Tag: house appraisers

Appraised Value, Market Value and Assessed Value…what’s the difference??

When people talk about the value of their homes there is  a wide variety of terminology…one home could have many different values. Between, the appraised value, listing price, market value and assessed value, who can keep it straight? But like … Read More..

Fannie Mae Easing their Standards

LOAN NOT APPROVED! This is the last thing a potential buyer wants to hear from a bank when trying to purchase a home, but now with Fannie Mae easing the financial standards of the debt to income (DTI) ratio. The DTI will be raised from 45% to 50% on July 29. What determines your DTI ratio? DTI is a ratio that compares your gross monthly income to your monthly payment on all of debt accounts. Included in this is your monthly credit card bills, auto loan payment, student loan payments, etc., and the monthly projected payments on the new mortgage. A $6,000 household monthly income and $2,500 in monthly debt payments, your DTI is 42 percent. Lenders use this ratio to evaluate your current debt load and to see how much you can responsibly afford to borrow. Less debt equals more borrowing power.  If you are loaded down with monthly debts, you’re at a higher risk of falling behind on your mortgage payments…this is not rocket science.

Researching data that spanned nearly 15 years, Fannie Mae’s researchers analyzed borrowers with DTIs in the 45 percent to 50 percent range and found that a significant number of them actually have decent credit and are unlikely to default on their home loans. Significant enough to raise the ceiling and stick their neck out just a little bit more for buyers. Lenders are excited about the policy change giving those buyers just over the 45% threshold a chance in the marketplace. All applicants still need to jump through the multitude of hurdles when it comes to Fannie Mae’s underwriting criteria. The criteria entails down payment, credit history, income, loan-to-value ratio and a mountain of other financial criteria.

The largest population rejected because of high DTI ratios are the Millennials, who often stretch to pay their rent early in their careers. Millennials are the generation born between 1980-2000, which means that the bulk of Millennials are entering the prime home-buying age. They are a new targeted demographic with a lot of marketing being angled toward them in an attempt to attain their buying power: could this expanded ratio correlate with the Millennial?

Millennials are the demographic group helping Baltimore City gain population for the first time in a half century. Harford County is having a more difficult time attracting this market sector: Millennials are looking for mixed use communities, transportation, dining and shopping opportunities. Baltimore County also has tried to cater their communities around this sector of the population.

Regardless of what age or demographic you may lie in, Fannie Mae may not be your only option if your DTI is above 45% or even 50%. As of 2016 FHA (Federal Housing Administration) guidelines maximum debt to income ratio of approximately 55% with compensating factors. FHA does have a major drawback, it requires the borrower to keep paying mortgage insurance premiums for the life of the loan, well after the risk of financial loss to FHA has disappeared.

Having a hefty amount of debt, whether it be from student loans or shopping sprees, may not deter you from being a homeowner with the added help of Fannie Mae increasing the DTI ratio. With the decision of easing the financial standards of the DTI ratio to increase a broader base of buyers I hope it comes with an increased amount of caution for the future of the housing market. As an appraiser for properties in Baltimore County, Baltimore City, Harford County, Howard County, Cecil County, Carroll County and Howard County during the housing crash when the easing of requirements regarding lending money did not bode well I remain watchful on the recent decision for the broadening DTI. The housing market crash, which started in 2007 should be a constant reminder and lesson for the easing of standards and what sort of repercussions it could bring.

Appraising Real Estate in Baltimore City

Appraising properties in real estate is tricky business for real estate appraisers. The vast value range, emerging markets, government housing and rehabilitation projects are just a few things a Baltimore City appraiser encounters when navigating the proper choice of comparable sales when determining the appraised value of a Baltimore City property. With more Millennials and empty-nesters moving downtown, there’s a renewed interest in the urban living experience causing an increase in appraisal work.

Lending institutions are quite cautious when reviewing a Baltimore City appraisal. Often values differ block to block depending on location of the water, monuments, parks, etc. The distance between the comparable properties and the subject property within an appraisal are highly scrutinized. Part of this scrutiny stemmed from the Baltimore City flipping scandal. With such diversity in value within a small radius due to the density of homes allow a large pool of settled sales to choose from. It is unethical, criminal and against appraisal practices to inflate the values of properties.

HB 521, a bill passed by the state legislature in the wake of the so-called “flipping scandal” of the 1990s, created a database of property appraisals in Baltimore City. Since 2003, every home appraisal done in the city was supposed to be given to the Department of Housing and Community Development, to be kept in files in case investigators ever needed to track down and investigate suspicious appraisers and/or lending practices.

Charm City is a city that bounces back regardless of setbacks. There are more than 40 homebuyer incentives that people could potentially qualify for when buying a home in the Baltimore City. They range from $1,000 to $30,000. These are for primary residents, not investors and you can stack them if you quality for more than one. You can go to http://livebaltimore.com/financial-incentives to learn more.

It is not only traditional buyers that are getting into Baltimore City real estate, even developers are turning a number of historic buildings in downtown Baltimore into amenity filled apartments. 26 S Calvert Street features a rooftop deck and mini basketball court, and 10 Light Street is a building that Metropolitan Partnership is turning into 400 luxury apartments.

With the growing demand of real estate in Baltimore City this leads the appraisal community with a responsibility for quality appraisal reports within lender guidelines that follow uniform standard appraisal practices.

Charm City is becoming more charming each year with expansion, renovation and opportunity. Robinson Appraisal Group can help you with all of your appraisal needs. Our services include estate appraisals, conventional appraisals and FHA appraisals to name only a few. Our office does a multitude of reports for the Baltimore County, Baltimore City, Harford County, Cecil County, Carroll County, Anne Arundel County and Howard County areas. We look forward to helping you in the future with an appraisal for your Baltimore City property. As our Baltimorean counterparts would say, Thanks, Hon!

Become an Appraiser in Maryland

How does someone become an Appraiser in Maryland? To become a real property appraiser, you will need to obtain education and experience, then pass a state-administered licensing or certification exam. One of the best ways to gain experience is to … read more

Appraisal Terminology

Appraisal Terminology Abatement – Abatement is an official reduction or invalidation of an assessed valuation after the initial assessment for ad valorem taxation has been completed; the termination of a nuisance; a reduction in rent levels that a landlord charges … Read More..