why my mortgage broker order appraisal before my loan application is approved?

Question

I heard that an appraisal should never be ordered unless the mortgage broker is sure the loan is going to go through.but my loan application is denied.and I still need pay for the appraisal fee?

Answer 1

The appraisal is a KEY component in determining a fianl approval of your loan. Not only is your loan based on your ability to repay, but it is also based on the property standing as collateral for that loan.

Now, you could have had a loan approval separate from having an appraisal, It very often happens that your LOAN gets approved but NOT FOR THE HOUSE appraised. In that case, you would STILL pay for that appraisal, and have to pay for yet another appraisal later. In other words, had the Lender determined - yes, we want to lend you $xxx,xxx dollars, but not to buy THAT house because of what the appraisal report said, then you would still have a loan approval, but now you have to go find a house they will give you the loan for.

From your note here, I am going to assume that you found a home, put a contract on it and THEN STARTED your loan process. That means, that both your approval for a loan, and determining if the collateral was worth the loan were happening simultaneously and THAT is why you had to have the appraisal done. Very often, having signed an offer to purchase, you needed to meet the closing deadline which is often 30 days from the last signature on the contract. For a lender to determine your ability to repay, and the value of the collateral within a 30 day window, both happen simultaneously.

Hope this helps.
Trudy Beerman
Realtor, Broker/Owner
www.residentialinvestorservices.com

Answer 2

When you signed the application, you authorized appraisal of the property which you intended to purchase. The mortgage broker is not responsible for insuring that the loan application receives approval (some are denied a day or two before scheduled closing).

Meanwhile, delaying an appraisal until the last moment could delay the closing, since underwriting demands an appraisal well in advance.

It's one of the risks you take when you apply for a mortgage.

Answer 3

Yes, you will still be responsible for the appraisal fee.

Your broker should not have ordered the appraisal until they had a conditions list from the underwriter, however, since you are dealing with a broker instead of a direct lender, most wholesale lenders require an appraisal before they will give underwriting approval with conditions. It's a catch-22.

Answer 4

the loan approval is always subject to the appraisal and other conditions even if the transaction does not go through you must pay for the inspection.

Now,usually the mortgage broker gives the appraisal a few comps just to make sure that is close enough price wise.

Answer 5

Ordering the appraisal is part of the process of your getting your home, along with signing the loan application, and your getting approved. Ordering title, survey's, inspections etc. Not sure why you got turned down, since your broker already had your credit, income etc to pre-appove you. Did he run your loan they the Freddie Mac or Fannie Mae sites to get an approval? Or did he get a refer? Were you going conforming, FHA, sub-prime? Did yoi have 2 years job time, rental history. What was your middle credit score, was income too low, have you had a bk in the past 2 years, lots of collections, judgements? If FHA judgements and collections have to be paid. Medical can remain open. Too many veriables as to why you got turned down.

How was your income vs debit (Debit to Income ratio) is called DTI 19/43 for FHA and Conforming and higher for sub-prime.

Were you needing 100 percent? 97 ? 95? Was sellers helping with closing costs - Was sellers helping with downpayment? Did you list reserves for the downpayent? That is always verified?

One thing in your favor is this, if you decide to find another broker one that writes for other companies and can do FHA/Conforming (and run your file thru LP or DU underwriting systems, and if you get an accept you are good to go. If you get a E1 or a E2 you are still good. Your MI coverage will be higher on a E1 or a E2 (have your broker explain it to you ok ) A professional broker will WORK with you and for you. The appriasal can be released and re-asigned to the new company that you work with. You will have to pay for it to get it released. Have the new person you are working with, call them to see if they will release it if you pay it. Most appraisers now a days want to get paid at the door, at the time the appraiser is doing the appraisal, just for this reason. They come out and do a job and want paid. Unless money is tight and clients put down escrow money on a purchase contract, and I know that I have an approval, than it can be rolled into the closing cost. One way or another when the deal goes thru, it needs paid. I have had to pay for a few appraisals out of pocket (as I am sure others have too) when a deal went bad. Any number of reason can delay or suspend, or deni a loan. It is up to underwriting decission, appraisal review's and the such, as to what happened. With the Sub-prime market as it is right now. More lenders are wanting a higher credit score for purchases and refi's - especially if you are needing a 100 percent loan. Not trying to discourange you. Talk to another lender and call your former lende to see if you can get your credit report. So you know what your scores are, and what is listed on your report. Show that credit report to a lender and see what they think. That way you do not have to have another credit pull. Normally I can look at credit, income, and know where to send the file. But have been in the business for 7 years and that does help. Did you ask they reason why you got turned down? Did he/she give you any suggestions on what to do next - everyone has a boss, you can always call and request to speak to their boss.

If you are still wanting this home, than I would recomment checking out www.hud.gov and www.fha.gov
www.ameridream.org www.freddiemac.com
www.franniemae.com

Good luck to you

Answer 6

the best way to start is probably a conference with your bank and get pre-qualified for a mortgage. this will ensure that you can get the loan in the first place and will give you a good idea how much you can afford to spend on a house. then find a real estate dealer in your area with a good reputation. go online and check out real estate ads in your area and make a list of the houses that you would like to look at. saves alot of time that way. rule of thumb on mortgages: on a 30 year mortgage you will be paying back almost triple what you borrow, 20 year mortgage you will be paying back double. the bigger the down payment, and shorter the term of the loan, the better off you will be financially in the long run.

Answer 7

Your not responsible for any costs unless your loan closes. If your told anything else don't listen to it. My clients at the bank never pay for an appraisal and I typically pick up the charge for them especially on a purchase, that being said unless your getting what you asked for then nobody else should either.

Answer 8

There are very few lenders that will obtain a Conditional Loan Approval before they get your documentation, get your appraisal, or even get your Preliminary Title Report since they see it as a waste of their time.

Some lenders (like me) feel the consumer deserves to get a FULL CONDITIONAL APPROVAL before you are asked to do anything. That way nobodys time and money---your time and money or my time and money---is wasted.

It's wierd more consumers don't demand approval upfront!

(I'm expecting Loan Professionals who don't do the right thing to give me a thumbs down now!)

Answer 9

It sounds like an inexperienced broker or he is trying to keep you from shopping his rates. Since you already paid for the appraisal he has a captive audience since most people are not willing to pay for a second one.