO SAID THE BORROWER CAN ASK HIS/HER LOAN OFFICER TO REQUEST A COMP VALUE FROM THEIR MANAGEMENT COMPANY. Now tell me what I said is against the rules?

This last response was a personal and judgemental one. You might as well have called me a crook Trevor. FYI - I learned a borrower can do this when I worked at Continental Home Loans. Are they a bunch of un-licensed Loan Officers too? Please, do not try to insult me, I would prefer you did it face-to-face. We're supposed to be professionals, so simply provide your professional opinion and keep it moving as oppose to taking jabs at me.
1 vote Thank Flag Link Thu Sep 20, 2012
Treavor,

I'm not sure we're on the same page. Here's the scenario.

I've been renting the same place for over a year. This has nothing to do with the condo.
I entered the contract for the condo last December.
They do not have FHA or AG approval.
I want to start renting the condo from the sponsor now. Move in date would be say Nov. 2012.

So the contract date is Dec. 2011. So if I start renting now, there should be no 6 month wait period, as I was never a tenant buying from my landlord. I was a purchaser who elected to make the sponsor my landlord. Am I correct?
0 votes Thank Flag Link Fri Sep 21, 2012
Byudkin,

CONTRACT date; not move-in date.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
0 votes Thank Flag Link Fri Sep 21, 2012
Javier,

From your reference:
"A current tenant, including a family member tenant, purchases the property where he/she has rented for at least six months immediately _predating_ the sales contract."

The sales contract is already signed hence my confusion. Or does the term "sales contract" mean "once the contract is executed following HUD approval"... Or, does "sales contract" mean the closing of the mortgage and commencement of FHA insurance...? You can see my confusion.

To me, the language above is applied for parties entering a contract of sale with their current landlord. I entered a contract of sale with a sponsor. From a FHA standpoint, I would think that VOR would be exactly the same as if I lived in one place in the previous 4 months (or 2 months, or however many), and in a different one in the 8 months prior... i.e. I had moved inside the last year.

Wouldn't be the first time I was wrong... And with the glacial pace this is moving it may not matter.

Thoughts / help?
0 votes Thank Flag Link Fri Sep 21, 2012
See page 77 of the HUD 4155.1 housing handbook. You would actually be eligible to apply for an FHA loan after 6 months of becoming a tenant in the property you're purchasing.
0 votes Thank Flag Link Fri Sep 21, 2012
Good morning Byudkin,

Sponsor = Landlord. Sponsor owns unit. You will rent from sponsor; sponsor is landlord. FHA provision for proof of on-time rental payments kicks in when buying the home you live in from your landlord: 12 months cancelled checks or proof of ACH payments. Letter from landlord not acceptable. Possible to do after 6 months.

FHA clock starts running when HUD approves CONDO, not when you sign contract.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
0 votes Thank Flag Link Fri Sep 21, 2012
Trevor,

We actually got a fairly good contract with some non-standard items in the contract.
-- We got a right to rescission after 4 months
-- We had a provision that they must qualify with FHA
-- We had a rental clause
-- We had a clause where they had to pay for storage of our effects after 2 months

There was more but I can't even remember. My attorney said if he was providing his service on the other end of the deal he would tell me to go blank myself... I'm not a lawyer but personally I thought it was a good contract.

What you said about FHA has me very concerned though. If I consummated the contract of sale prior to renting then I would think that from a loan standpoint I purchased the unit from the sponsor, not my landlord. FHA has a right to review my contract but there's nothing in there that says I "have" to rent the unit. Seems ambiguous but I am concerned now.

Could you please advise on what the FHA guidelines dictate as far as that provision? A rent-to-own provision like that makes sense but again I would think that the date reviewed is from the date of the contract of sale not the date when the application lands on their desk.
0 votes Thank Flag Link Fri Sep 21, 2012
Byudkin,

Spot on advice from my colleague Annette Levinson; she has a good reputation for posting accurate and honest advice here on Trulia.com

A word of caution about renting from the Developer: this may affect your ability to get approved for an FHA loan. FHA guidelines state that if you are purchasing the home/apartment where you live from the landlord/owner then you must prove an on time payment history via cancelled checks or ACH transfers (no other form of verification is acceptable) for (ready for this?) TWELVE MONTHS. This is a Rock-Solid FHA guideline.

So, if you move in and rent then you'll have to wait a whole YEAR before you can apply for the mortgage.

Honestly, it sounds like your Attorney did a TERRIBLE job of protecting and advising you on this transaction. Everything seems skewed towards the Developer. That's too one-sided for my liking.

I hope we provided you with accurate information today that you can use to make the best decision possible.

Good Luck!
Trevor Curran
NMLS #40140
0 votes Thank Flag Link Thu Sep 20, 2012
Thank you all for your answers.

What I'm hearing is I couldn't use the appraisal for the sake of securing a mortgage until I have a completed application & receive GFE's and truth in lending disclosures. That will take probably 2 weeks and that's unfortunately 2 weeks I don't have... My lease is running out.

