Category Archives: Home Mortgage

appraisal guy 2There are a lot of misconceptions concerning the purpose and process of the appraisal report and the appraiser.
Let’s start with the person.  According to The Appraisal Foundation, “an appraiser is one who develops and reports an opinion of value on a specific type of property”.


This definition leads us to the purpose of the appraisal.
The reporting of the OPINION of value is what we call the appraisal.  Note, my over exaggerated bold and capped OPINION.  I state this because most people believe that valuing a property is a science because it has all those numbers and numbers belong with equations which prove or disprove results.  This is not entirely the case for appraisals.  Appraisals are more like finely crafted pieces of art.  All kidding aside, the reason the appraisal is an art is largely in part because of the amount of emotion in real estate transactions.  How do you quantify emotion?  You step into your 49th open house and you just know.  You KNOW, again over-emphasizing here, this is your home and you are not going to lose it without a good fight to the finish.  You are even willing to, dare I say, over-pay for it.  Because you have falling for it.  Your emotions have made your decision for you.  Now don’t worry, you are just like the rest of us.  We all purchase based on how it makes us feel and how we believe it will make us feel in the future.  I do it every day.


The purpose of the appraisal report is primarily for the lenders (aka the Bank).  The appraisal simply reports to the bank what similar properties are selling for in the neighborhood.  The bank wants to know if similar “emotional” responses are consistent in the neighborhood.  Why?  Because every purchase of a home defines the market value of your property.  Market value, according to The Appraisal Institute, “The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, for self-interest, and assuming neither is under duress.”


For example, currently in the Metro Boston and Woburn area we are seeing some days on market, the number of days a property lists on the open market, at or below one week and we are seeing selling prices above asking prices (list price).  The appraisal report must report this and be consistent with what is happening in the current market.  This leads us to the process of the appraisal.


The process is similar for most appraisers.  The appraiser guy or gal comes to the property for inspection, interior and exterior.  They will research and view the neighborhood.  They will verify property data with the assessor and/or building inspector. They will research the market trends of the past year paying particular attention to what the current trends are within the past month to 3 months.  Then they will research sales in the neighborhood and pull the best available sales that most accurately reflect the subject property in terms of Location, Square Footage, Style, Age, Condition, Bedrooms, Bathrooms, Acreage, Amenities, Topography, View, Date of sale, Type of sale, Days on market, etc…  The comparable selection is like 5th grade science class when you dissected the frog saturated in formaldehyde.  It’s that experience you wish you could remember to forget.  After all the differences are valued out there is a range of value from the adjusted comparable sales.  The final estimated opinion of value is typically within this range.  The range, again, reflects the art of the appraisal because it is an opinion with the range.


There are various reasons, other than for a lending transaction, to have an appraisal completed on your property.  If you are ready to embark on a renovation project, better hold the horses and find out if your investment will have a good return.  I’ve saved families from making this mistake a few times.  What about if a loved one is reaching the end of their life and you are doing the final preparations for their will.  Finding the value of the home can help sort out any loose ends and help the family focus on what matters.  One other reason would be if a couple finds themselves unable to continue in marriage and needs to divorce.  Typically the largest asset to divide is the property.  You need an unbiased appraisal on the property in all these scenarios.

You can go to our website to learn more by clicking the links.  The document added to this blog is from The Appraisal Institute and helps further distinguish the purpose and process of the appraisal.


TAF BorrowersInfographic

ratelockA rate lock is a written agreement that guarantees a borrower a specific interest rate on a mortgage loan as long as the borrower and lender close the loan within a specified period of time.  Most often rate locks are for a period of 30-60 days.  The rate lock guarantees that a borrower will get a specific interest rate for the life of their fixed rate mortgage.   This gives the borrower the confidence to move forward with the loan knowing that their mortgage payment is a specific amount.

The appeal of locking in a rate has recently grown because rates are generally rising.  Already, rates are a full point higher than this time a year ago.  However, the borrower must be sure that the loan can close within the rate lock period.  Borrowers need to be aware of their closing date!  All too often a borrower will call a mortgage lender and get a nice low quote for a mortgage rate.  The catch is that the borrower may get a quote on a rate that needs to close within 15 days.  Not many loans close within 15 days.  It’s imperative that the borrower ask the lender the rate, the lock in period and whether there are any points associated with the rate.  I’m sure everyone has seen the fine print at the bottom of mortgage ads showing a specific interest rate with 2 points.  A point is 1% of your loan amount so on a loan of $300,000, the borrower has to pay an EXTRA $6,000 in closing cost for the 2 points.  Buyers BEWARE.

What happens if your rate lock expires because you cannot close by the expiration date?  First of all, the longer the lock period then the higher the interest rate or points.  Many lenders will lock a rate for 120 days.  However, this extended lock period comes at a price.   If your rate has expired, you will get the higher of the locked rate or market rate.  If you realize that you need more time for closing prior to lock expiration, you can generally extend the rate for a specific period of time for a price.  The extension can cost anywhere between .250 points to 1 point depending on the length of the extension.

