An appraisal of real estate is the valuation of the property. The majority of real estate appraisals are requested to validate the property’s purchase price for loan purposes.

The appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property.

Considerable research and collection of general and specific data must be accomplished before the appraiser can arrive at a final opinion of value.

There are many reasons to obtain an appraisal. The most common reason is for a real estate or mortgage transaction, but we have compiled a list of other reasons you may need to order an appraisal.

  • To Settle an Estate

    Taxing authorities such as the IRS often require appraisals to establish the value of an estate when a death occurs. Most estate appraisals are ordered by attorneys, not by the survivors.
  • To Establish the Replacement Cost for Insurance

    Appraisals obtained for establishing the loss risk in case of fire are often limited to providing an estimate of the replacement or reproduction cost of the improvements.
  • To Establish Just Compensation for Condemnation

    The appraiser may represent either the landowner or the condemning authority. Usually, the government entity that needs the land for public use orders an appraisal and offers to purchase the land for the value indicated by the appraisal. If the landowner feels that the amount offered by the condemning authority is not enough, then the landowner may also order an appraisal.
  • To Contest High Property Taxes

    If property owners feel that their property is assessed too high, then they may order an appraisal from a qualified appraiser to contest the assessment.

Your credit report provides information to current and prospective creditors to help you make purchases, secure loans, and manage your personal finances. Credit grantors send updates to each of the credit reporting agencies, usually once a month. These updates include information about how individuals use and pay their accounts.

The Fair Credit Reporting Act requires each of the nationwide credit reporting companies—Equifax, Experian, and TransUnion—to provide you with a free copy of your credit report, at your request, once every 12 months. A credit report includes information on where you live, how you pay your bills, and whether you've been sued or have filed for bankruptcy.

The three nationwide credit reporting companies above have set up a central website for you to request your free credit report. You can order your free annual report by visiting the website, calling the toll‐free telephone number, or by mail through the mailing address below.

Visit annualcreditreport.com

Call 877.322.8228

Complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348‐5281

Credit scoring is a statistical method that lenders use to quickly and objectively assess the credit risk of a loan applicant. The score is a number that rates the likelihood you will pay back a loan. Scores range from 350 (high risk) to 850 (low risk). There are a few types of credit scores; the most widely used are FICO scores, which were developed by Fair Isaac & Company, Inc. for each of the credit reporting agencies.

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality, or marital status.

Many different mathematical formulas are used to calculate credit scores and most are based on the following factors, although each scoring model may weight these factors differently:

  • Payment History

    This, along with public records, generally accounts for approximately 35% of your score. A record of late payments on your current and past credit accounts will typically lower your score. Being consistent about paying on time can, over time, have a positive impact on your score.
  • Public Records

    Matters of public record such as bankruptcies, judgments, and collection items may lower your score. Be aware of these, even if you can't always avoid them.
  • Length of Credit History

    In general, a longer credit history is better and can sometimes have a positive impact on your score. Credit history typically accounts for around 15% of your score.
  • New Credit Accounts

    Opening multiple new accounts in a short period of time may negatively impact your score.
  • Inquiries

    An inquiry is recorded on your credit report whenever someone requests your credit report such as a lender, landlord or insurer. A large number of recent inquiries may negatively impact your score. Your new credit accounts and inquiries generally make up about 10% of your score.
  • Accounts in Use

    The number of open accounts usually makes up approximately 10% of your score. One of the most important factor for a good credit score is paying your bills on time. Even if the debt you owe is a small amount, it is important that you make payments on time. In addition, you may want to keep balances low on credit cards and other "revolving credit;" apply for and open new credit accounts only as needed; and pay off debt rather than moving it around. Every score is accompanied by a maximum of four reason codes. Reason codes should be reviewed by you to ensure they are accurate.

Your credit report must contain at least one account which has been open for six months or greater, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score.

Your credit profile details your credit history as it has been reported to the credit reporting agencies by lenders who have extended credit to you. Your credit profile lists what types of credit you use, the length of time your accounts have been open, and whether you've paid your bills on time. It tells lenders how much credit you've used and whether you're seeking new sources of credit.

