When choosing a lender, consider who is in their appraiser management pool.
If you’re wondering which mortgage lender you should work with, there are three important factors to consider: the lender’s rates, fees, and timeline of closing. However, in the last year or so, a whole new element has come to the forefront that I’d like to discuss today. Who is the appraiser that the lender hires to determine how much the bank is willing to loan to the buyer of a home?
We had a buying client who offered $675,000 for a home with an asking price of $599,000. We gave him the name of a loan officer we’ve worked with quite a bit, but the client had found two other lenders, one of which had comparable rates to our recommendation. The other had a slightly higher rate but lower fees.
The client decided to pay for an appraisal from all three lenders concurrently. He had offered $75,000 over asking price and wanted to minimize how much money he’d have to pay out of pocket if the home didn’t appraise. Remember that if a home doesn’t appraise and the buyer has already waived the appraisal, the buyer is responsible for making up the difference between the appraised value and the sales price.
One of the appraisals came in at $623,000, another was $648,000, and the other was $670,000. That means if the buyer picked the lender whose appraiser valued the home at $670,000, he would have saved $50,000 compared to the lender who appraised it at $623,000. In the end, we recommended he go with the $670,000 appraiser.
Appraisers are a critical component in determining which loan officer you should select, not just the rates and fees. If you have any questions or would like to better understand this increasingly important topic, don’t hesitate to give me a call or send me an email. I’d love to help you understand all the criteria you should look at when choosing a lender.
