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With 2022 more than half behind, market indicators continue to predict the minimum redemption amount, but purchase volume is facing issues.
Amid inventory shortages, high write-offs, rising interest rates, and significant economic problems, difficulties in purchasing and refinancing are hampering the ability to borrow money.
In the past five years alone, owners have earned an average of $125,000 in assets on their own.
Because there are so many new properties, owners are looking for ways to use them rather than trying to buy another property when prices rise.
Renovation costs peaked at $391 billion per year in the first quarter of 2022. That’s a hard number to ignore.
For lenders, these economic indicators mean that now is the time to create a lending program and work with high efficiency.
However, many borrowers find it difficult to start a home business due to certain misconceptions about pricing in a way that guarantees a good loan.
By eliminating these misconceptions about the best lending solutions when considering a lending facility, borrowers can be more confident about their lending transactions.
Lenders who understand how to make good choices and reap the economic benefits can create a lending program that reduces costs and delays while providing stable business.
Myth #1: Every loan should have an appraisal
The thought process can be long and frustrating, especially for owners. Preventing certain people from starting the loan process should suffice.
However, while this is true for most commercial purchases, for home loans, start with AVM with a Property Report (PCR), appraisal, review of the existing test board, desk and drive-thru test, and a full test if all else fails. can order.
The FDIC’s 2010 financial statements provide details on when and what special assessments may be used in home loan situations.
Under these guidelines, many home loans can bypass the traditional appraisal process, saving days or weeks in the buying process.
AVM can be performed in minutes and PCR typically takes 2-3 days. Compared to a full assessment process, which historically takes weeks and costs hundreds of dollars, these options are more attractive to your bottom line and your time at home.
With this in mind, it might seem obvious that AVM and PCR are the best options.
However, it is important to remember that not all cases are suitable for AVM. Lenders should make this decision based on the quality of city real estate data in the area where business loans are served.
Getting the right combination of these is important, especially since lenders are always paying mortgages on mortgages.
You can save a lot of time and money by starting to analyze the connection between measuring devices everywhere.
Myth #2: AVM is not a way to measure the value of a home
As the United States emerged from the Great Depression, a misconception about the prevalence of AVMs emerged. Meanwhile, AVMs have had a reputation for poor investment performance.
But this fame does not just come. Misunderstandings often come from misusing AVM, not from its benefits.
Lenders tend to use AVM as a home appraisal in all situations. Fortunately, a lot has changed since then.
With the introduction of the coordination process in 2010, lenders finally have a framework for the responsible use of AVMs and the procedures necessary to ensure the use of the various products of value.
Additionally, technological developments such as artificial intelligence (AI), machine learning, geospatial data, etc.
These improvements and advancements have allowed most AVMs to offer values within +/- 5% of the actual home value.
Myth #3: Doing the right test is expensive and difficult.
As AVMs become a mainstay of mortgage lending, lenders entrust AVMs with the responsibility of ensuring they understand their standards and performance over time.
Analyzing instructions for AVM can seem difficult, especially for lenders who are not part of large organizations that employ auditors and analysts.
For small and medium lenders that do not have a large national presence, doing their own AVM test is not a viable option.
Fortunately, third-party agencies can provide lenders with the AVM test data they need to meet the correct guidelines.
Working with lenders, these service providers can provide them with the resources to meet stringent requirements, regardless of the size of their business.
Lenders looking to partner with AVM Labs should prioritize loan-grade AVMs using a combination of predictive analytics, data quality, AI, or machine learning.
It is important that test providers compare the AVM in the test with the most recent data available, using a standardized test that provides accurate and up-to-date data.
Reference Source: Housingwire
