House Appraisal before mortgage gets insured - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

shane_c · 06-19-2006, 09:46 AM

Well, we applied for and got a mortgage, signed the purchase agreement and are about to give the downpayment to the vendors but we find out that GE is wanting to do a house appraisal before they will insure the mortgage. The bank is still sending the papers through to the lawyers though in the hopes of not delaying our June 30th closing. GE is supposed to do the appraisal by Wednesday of this week. What can I do to be prepared for this? What will they be looking for? So far, the only thing I've done is print off a few similar places in the neighbourhood that are going for 10,000-30,000 more. I can't see why they would say it wouldn't be worth what we're going to pay given todays market but our luck that's what will happen.

Ironhorse · 06-19-2006, 09:52 AM

I think it also depends on how much $$ down you're putting into the new place. They may not care nearly as much if you're putting 20% down vs. 5%.

They're just making sure that you're not taking out a 400K mortgage on a 250K property. It's to protect them if something should happen and they end up with a mortage that cannot be recovered by selling the property. Sometimes people can overpay....

This inspection is fairly common. I think you should be fine.

shane_c · 06-19-2006, 09:57 AM

Quote:

Originally Posted by Ironhorse

I think it also depends on how much $$ down you're putting into the new place. They may not care nearly as much if you're putting 20% down vs. 5%.

They're just making sure that you're not taking out a 400K mortgage on a 250K property. It's to protect them if something should happen and they end up with a mortage that cannot be recovered by selling the property.

We'll be putting about 6% down. The city appraisal is very low compared to what houses seem to be selling for. Even if we turned around though and sold the day after we took possession we have no doubt it would sell for more that we're paying since the landlord (currently renting the home) is giving us a deal compared to others in the neighbourhood.

V · 06-19-2006, 09:59 AM

Don't sweat it. They have everything they need, you shouldn't have to provide them with any information.

I had to get an appraisal before the bank would give me a HELOC, and the appraisal came in at about 30K higher than I could hope to sell it for. Hopefully you get the same guy!

HOOT · 06-19-2006, 10:56 AM

They could be doing the inspection because you are getting a 'deal' they might want to find out why it is going for $30K less than houses around you. They don't understand (or probably care) it is your old landlord setting you up.

I wouldn't worry about it. Most places will do inspections just to save themselves!

ken0042 · 06-19-2006, 11:06 AM

When I bought 18 months ago there was talk of there being an issue with mortgage fraud in Calgary. They had a quick look at my deal because I was assuming; and apparently assuming is where some of the fraud happens.

This just seems to me to be a case of GE spending $500 on an apprasal before letting you buy their $8000 insurance.

Barnes · 06-19-2006, 11:46 AM

I had an appraisal last week for a HELOC and the lady was there for 5 minutes inluding the time to and from her car. As long as your house is not an operating grow op youll be fine.

White Doors · 06-19-2006, 12:01 PM

Do you have life insurance? If you hafe life insurance I'd skip the mortgage insurance if you don't have children.

Mccree · 06-19-2006, 12:03 PM

Quote:

Originally Posted by White Doors

Do you have life insurance? If you hafe life insurance I'd skip the mortgage insurance if you don't have children.

You cannot skip it unless you have 25% down.

White Doors · 06-19-2006, 12:05 PM

Yes you can. I put %5 down and declined mortgage insurance.

You have to have HOME insurance not mortgage insurance.
Mortgage insurance is a bad deal.

4X4 · 06-19-2006, 12:19 PM

GE has significantly less recourse if you default than does CMHC. The details are evading my terrible memory, but that may have something to do with it.

Where's Troutman?

Sylvanfan · 06-19-2006, 12:26 PM

Yeah, instead of Mortgage insurance I think you're better off going with term life coverage instead. If you die 10 years into the Mortgage your policy is worth whats left on the Mortgage. If you can get term life for the same cost you still get the full coverage amount whether you die 1, 2, or near the end of the term. Mortgage insurance is nothing more than profit insurance for the bank.

ken0042 · 06-19-2006, 12:36 PM

Quote:

Originally Posted by White Doors

Yes you can. I put %5 down and declined mortgage insurance.

