Mortgage Questions - Appraisals/Inspections

What is an appraisal and who completes it? 

Home equity loans frequently use the county tax assessment value for the value estimate. An automated valuation or appraisal may be required should the tax assessment value be insufficient for the amount of credit requested.

To determine the value of the property you are purchasing or refinancing, an appraisal will be required for a mortgage loan application. An appraisal report is a written description and estimate of the value of the property. National standards govern not only the format for the appraisal; they also specify the appraiser's qualifications and credentials. 

The appraiser will create the written report for Capitol Federal, and you'll be given a copy at your loan closing.

What types of things will an underwriter look for when they review the appraisal? 

In addition to verifying that your home's value supports your loan request, Capitol Federal will verify that your home is as marketable as others in the area. We'll want to be confident that if you decide to sell your home, it will be as easy to market as other homes in the area.

We'll review the features of your home and compare them to the features of other homes in the neighborhood. We'll also make sure that the value of your home is in the same range as other homes in the area. If the value of your home is substantially more than other homes in the neighborhood, it could affect the market acceptance of the home if you decide to sell.
(back to top)

Will I get a copy of the appraisal? 

Capitol Federal Savings Bank will provide a copy of your appraisal at closing.
(back to top)

If my property's appraised value is more than the purchase price can I use the difference towards my down payment?

If you are purchasing a home, we'll have to use the lower of the appraised value or the sales price to determine your down payment requirement.
(back to top)

Are there any special requirements for condominiums? 

Since the value and marketability of condominium properties is dependent on items that don't apply to single family homes, there are some additional steps that must be taken to determine if condominiums meet Capitol Federal guidelines.

Generally, the condominium development must be complete before Capitol Federal can provide financing, so that we can be certain that the remaining units will be of the same quality as the existing units. In addition, we'll consider the ratio of non-owner occupied units to owner-occupied units. We'll also review the appraisal to ensure that it includes comparable sales of properties within the project, as well as some from outside the project. 

Depending on the percentage of the property's value you'd like to finance, other items may also need to be reviewed.
(back to top)

I'm purchasing a home, do I need a home inspection AND an appraisal? 

Both a home inspection and an appraisal are designed to protect you against potential issues with your new home. Although they have totally different purposes, it makes the most sense to rely on each to help confirm that you've found the perfect home.

The appraiser will make note of obvious construction problems such as termite damage, dry rot or leaking roofs or basements. But appraisers are not construction experts and won't find or report items that are not obvious. That's where the home inspector comes in. They generally perform a detailed inspection and can educate you about possible concerns or defects with the home.
(back to top)

How long does it take for the property appraisal to be completed? 

Appraisals are performed by licensed appraisers who are familiar with home values in your area. We order the appraisal as soon as the application fee is paid. Generally, it takes 5-7 days before the written report is sent to us. We follow up with the appraiser to ensure that it is completed as soon as possible. If you are refinancing, the appraiser should contact you to schedule a viewing appointment. If you don't hear from the appraiser within three business days of the order date, please inform your loan officer. If you are purchasing a home, the appraiser will contact the real estate agent or the seller to schedule an appointment to view the home.
(back to top)

Does Capitol Federal require flood insurance on properties? 

Federal law requires all lenders to investigate whether a home they finance is in a special flood hazard area as defined by the Federal Emergency Management Agency (FEMA).

Capitol Federal Savings Bank uses a third party company that specializes in reviewing of flood maps prepared by FEMA to determine if a home is located in a flood area. If it is, then flood insurance coverage will be required, since standard homeowner's insurance doesn't protect you against damages from flooding.
(back to top)

What is title insurance and why do I need it?

A home is most likely the most expensive and important purchase you will ever make. You and your mortgage lender want to make sure the property is yours, and that no individual or government entity has any right, lien, claim or encumbrance on it.

The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.

Title companies typically issue two types of title policies. An Owner's Policy covers you, the homebuyer. A Lender's Policy covers the lending institution over the life of the loan.
(back to top)

What is mortgage insurance and when is it required?

Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. Low down payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are comfortable with down payments as low as 3 - 5% of the home's value. It also provides you with the ability to buy a more expensive home than might be possible if a 20% down payment were required.

This is not to be confused with mortgage life insurance, which is designed to pay off a mortgage in the event of a borrower' s death.
(back to top)