There are usually five categories of information on a credit profile:

  • Identifying Information
  • Employment Information
  • Credit Information
  • Public Record Information
  • Inquiries

There are many items that are NOT included on your credit profile, including:

  • Your Race
  • Your Religion 
  • Your Health 
  • Your Driving Record 
  • Your Criminal Record
  • Your Political Preference
  • Your Income

Credit reporting agencies collect information about you and your credit history from public records, your creditors, and other reliable sources. These agencies make your credit history available to your current and prospective creditors and employers as allowed by law. Credit agencies do not grant or deny credit.

The main nationwide credit reporting agencies are:

Equifax

PO Box 105873
Atlanta, GA 30348
800-685-1111

Experian

PO Box 2002
Allen, TX 75013
888-EXPERIAN (888-397-3742)

TransUnion

PO Box 2000
Chester, PA 19022
(800) 888-4213

Lenders may look at other information besides your credit score and credit profile before deciding whether to approve your mortgage. They may also consider:

  • Income stability
  • Employment history
  • Monthly debts in relation to your income
  • Savings amount and methods
  • Mortgage type
  • Property type and value
  • Down payment amount
  • Timeliness of rent and utilities payments

The Fair Credit Reporting Act outlines specifically who can see your credit profile. Businesses must have a "legitimate business need," or a "permissible purpose," to obtain your credit file. Otherwise, only you, and only those who you give written permission, can access your credit files. Your neighbors, friends, co-workers, and even your family members cannot have access to your credit profile unless you authorize it.

Some examples of those who can access your credit files with permission are: 

  • Credit Grantors
  • Collection Agencies
  • Insurance Companies
  • Employers

Any company that receives a copy of your credit profile will be listed under the "Inquiry" section of your report. An "inquiry" is a listing of the name of a credit grantor or authorized user who has accessed your credit file. Credit grantors post an inquiry before offering you a pre-approved credit card application.

These are listed as "promotional" inquiries on your credit file because only your name and address were accessed, not your credit history information. They are not sent to credit grantors or businesses for reasons of credit reporting. They are listed for your informational purposes only.

You have the right, under the Fair Credit Reporting Act, to dispute the completeness and accuracy of information in your credit file.

When a credit reporting agency receives a dispute, it must reinvestigate and record the current status of the disputed items within a "reasonable period of time," unless it believes the dispute is "frivolous or irrelevant." If the credit reporting agency cannot verify a disputed item, it must delete it. If your report contains inaccurate information, the credit reporting agency must correct it. If an item is incomplete, the credit reporting agency must complete it.

For items in your credit profile which you feel deserve further explanation (such as an account that was paid late due to the loss of job, military call up, or unexpected medical bills), you can send a brief statement to the appropriate credit reporting agency. The information alert will be placed in your credit profile and will be disclosed each time it is accessed.

In order to establish good credit, you need a good credit history. If you have no credit history at all, it is easy to start creating one.

Opening a bank account is the simplest and safest way to manage your finances. By opening a savings account or a checking account, you can build good credit by saving money and earning interest, easily paying bills and tracking expenses. Responsible use of a checking account will reflect favorably in your credit report.

If you have services in your name (telephone, gas, and electric), make sure you pay them in full and on time. Pay any loans and credit accounts on time each month. At least pay the minimum, if there is one. Applying for a credit card and using it responsibly can also help you build a good credit history.

Many of us know the fear and frustration of having our wallet or credit cards stolen, but even worse is having your identity stolen. According to one non-profit debt counseling agency, some 40,000 consumers each year are victims of this crime, which is a serious type of fraud.

With identity theft, someone will use personal information about you such as your name, address, social security number, or driver's license to apply for credit, utilities, bank accounts, mortgages, and even jobs in your name. Some people don't find out that their identity has been stolen until months after it has happened.

Here are some tips to help you avoid becoming a victim of identity theft:

  • Check your credit report at least once a year. Investigate if you find accounts that are not yours.
  • Rip-up, or better yet, shred, any credit card applications, bank or billing statements, and any other sensitive documents.
  • If you don't get a bill for one of your credit cards in any given month, call the issuer immediately.
  • Use a locked mailbox for incoming and outgoing mail. Avoid giving out your social security number unless it's necessary. Save your ATM and credit card receipts, check them against your statements and then shred them.

