Obtaining a mortgage is an in-depth process that requires several important steps before eventually making it to the closing table. As the coronavirus pandemic continues to affect all aspects of daily life, many people are wondering what impact this will have on their homeownership goals. This is a valid question and one we plan to discuss in this blog post. While technology has made us more connected than ever before, some protocols have been tougher to navigate, two being home inspections and appraisals. Let’s tackle both and hopefully offer much-needed peace of mind to those aspiring to buy a home soon.
While a home inspection isn’t required, it’s highly recommended and shouldn’t be overlooked even during a quarantine. By having a professional inspect the property you intend to purchase, you’ll be able to identify any visible major issues before it’s too late. During an inspection, the property is thoroughly examined, and a full report is provided. It’s not uncommon for the potential buyer to be present while the inspection is being conducted. While it’s a great way to get a real-time account of any issues that are spotted, it’s not suggested during this time as everyone in the country is doing their part to curb coronavirus-related illness. Instead, many home inspectors are accommodating their customers by performing remote inspections. By doing this, houses are combed over by the inspector alone who then reviews their findings with the buyer via videoconference. Pictures and videos are taken of any issues or concerns. They are then emailed to the client and discussed in length. Remote inspections are a great alternative to the traditional method. Find a licensed inspector whom you trust, and do not be afraid to ask questions.
Another step in the mortgage process that is typically required before closing on a home is the appraisal. This is both an important and necessary step that lenders require to confirm the value of a property. An appraisal is an unbiased estimate of a home’s market value and is conducted by a licensed third party appraiser. It protects the lender by ensuring that the home’s selling price is appropriate based on its condition, location, and other factors. As the coronavirus pandemic continues to affect all aspects of our daily life, buyers are curious about how an appraisal can be conducted without sacrificing the health and safety of those involved. The good news is that there are alternatives.
The purpose of an appraisal is to make sure a lender isn’t loaning more money than the home is worth. Therefore, this step is not something that a mortgage lender can typically forgo. Thankfully, on March 23, 2020, the Federal Housing Finance Agency (FHFA) directed Fannie Mae® and Freddie Mac® to temporarily ease the standards for property appraisals. The agency said the reason for the decision is the “extraordinary circumstances” the country is facing during the COVID-19 pandemic. During this time there are a few options so that appraisals can still be completed. One is a desktop appraisal, which is conducted by a certified real estate appraiser who uses information such as tax records found via public records along with evaluating comparable sales in the area. The research gathered is then used to assess the value of the property. While for many, this may not be ideal, it has become more common and accepted by lenders over the years even before the presence of coronavirus. The other option is a drive-by or exterior appraisal. This involves looking at the outside of the home and combining those findings with real estate records to determine the value. During an exterior-only appraisal, pictures are taken to verify that the home exists. From there, the remainder of the appraisal is similar to a desktop appraisal in that research is conducted to gather the additional information required.
At the moment, nothing is “normal”, and we understand that tensions are high for many. However, the mortgage industry has overcome many hurdles over the decades and has learned how to navigate new guidelines and protocols when necessary. At the end of the day, the most important thing for us is to ensure that homeownership is still available for those who desire it. If you have questions about the home buying process during this time, contact a Silverton Mortgage loan originator. We’re available to walk you through exactly what you can expect as we are committed to keeping the path to homeownership is as smooth as possible even amid COVID-19 concerns.