Mortgage Money and Gasoline
by Craig Goebbel
President & CEO, LoanTek, Inc.

It was another tough week for mortgage rates. Pressure coming from good economic news teamed up with huge offerings of commercial paper to continue pushing mortgage rates higher. Although a sub-seven rate is still available for 30-year loans, they are more expensive than last week. Low closing cost loans in all categories are now in the low sevens with no indication they will decline.

Will this hamper the housing market?

I don’t think so. Consider your driving habits. Have your started driving less even though gas prices have crept up in the last few weeks? If you are like most people, you did not. Although gas was less expensive two weeks ago it is still cheap, especially when compared to the levels we saw this time last year. So, when you are close to empty you find a station and you fill up. The same is true for mortgage rates at these levels. If you are not in the market for a loan, current mortgage rates are not on your mind. But, when you are in the home buying mode, you find a good lender and get your loan. As long as rates are considered a good deal, they are secondary to the bigger event, finding and buying your new home.

Appraisals, Would You Like to Super Size That?

In case you have not purchased or refinanced a home lately, things have changed. We used to have just one report available, a “one size fits all” approach. That report is still available but now we have options. Why did this happen?

Much of the change has been driven by more sophisticated automated underwriting engines as well as the desire by agency conduits to lower the cost of getting a loan. For example, Fannie Mae has a stated objective of lowering closing costs by several hundred dollars.

What are the appraisal options?

The least expensive is the 2070, commonly referred to as the “drive by” appraisal. It may include an interior inspection. This appraisal has no value so you may be disappointed if you want an affirmation of your home’s value.

Next in line and more expensive than the 2070 is the 2055 appraisal. It can be exterior only, or may require an interior inspection. It includes comparable sales with pictures as well as pictures of your home. It always states a value.

The most expensive and most comprehensive owner occupied appraisal is the 1004, Uniform Residential Appraisal Report (URAR) The URAR is considered the most complete appraisal. It has all the features of the 2055 as well as an analysis of what it would cost to replace your home.

Who determines which appraisal is required?

The lender makes this decision usually guided by the result of an automated underwriting decision. Some factors that determine this are your loan-to-value ratio and your credit. If you have a choice and want a value, chose the 2055. Otherwise, take the least expensive option available.

© 1999 - 2004 LoanTek

Craig Goebbel is President and CEO of LoanTek.com, mortgage loan brokerage.  He is also producer and host of Real Estate Radio Show, a Seattle-based talk show featuring mortgage and real estate news, interviews and listener calls. It is broadcast on KVI Radio AM 570 in Seattle, Washington. Past show are also webcast via the Internet at http://www.realestateradio.net.

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Real Estate Radio with Goebbel and Gray is the leading real estate radio talk show in the world and is hosted by Real Estate home mortgage expert Craig Goebbel, owner of LoanTek Home Loans and Robb Gray of John L. Scott Real Estate.