Mortgage insurance allows a potential buyer to obtain a mortgage without having to provide a 20% down payment. Loan officers may require insurance on loans with a down payment less than 20% of the home’s value in the event that the homeowner isn’t able to repay the loan.

Mortgage insurance also provides home buyers with flexible payment options, since a large down payment is not always necessary. Although the cost of the mortgage insurance is often paid by the home buyer, or borrower, the mortgage insurer works directly with the loan officer.

There are some loan products in which mortgage insurance is paid directly by the lender as well. Mortgage insurance is not the same as credit life insurance, also called mortgage life insurance. This type of policy repays an outstanding mortgage balance upon the death of the person who took out the insurance policy.

There are local, state and national non-profit organizations dedicated to assisting homebuyers with their down payment and closing costs. Buyers can receive a free gift under these programs. Gift amounts vary with each program and buyers typically do not have to repay these gifts.

It's easy to learn more about grant programs and the qualification guidelines for each program. Each program requires that buyers must qualify for any eligible loan program with their lender).

Other requirements may include, that the buyer complete a Home Ownership Counseling Course or provide a percentage of their own funds for the transaction. In addition, some programs have income/asset guidelines, reserves requirements, or geographic limitations.

Many local and state agencies offer funds to help individuals and families with a down payment. Learn about housing agencies and grant resources available in your area. Our loan officers can assist you with these resources.

Insure Your Home for at Least 100% of the estimated replacement cost value. Your home may be one of the largest investments you ever make. Understanding market value versus replacement cost is an important consideration in determining how much coverage you need. It is important to have enough coverage to account for the unforeseen and be able to replace your home. Also, be sure to increase the limit of your policy if you make improvements or additions to your house.

Private mortgage insurance is a type of insurance that may be necessary for mortgages where the down payment is less than 20% of the property value. PMI also allows a home buyer to put down a lower down payment than would otherwise be possible. PMI is an insurance policy that reduces the risk a lender takes in the event that a homeowner does not repay their mortgage.

Mortgage insurance can usually be canceled by the home buyer after they have at least 20% equity in the home. You should contact your lender to find out the procedure for canceling mortgage insurance if you have 20% equity. If cancellation is not requested, PMI will automatically stop once 22% equity is reached and various other requirements have been met.

Guidelines for canceling private mortgage insurance are set by regulations.

A policy of title insurance is a contract of indemnity between the insured and the insuring company relating to the title to the land described in the policy, protecting the insured against loss of damage by reason of defects, liens or encumbrances of the insured title existing at the date of the policy and not expressly excepted from its coverage.

The policy is issued after a complete search and examination of the public records and shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters which may affect the rights of ownership, possession and use of the property.

Title insurance protects the "record" title, insuring it is good subject only to the exceptions expressly set out in the policy. lt also insures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the "right" to sell property.

There are different types of policies. Owners™ policies are issued to real estate owners. Lender policies are issued to mortgage lenders. In addition there are several other special forms of policies. There is a type of policy to meet the requirements of almost any form of real estate transaction.

Title Insurance insures that the "record" title is good subject only to the exceptions expressly set out in the policy. It also insures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the "right" to sell property.

The standard owners policy and standard mortgage policy are based on public records of the recording district in which the land is located. It does not insure against matters which would only be disclosed by actual inspection or survey of the property. It does not insure against certain matters not shown by the public records such as unrecorded easements, liens or money obligations; unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances, or against the rights or claims of persons in possession of the property which are not shown by the public records.

Upon application, the issuing company may specially cover matters which are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions which the inspection will determine to be proper. An additional risk premium is charged for this type of coverage. Insurance of this kind is called extended coverage.

An owner's policy protects only the owner while a mortgage policy protects only the holder of the mortgage on the property. Separate policies are required to protect both interests. Special rates are available when both owners and mortgage policies are applied at the same time.

The owner's policy of title insurance usually is issued after the deed to the buyer is delivered and recorded.

