Tuesday, December 26, 2006
Mortgage Loan Negotiation Using Your Appraisal As Leverage
If a mortgage applicant is low on money for out of pocket expenses when applying for a mortgage loan, the applicant should ask the mortgage companies they are interviewing if they will pay for the appraisal up front. Although, the mortgage company will often charge you for it when your loan closes, this can keep your pre-closing costs down. This also keeps the mortgage applicant from paying for an appraisal in the event that their mortgage loan application is turned down.
If an applicant is relatively sure they will be approved for the mortgage loan, and the applicant has the money to pay for an appraisal; it is recommended that the applicant pay for the appraisal themselves. Not only should they pay for the appraisal, they should have the appraiser send the hard copy or a PDF copy of the appraisal deeded in your name.
Traditionally, the mortgage company will order the appraisal, even if you are the one paying for this. This method allows the mortgage company to maintain control of your appraisal because it is deeded in their name. This can give the mortgage company leverage over the applicant.
First, if the applicant decides to go with another lender, the deeded mortgage company can refuse to release the appraisal in many circumstances. This can cause long delays in getting your mortgage closed with another company because the entire appraisal process would need to be completed over again.
Second, if the mortgage company knows that you are retaining control of your appraisal, it keeps them aware that you still may be shopping their mortgage rate. This keeps the mortgage company competitive about any changes they may need to make to your loan proposal.
Because this is an untraditional strategy when negotiating a mortgage loan, an applicant may require some resistance from the mortgage company when bringing up the issue. The loan officer may have some objections to the appraisal being deeded in anyone other than the lenders name. Tell the loan officer you are requesting that the lender stipulate you for an appraisal deeded in their name. This is a common practice in mortgage underwriting known as a stip. If the loan officer tells you that they cannot stipulate or conditionally approve the loan this way, try moving to another company that will.
At the point that you have decided that you have found the mortgage company you want to go with, it is time to contact the appraiser and have them deed the appraisal over to the lender you have chosen. Rarely do appraisers charge a fee to do this, but sometimes they may.