I can back out of the sale whenever I want for any reason as I included a provision in my contract which gave me the right to do so after 5 months.

The appraisal is being conducted because I also have a provision where I can rent the property from them until closing. If I take that & move in, I would be in a very unenvious negotiating position if the appraisal were to come back low ("you come up with the difference or move out"). So this is to:
-- Determine if I want to accept that provision
-- Try to move to a FM/FM instead of FHA
-- Walk away feeling like I made the right decision.

The market in that area has turned around tremendously since I signed on, the question is, how much, and will it make me stick around.

Sounds like I'll be ringing phones for an appraisal and will keep the bank out of it for now. Let me know if you have any additional advice...
0 votes Thank Flag Link Thu Sep 20, 2012
The reason for the delay in closing will determine your ability to pull out the contract. If you are 100% at fault the seller could hold you to the contract. If you are not at fault you also do not need an appraisal to determine the value. Valuations can be arrived at by contacting a realtor or an appraisal company. This report will be at your expense and will not be used by the bank. If you believe the appraisal by the bank is false you can use your personal appraisal to dispute the value arrived at by the bank. You also have the right to request a 2nd appraisal. Good luck
0 votes Thank Flag Link Thu Sep 20, 2012
Javier posts the classic response for a Loan Officer who is not Licensed, only Registered because he works for a regular bank, to provide incorrect information to a consumer.

1. It is a felony for a Loan Officer to speak with the Appraiser who will perform the appraisal on a property for which the Loan Officer is processing a loan application.

2. Under revised HUD regulations an appraisal management company cannot perform an appraisal without a fully-executed contract of sale.

3. ALL Licensed and Registered Mortgage Loan Originators must include their NMLS # in ALL communications except inter-office communications within their institution.

It's good to follow the rules; it's how I have a career after 23 years.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
0 votes Thank Flag Link Thu Sep 20, 2012
You CAN order an appraisal without going forward with a loan application, solely for the purpose of a property evaluation. This will not be the same as the appraisal thy would have to be ordered again once you submit your mortgage application. In fact it would be more like you ordering it directly from the same management company your lender uses.

Keep in mind that these management companies assign appraisal orders to random appraisers in their approved list. This mea s there is a good chance that both the property evaluation appraiser and the one your lender orders once you submit your application come from 2 different appraisers who could have 2 different opinions as to what the value is. They should be in the same ballpark.
0 votes Thank Flag Link Thu Sep 20, 2012
The answer is no, a Lender cannot order an appraisal without a complete loan application.

A Lender can only order an appraisal with a completed formal Loan Application and an executed contract signed by all parties. Once you've submitted your Loan Application the Lender has to wait 4 days from the date they send you a Truth-In-Lending statement before they can spend your money on an appraisal.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
0 votes Thank Flag Link Thu Sep 20, 2012
Yes you can have your lender order an appraisal before you submit an application. You can also ask your loan officer to have his/her management company comp the property out this way you have a very good idea of what it'll appraise for without having to spend money on an actual appraisal. I do this very often and I know many other loan officers do too.
0 votes Thank Flag Link Thu Sep 20, 2012
So is there. lender that can set that up without a full application? That's really the root of the question.
0 votes Thank Flag Link Thu Sep 20, 2012
I hear ya. But your Lender will not accept an Appraisal that you order. You can get your own appraisal, but it's yours to keep.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
0 votes Thank Flag Link Thu Sep 20, 2012
I understand that there's a difference between "An appraisal" and "The appraisal".

For FHA, this can't be "The Appraisal" because they're not HUD approved.

For FM/FM, I'd ideally like this to count as "The Appraisal" -- but without filling out a formal application until after the results are in.

Whether I can do that or not, I plan on ordering "An appraisal" because we have a termination clause in the contract. If this appraisal is garbage, then the sponsor can renegotiate with us or we walk. We have waited months for them & they aren't doing much... Hence the frustration & the need to get "an appraisal" now.

So, I'd like to talk with a bank, have them spin the big wheel of appraisers, then I'd write the bank a check to have them hire said appraiser, and if it goes well, then I start a FM/FM application. This won't be with my current broker as I am not particularly happy with him.

Does that make sense? Basically I am paying for an appraisal no matter what, but if possible, I'd like it to be able to count for something... Try to kill two birds with one stone.
0 votes Thank Flag Link Thu Sep 20, 2012
Generally this is not done, Contact Sal Tomaselli at better loans 718-457-4444 ext 15

However if you are just interested in determining the market price, consider asking your broker to do a CMA this will not cost you anything
0 votes Thank Flag Link Thu Sep 20, 2012
Thanks for the clarification; as I suspected this is a new development. Unfortunately your idea of the process is rather skewed. Let's say the Developer obtains FannieMae approval or HUD approval. You then apply for your loan. The appraisal comes in short. At that point one of four things happen: you come up with more down payment OR you and the Developer meet somewhere in the middle OR the Developer reduces the price OR all parties cancel and go home.

Either way, you can't use the appraisal to game the transaction; it is what it is.