A purchasers policy is usually issued after the contract has been executed by both parties or after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been properly executed and recorded. The coverage of your policy is against all matters that appeared of record up to the date of issuance of your policy. Since that time many documents may have been recorded, some of which may affect the title to your land. Taxes and assessments may have accrued and be unpaid. There may have been actions in court affecting your title. The purchaser is entitled to have full information and protection as to the condition of the title right up to the date of his purchase. In addition, there may be matters of record which would prevent either the seller or buyer from selling, buying or mortgaging land until such matters have been cleared. These items include such things as federal tax liens, judgments, incompetence, divorce actions and other conditions which the title search may disclose.

What Protection Does Title Insurance Give?

It insures that the "record" title, is good subject only to the exceptions expressly set out in the Policy. It also insures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the "right" to sell property.

What Risks Are Not Covered?

The standard owners policy and standard mortgage policy are based on public records of the recording district in which the land is located. It does not insure against matters which would only be disclosed by actual inspection or survey of the property. It does not insure against certain matters not shown by the public records such as unrecorded easements, liens or money obligations; unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances, or against the rights or claims of persons in possession of the property which are not shown by the public records.

Can Protection Be Obtained Against Matters Not of Record?

Upon application, the issuing company may specially cover matters which are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions which the inspection will determine to be proper. An additional risk premium is charged for this type of coverage. Insurance of this kind is called extended coverage.

Are There Different Kinds of Policies?

Yes. Owners Policies are issued to real estate owners. Purchasers Policies are issued to purchasers of real estate under contract. Mortgage Policies are issued to mortgage lenders. In addition there are several other special forms of policies. There is a type of policy to meet the requirements of almost any form of real estate transaction.

When Is the Policy Issued?

An owner's policy protects only the owner while a Mortgage policy protects only the holder of the mortgage on the property. Separate policies are required to protect both interests. Special rates are available when both Owner's and Mortgage policies are applied at the same time.

The Owners Policy of title insurance usually is issued after the deed to the buyer is 'delivered' and recorded. A Purchasers Policy is usually issued after the contract has been executed by both parties or after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been properly executed and recorded.

If I Was Insured When I Bought the Land, Why Should I Have It Re-Issued to My Purchaser When I Sell?

The coverage of your policy is against all matters that appeared of record up to the date of issuance of your policy. Since that time many documents may have been recorded, some of which may affect the title to your land. Taxes and assessments may have accrued and be unpaid. There may have been actions in court affecting your title.

The purchaser is entitled to have full information and protection as to the condition of the title right up to the date of his purchase. In addition, there may be matters of record which would prevent either the seller or buyer from selling, buying, or mortgaging land until such matters have been cleared. These items include such things as federal tax liens, judgments, incompetence, divorce actions and other conditions which the title search may disclose.

How Are Premiums for Title Insurance Determined?

Title Insurance Premiums are determined by the amount and type of coverage provided. Unlike other insurance premiums, however, the title insurance premium is paid only once as the policy is effective for so long as title or "ownership" remains in the name of the insured-in, or his heirs or devises. Rates are filed with the insurance commissioner who regulates the activities of title insurers.

Flooding is not covered by a standard homeowners insurance policy.

To determine if you need flood insurance, ask your lender about the flood history in your area. If there is a potential for flooding, you must purchase a policy that covers the value of the structure and your personal belongings.

Flood insurance can be purchased from an insurance agent or company under contract with the Federal Insurance Administration, part of the Federal Emergency Management Agency or from a private insurance company.

Flood insurance is only available where the local government has adopted adequate flood plain management regulations for properties located in a special flood hazard area under the National Flood Insurance Program.

Have questions?

We're here to help. 

Give us a call at 888.769.3796 and select option 2. 

EMAIL US

Loans are subject to credit and property approval, bank underwriting guidelines, and may not be available in all states. Other loan programs and pricing may be available. Certain conditions, terms, and restrictions may apply based on the loan program selected. The term of the loan may vary based upon program chosen. Property insurance is required; if the collateral is determined to be in an area having special flood hazards, flood insurance will be required.

Additional Resources

Jason Weitzel
Jason Weitzel, VP Senior Mortgage Loan Officer, Kenosha, WI

Your Trusted Mortgage Loan Officer

Whether you are buying your first home or moving into a new home, we will be there to guide you every step of the way.

FIND A LOAN OFFICER