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Agent Name Here, Realtor Ò Your Brokerage Company | 888.888.8888 | 17 Appraisal In a home appraisal, a licensed appraiser conducts a thorough inspection of a property to assess its true worth, which isn't always the same as the contract price. The appraiser will then compile all of their ndings into a report and give the home's appraised value. If a buyer is nancing their purchase with a loan, the lender will typically handle ordering the appraisal. The lender wants to ensure they are not lending more money than the property is worth. As such, some lenders require buyers to include an appraisal contingency in their offers. VA loan The government (Department of Veteran Affairs) guarantees a VA loan. They are available to the military, active and retired, and even for some eligible spouses, at little to no down payment plans with competitive interest rates and fees. VA mortgage loans come with minimum property requirements that can end up forcing home sellers to make many repairs. Because VA appraisals may increase their repair costs, home sellers sometimes refuse to accept purchase offers backed by the agency's mortgages. How do FHA loans work? FHA loans are part of a group of loans that are backed by the federal government. Instead of lending money, the FHA offers banks and private lenders a guarantee that they will cover losses they incur if the borrower does not repay the loan. FHA vs. conventional loan Conventional loans are mortgages that are not backed by a government guarantee. They are typically considered to be more challenging to qualify for but offer borrowers greater exibility. One signicant difference between FHA and conventional loans is that a lower down payment required for an FHA loan often means that the buyer pays more interest over the life of the loan. A higher down payment also often results in paying less for mortgage insurance. Lenders will typically waive the mortgage insurance payment altogether if the borrower puts 20% or more down. What are points? Points are fees the borrower pays the lender when the loan is closed, expressed as a percent of the loan. On a $300,000 loan, 2 points mean a payment of $6,000 to the lender. Points are part of the cost of credit to the borrower, and in turn, are part of the investment return to the lender. That said, points are not always required to obtain a home loan, but a 'no point' loan may have a higher interest rate. Discount points refer to a fee, usually expressed as a percentage of the loan amount, paid by the buyer or seller to lower the buyer's interest rate. ©theARTof Marketing.org

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