Some loans can now be approved without an appraiser physically entering the house.
DEAR DAVE: We applied for an FHA loan last month and were surprised to learn that the property has already been appraised at about $5,000 more than we agreed to pay for it. That’s fine by us, but the seller said that no appraiser ever came over to inspect the property. Isn’t that unusual?
ANSWER: Yes, it’s unusual. But then again, the COVID-19 virus has made for some unusual times in the real estate business.
The Federal Housing Administration is just one of several agencies that recently announced that it will now allow banks to use exterior-only appraisals, commonly referred to as “drive by” reports. It will also allow desktop appraisals, where the appraiser doesn’t enter the home but instead depends on data from the local Multiple Listing Service, public records and other third-party sources to identify the home’s size and other characteristics.
The change is also being adopted by the Department of Housing and Urban Development, Department of Veterans Affairs and credit giants Fannie Mae and Freddie Mac.
The modification is an attempt to speed up the home loan process, which has been slowed by social-distancing protocols and stay-at-home orders in many cities and states across the nation.
In a related move, a trio of federal regulatory agencies said that, in certain cases, banks could delay getting an appraisal for up to 120 days after a mortgage is closed. It only applies to loans that the lender will keep in its own portfolio rather than selling them to Fannie Mae, Freddie Mac or other companies.
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REAL ESTATE TRIVIA: Pay-tracking firm PayScale Inc. (www.payscale.com) reports that appraisers earn an average of $60,348 a year, although those with several years of experience can make more than $100,000.
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DEAR DAVE: I am retiring from the U.S. Army after 20 years of service and would like to build a retirement home in a small town. Can I get a VA loan to finance the construction, or is the program limited to the purchase of already built houses?
ANSWER: The Veterans Affairs’ popular no-money-down mortgage program can be used to build a new house, purchase an existing one or to refinance a current loan. The home must be used as your primary residence — it cannot be a vacation getaway.
Lending website valoans.com reports that about 90% of borrowers who get a VA-guaranteed mortgage choose the no-money-down option.
The loan limit in most counties is $510,400, but goes up to $765,600 in pricier markets. If you already have a location picked out, you can find out which limit would apply in that area by visiting www.veteransunited.com. The VA’s own website, va.gov, also has lots of useful information.
Thank you for two decades of service to our nation.
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DEAR DAVE: Some time ago, you wrote that homeowners who create a living trust so their heirs can inherit their property quickly and inexpensively instead of forcing them into probate proceedings should also create a “durable power of attorney” that would allow someone else to handle their affairs if they get too sick to do it themselves. But wouldn’t that same power of attorney also allow the designated person to unilaterally change the terms of the living trust?
ANSWER: No. That’s because any well-written trust document includes two common provisions that protects it from any unauthorized changes.
The first provision states that the “grantor” — the person who creates the trust — is the only one allowed to amend or dissolve it unless he or she specifically grants such power to another person through a durable power of attorney. If the durable power document doesn’t contain such specific language, the trust can be changed only by the grantor.
The other common provision states that the trust automatically becomes irrevocable and cannot be amended after the grantor dies, unless an exception is made elsewhere in the trust document. This is another safeguard that protects against unauthorized changes, even if someone else holds a durable power of attorney.
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Our booklet “Straight Talk about Living Trusts” explains how even low- and middle-income homeowners can now reap the same benefits that creating an inexpensive trust once provided only to the wealthiest families. For a copy, send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405. Net proceeds will be donated to the American Red Cross.
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