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   Mortgage Disclosure

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   Appraisals: Cost Approach

• Before You Apply

  What to do to prepare up to a year in

  advance of your mortgage application.

• Can You Trust Your Loan Officer?

  Who does your loan officer work for,

  and how do you find the best one?

• Lender, Broker, or Bank?

  What type of loan Provider is right for

  you?

• Types of Loans

  The types of mortgage loans and

  their advantages and disadvantages.

• Types of Documentation

  Your options for disclosing how much

  you make and where it comes from.

• Underwriting

  What does an underwriter look for

  when analyzing your loan application?

• Pre-Approval

  What it is and isn't and how it saves

   you time and heartache.

• Credit

  What it is, and how it affects your life.

• Income & Employment

  How much you need to make and for

  how long in order to qualify.

• Down Payment/ Assets

  How much, where from, and what kind

  of money will work.

• Down Payment Assistance

  Short on funds?  Learn about your

  options and explore these resources.

• Processing

  What happens to your application after

  you sign it and before you close?

• Title

  What is it, what does it mean, and how

  does it work?

• Appraisals

  What is your home worth, why you

  should bother  to find out, and how

  does it affect your loan?

• Alternate Financing

  Facing rejection?  Time to get creative.

• FHA

  Low down payment, forgiving

  qualifications.  A great loan option.

 

 

 

 

Cost Approach

  In the cost approach, the appraiser estimates the current market

  value of the home by estimating the cost of rebuilding the

  home (including any improvements since the house was first

  built), plus the value of the land, minus the estimated

  depreciation of the home since the home was first built.  

  The idea behind this approach is that a knowledgeable

  buyer would not pay more for a house than the cost of

  building a similar house in similar condition on a similar lot.

  It is calculated as follows:

  Cost of Reconstruction - Depreciation + Value for land =

  Property Value

  For example:

  The subject house is similar in size, design and quality of

  construction to a new house that cost $150,000 to build.  The

  subject house has depreciated by ten percent due to normal

  wear and tear and is on a lot valued at $40,000.  Using the

  cost approach, the estimated value of the home is:

  $150,000 - (10% x $150,000) + $40,000 = Property Value

  $150,000 - $15,000 + $40,000 = $175,000