If you're thinking of FHA you wouldn't be able to apply for the FHA loan until after the Development received HUD approval anyway because your Lender has to get an FHA "Case Number" which is the unique identifier for the FHA Insurance.

What do your Attorney and your Mortgage Banker have to say about all this? I have a client similar to you right now and I can promise you he knows exactly where he stands in the process before and after he signed the contract. If your Pro's aren't providing you with proper guidance then you need to fire them and find another.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
0 votes Thank Flag Link Thu Sep 20, 2012
Thank you all for the prompt answers.

The unit has been in contract for this long because the sponsor has not declared their offering effective yet. I did get prequalified & had a completed application for FHA but it sunset a long time ago. I'd like to try to get on to a FM/FM because it's one less hurdle for the sponsor to clear, as they don't have FHA approval either (so I can't get my FHA appraisal anyways).

That said, I'd rather not start a formal application yet because it involves a fresh start, miles of paperwork, dinging my credit again, etc etc, and I feel like it's not worth the effort because I realize I'm very close to FM/FM maximums on DTI. I have cash on hand, but I'm not looking to put a full 20% in to clear PMI. Without PMI I would qualify.

So if the property appraises for 90% LTV I would come up with 10% and do an application, but that's dependent on the appraisal.

I have no issue paying for the appraisal to be in a better negotiating position. If I'm not putting the money in to clear PMI then I'm probably stuck with FHA and I'll need another appraisal at that point... But if this appraisal is good and I can come up with the remainder of funds to get to 80% LTV, I'd rather not pay for a second appraisal to get a FM/FM commitment either.

So with that in mind, I would have to get a full application processed in order to order a FM/FM appraisal? I'd rather not do that since the appraisal could sunset, and it might be a total bust anyways...
0 votes Thank Flag Link Thu Sep 20, 2012
There is a good chance that you might be in violation of your contract. For the most part, as per residential sales contracts, the buyer is obligated to do their end in applying for a mortgage in a timely manner and order an appraisal. If you have been under contract sice December, and you don't have either a loan commitment or a denial letter, you may be in jeopardy of loosing your down payment.

It's been about 10 months. You need to apply for a mortgage ASAP and order an appraisal and from there you'll be able to determine what will happen as far as the deal going through or if it doesn't appraise then you either re-negotiate with the seller or you walk. But you need to do your end NOW!

Good luck!

Javier Meneses
NMLS #23130
Sterling National Bank
jmeneses@snb.com
0 votes Thank Flag Link Thu Sep 20, 2012
There is a procedure, set up to protect you, and help you:

1. You get a Loan set up,
2. You get a Realtor in your corner
3. You find a house
4. Your Realtor does a CMA to determine the Market Value
5. You make an Offer, with Loan, Appraisal and Inspection CONTINGENCIES
6. You get an ACCEPTANCE from the SELLER
7. You go into ESCROW
8. You do your Inspections, if they come out Okay, you release the Inspection Contingency.
9. Your Bank schedules the Appraisal with their choice of Appraisers
10. If the Appraisal comes out Okay, you release the Appraisal Contingency
11. You get a Loan Approval from the Bank
12. You release your Loan Contingency
13. You Close Escrow

This is the way it is done.
If you want to spend an extra $500 (or so) doing a extra APPRAISAL before you start; you may certainly do so; but it will be extra, it will not be accepted by your Bank.

Good luck and may God bless
0 votes Thank Flag Link Thu Sep 20, 2012
Dear Byudkin:

You stated that you have been in contract since December of last year... that is an awfully long time? What is the hold up about? If you are in contract and needing to get a mortgage, normally you should have already spoken to a mortgage banker, gotten pre-qualified and submitted a loan application. I would have thought you would have already received a commitment as well.

When you submit your loan application you usually give a check to the loan officer for the appraisal. Did you do that? If so, contact your mortgage banker and tell he or she that you want the appraisal done now. Keep in mind that if it takes too long to close after the appraisal is done, it will become "stale" in the banks eyes and they may have to do another before you actually close.

If I had more details I can give you additional thoughts and advice. Feel free to contact me if you like. Either way, good luck!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes Thank Flag Link Thu Sep 20, 2012
Good morning Byudkin,

I'm afraid you cannot obtain a bank appraisal without first applying for the mortgage loan. The Lender will require your completed Loan Application, a signed Good Faith Estimate and Intent To Proceed with Loan form, signed Truth In Lending, and a fully-executed contract of sale to order the appraisal.

Banks cannot assign appraisers to consumers; the appraisal process is a secure part of the loan application.

Why are you in contract for nearly a year? Is this a new development?

If so, you wouldn't want to do an appraisal now, anyway. If you're not closing for a few months, yet, the value could change. Appraisals are only valid for specified periods of time after which a new appraisal will likely be ordered.

Once the appraisal is done by your Lender you can always request a change in the loan application to increase/decrease your down payment. Be sure to consult with your Attorney before doing so because you don't want to violate the terms of your contract of sale and mortgage contingency contained therein.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
0 votes Thank Flag Link Thu Sep 20, 2012
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