You have to have HOME insurance not mortgage insurance.
Mortgage insurance is a bad deal.

I think you guys are talking about 2 different things. What you are thinking of WD is the insurance that pays off your house if you die. What Shane is talking about is the insurance that the bank makes you take out so that if you default on the mortgage they aren't left short- like what happened in the early 80's.

If I'm wrong, I'd love to know what bank let you decline the CMHC insurance.

Mccree · 06-19-2006, 01:07 PM

Quote:

Originally Posted by ken0042

I think you guys are talking about 2 different things. What you are thinking of WD is the insurance that pays off your house if you die. What Shane is talking about is the insurance that the bank makes you take out so that if you default on the mortgage they aren't left short- like what happened in the early 80's.

If I'm wrong, I'd love to know what bank let you decline the CMHC insurance.

Yes..I was talking about the CHMC insurance you can only avoid that if you put 25% down. I declined the other stuff too as I thought it was a waste of money.

trew · 06-19-2006, 03:32 PM

Quote:

Originally Posted by fotze

True, you can;t get out of that although it is a much bigger scam or possible scamola than mortgage insurance. It is more of a house purchase tax than insurance premium.

In normal times, I would tend to agree with you on the "purchase tax" thing. However, now that the market is getting frothy, CMHC and GE Capital are taking on some "actual" risk by insuring the low-down mortgages.

Anyone know if those 0% down mortages are still on the table? I bet they strap you to the table and pull out the rubber gloves for one of those babies!

MoneyGuy · 06-19-2006, 03:47 PM

Quote:

Originally Posted by shane_c

We'll be putting about 6% down. The city appraisal is very low compared to what houses seem to be selling for. Even if we turned around though and sold the day after we took possession we have no doubt it would sell for more that we're paying since the landlord (currently renting the home) is giving us a deal compared to others in the neighbourhood.

I'm a financial planner and I wouldn't worry about this either. As for the city appraisal being low, don't fret. That not really the actual value of the house anyway. Welcome to home ownership, bud.

BTW, do not under any circumstances (well, generally not) buy mortgage insurance. There is a far better option.

ken0042 · 06-19-2006, 03:52 PM

Quote:

Originally Posted by trew

In normal times, I would tend to agree with you on the "purchase tax" thing. However, now that the market is getting frothy, CMHC and GE Capital are taking on some "actual" risk by insuring the low-down mortgages.

How do you figure? I would have thought the opposite would be true; because a house I buy now for $300K will be worth $340K in a few months, how is that really a risk? Or is there something else I'm missing here?

MoneyGuy · 06-19-2006, 04:04 PM

Quote:

Originally Posted by ken0042

How do you figure? I would have thought the opposite would be true; because a house I buy now for $300K will be worth $340K in a few months, how is that really a risk? Or is there something else I'm missing here?

Sounds like you're in your first house and you're young dn inexperienced, I'm guessing.

Yup, you are missing something. Do you think these prices only go up? They certainly do not. This market will correct eventually and when it does it can go down a lot. Witness the tech meltdown in 2000. House prices can shed 50K at these levels. Don't think it can't happen. It has before and will again.

The statement "a house I buy now for $300K will be worth $340K in a few months, how is that really a risk?" is pretty naive.

I'm not predicing a real estate meltdown in the next couple of years because the economy is too hot, but just understand that there are risks.

ken0042 · 06-19-2006, 04:20 PM

Right. I get all of that.

I just don't see how it is more of a risk "now that the market is getting frothy."

I understand it can always be a risk, and yes I do expect a correction at some point in the future. But everything points to it leveling off gradually as supply catches up with demand.

I just want to know why it's more risky for the lender today than it was a few years ago.

photon · 06-19-2006, 04:39 PM

I guess the risk would be if the $300,000 mortgage they just insured is now secured against an asset worth $285,000 and you defaulted.

But I agree with you, I don't think this is going to "pop" like some folks think. Part of a bubble is rampant speculation. Vancouver has rampant speculation. 67% of the average salary goes towards the cost of an average house there. That's nuts. Alberta is still at 33%. Affordability is still very high here.