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Lender dropped my program...confused with ??
Hi,
Been lurking on this board for awhile as we are in the process of buying a house after selling our condo last year. Will try to condense my ?? as best I can.
After much research, we ended up settling on Chase as a lender. We we were going for a 5% conventional loan and AFTER they ran our credit and started the process, we learned Chase dropped that program in MI and I think FL so, in order to keep a 5% downpayment, we switched over to FHA. Bummed because i am now paying more in PMI but it is what it is.
FF...we put in an offer on a home we love. There was a bidding war and ours got accepted. Inventory in the area we want is incredibly low...things turning over within the day. That's what happened on our house.
Inspection goes great (we found a few things they agreed to fix). On to the FHA appraisal. We dont have the exact number yet but our realtor gets the feeling it will be low. Like as much as $30,000 seperating. The appraiser is not from our local area...is from an area where inventory lasts months to years and also we feel is not comparing apples to apples as there is a big difference in housing in our immediate area.
The sellers immediately push for a conventional mortgage and lower the price by $10,000. They are doing this hoping to get a conventional appraiser more local to the area, etc. We say no...we want to see the final number on what the FHA appraiser says and then we will go from there. Our appraisal should be in by tomorrow.
We do want to try and make this work but i am not willing to pay more for what the house appraises for (obviously we wont get a mortgage for more than its appraised for anyway). we've also been already told by Chase that our mortgage is approved so we are pretty far into the process with them.
My questions are this: Should we even try to look for another lender that will do a 5% conventional and work with them on getting the house re-appraised? If so, how do we break up with Chase? Has anyone had this issue where the FHA appraisal just doesnt feel right (even from a buyer's perspective)?? Do we just take what the FHA appraisal comes in at and not budge, knowing we could lose the house?
I definitely dont want to overpay but I dont want to lose the house over a low appraisal if it's wrong. Any advise appreciated.
Re: Lender dropped my program...confused with ??
How is switching to a conventional mortgage going to allow you to get around a difference between contract and appraised price? Do the sellers think you'll be willing to pay cash for the difference? (Don't.)
Wait until the appraisal comes in and then see what's what.
An FHA appraisal sticks to the property for quite awhile. 6 months, I believe? The sellers will not be able to turn around and sell for the contract price to a different buyer. Nobody in their right mind would overpay that much for a house.
Your other questions, I guess it depends on what the appraisal comes in at and how far apart it is from the contract price. Sometimes people have luck appealing the appraisal, sometimes not.
I think you're reading to much into things with out seeing the appraisal first. Just because an appraiser is not from an area does not mean that they are not knowledgable to appraise properties in other towns, counties, neighborhoods etc. Part of the job is to get to know the areas that they are working in.
Part of your realtor's job should be to help them become knowledgable if they have concerns that the appraiser might not be.
It really doesn't make any sense that your realtor "has a feeling" that it will be low. There must be more going on than just that the appraiser isn't from the area.
Either the appraiser has given a heads up to one of the realtors and you're being left out of the loop until the appraisal comes in. Or there are some comparable sales out there that your realtor knows about that make your house look like it might be worth less than what you have offered.
It would be my guess that the appraiser has spoken to the listing agent looking for some help with comparable sales if the sellers are already agreeing to drop the price with out even knowing that the apraisal came in at.
Switching to a conventional will allow the property to be re-appraised by a local appraiser but who knows what this 2nd appraiser will come in at. The feeling is that a conventional appraiser wont be as strict as an FHA appraiser. I have no idea if that is true or not.
No worries...we have NO intention of overpaying and NO we will not be coming with cash to make up a difference of even $1,000.
But the FHA appraisal wont stick if the next people come along and do a conventional mortgage, right? then it would be up to whatever that appraiser appraises the property at, correct? Or am i thinking about it wrong?
FHA and conventional appraisals should have relatively the same values, with maybe slight variations depending on the appraiser - but not tens of thousands of dollars.
Market value = market value regardless of the type of financing you are receiving.
If the next people come by and do a conventional mortgage, no the fha appraisal would have no bearing on the property.
I don't understand why you, your realtor and your sellers are assuming that the FHA appraisal will come in low but that a conventional would not.
We sold our home and the conventional appraisal came back $20k below agreed upon price (our buyer is paying for the difference in cash) and our new house came back right above agreed upon price and was an FHA appraisal.
Obviously, that's just one scenerio but it doesn't logically follow to me that FHA = low.
If your realtor thinks there may be as much as a $30k gap, that tells me she thinks you are over paying.
We just had an FHA appraisal done last week on the house we are selling. There was only 1 comp in our area similar for the size of our home on the size lot we have. Actually comp was still a bit smaller on both house size and lot than ours. The appraiser took a couple of comps from the next town over. The appraisal came in $5,000 over asking price.
If the appraisal comes in way under you might be able to ask for a review of the appraisal or pay for another appraisal yourself.
Thank you for the advice!
Yes, I was already in contact with other lenders who are still offering the 5% conventional and still are. We could switch everything over for sure but right after we got our pre-approval from Chase and found out the program had changed, we were ready to make an offer on this house.
After 3 appraisals on a house we were having built and having to walk away, here is what I learned: The only differences between conventional and FHA, are that an FHA appraisal will stick with a property on a re-sale (we were not doing this, but I learned this) and that sometimes an appraiser will have certain guidelines for an FHA loan, not required by a conventional program. Since it is not a older home, it should not be an issue. The appraisals themselves should not be that far apart no matter if it is FHA or Conv. What I can tell you is that you and your REA need to do your own evaluation of comps. And you need to look at price per square foot. Your house will need to be close to the same value of houses not only in the immediate area/neighborhood/subdivision, but also homes in the area around the neighbor that have sold recently. Realtor.com does show houses that have sold, price per SF and your realtor should also be able to send you MLS listings and the sales price/PPSF as well.
Don't assume the appraisal is wrong (we had 3 done) and all were below sales price, one by as much as $45k. This is something you want to know before you buy. It can save you from starting out underwater on a home without even knowing. GL.