Some mortgage lenders allow a “float down” option.  You can lock your rate but then you are allowed to re-lock at a lower rate if the mortgage rates decline.  However, these float down options either cost money upfront which is lost even if you don’t exercise that option or the beginning rate is higher than the market rate at the start of the process.

Why not just lock your rate with different lenders on different days?  That option could get expensive since most lenders require a non-refundable deposit when you lock the rate.

Borrowers need to ask the lender at what point during the process can the loan be locked, what is the interest rate and are there any points, what is the length of the rate lock, can the Lender close during the period of the rate lock, and what happens if rates drop?  An educated borrower will be a happy borrower by avoiding surprises at the closing table.

cathy dylAbout the author:  Cathy Dyl is a Senior loan officer at Stoneham Bank  (NMLS Originator ID # 49343) and has been working in the mortgage industry for over 17 years.You can contact her directly at  or learn more about her here

No one can deny that we are in an awkward stage in real estate right now.  With homes selling well above asking price due to low inventory and high demand, it is impossible to know the true value of a home at the inception of the listing.  Unfortunately, those days of relying on previous comparable sales are out the window and such homes are only used as a mere gauge when listing a property.  As a result of such pricing flux, appraisals are often and frequently conflicting.   This can sometimes pose a problem for both parties in the transaction.

In a typical transaction where the Buyer is seeking financing from an institutional lender,  the Buyer’s lender sends an appraiser out to the property in order to set a value to the home.  Said value is based on several factors including but not limited to: the home’s physical makeup (square footage, number of bedrooms/bathrooms, amenities, etc.), where it is located, and most importantly, what other comparable homes in the area sold for in the last few months.  The last factor poses the biggest problem when determining a home’s value.  Because homes have only recently been selling higher than their actual values, there are not enough, if any, comparable homes that have sold within the past few months that reflect such pricing increase.  The end result…the home appraises for lower than the agreed upon price.

From a Buyer’s standpoint, this means that the lender will probably deny financing because the lender will not loan money for a property that is worth less than the agreed upon price.  If the Buyer’s lender will allow the Buyer to borrow money, it will usually require the Buyer putting more money down if they choose.   This result would usually allow the Buyer to contractually get out of the agreement and receive a full refund on all their deposits. From a Seller’s perspective, a decision must be made: either drop the purchase price to the appraised value, or find another Buyer.  Either situation is not ideal to a Seller.

Other scenarios however, can pose more complex situations and results.  In the case where a Buyer is paying cash and they opt to do an independent appraisal, the appraisal could come in lower than the agreed upon purchase price, which would alarm the Buyer that they may be overpaying for a home.  In another case where the Buyer is only financing a small amount of money where there is plenty of equity for the lender to finance the desired amount, it could be seen that the Buyer is overpaying for the home as well.  In these situations, it is always best to put a separate contingency in the Contract to Purchase and the Purchase and Sales Agreement which states something to the effect of “This Agreement is subject to the property appraising at or exceeding the purchase price, failing which all deposits given by Buyer shall be forthwith refunded and this agreement shall be null and void without any recourse to the Parties hereto.” This will allow the Buyer the option of either backing out of the contract if the property does not appraise for the contract price or purchasing the property despite  the appraised value being lower, hoping that the home’s appraised value will eventually increase. On the Seller’s end, a way to ensure that a Buyer will purchase the property despite a low appraisal is to insert a clause in the Contract to Purchase and the Purchase and Sales Agreement which states something like “In the event the appraisal is lower than the agreed upon purchase price, Buyer agrees that it shall not be the cause of termination of this agreement and shall be obligated to purchase the subject property subject to the terms of this agreement.”      

Because of what is going on in the market, it is vital to always seek guidance from a knowledgeable and reputable real estate agent and attorney.  The days of cookie cutter transactions are no longer with us and it is vital to have people in your corner during these times.


Jim - October 2010James A. Juliano is one of the founding partners of Scafidi Juliano & Hurd, LLP, managing the Woburn office location in Downtown Woburn Center.  He currently serves on the Woburn Conservation Commission.  Mr. Juliano is currently an active member in the Woburn Residents Environmental Network (WREN) and is a Director of the Friends of the Tri-Community Greenway, Inc. which is a non-profit corporation responsible for the formation and organization of the 6.63 mile bike path and park that will stretch through Stoneham, Woburn, and Winchester.  Mr. Juliano is also very active with the Eastern Middlesex Association of Realtors (EMAR) and serves on the Board of Directors for the Women’s Council of Realtors – Northern Region Massachusetts Chapter.

Mr. Juliano’s present areas of practice include residential and commercial real estate transactions, residential and commercial lending, land use and zoning, and Landlord/Tenant law.  Mr. Juliano can be reached at or by phone at 781-210-4710, Ext. 102.


The month of June has not been kind to mortgage interest rates.  In fact, rates experienced the most rapid climb in 26 years.  It’s unlikely that rates will be that low ever again.  So why did this happen?  According to CNN there are 3 basic reasons for the sharp increase in mortgage rates:


  1.  The Fed announced that they are going to stop bolstering the housing market.  The Fed has kept rates at rock-bottom levels by buying up $85 billion a month of Treasury bonds and mortgage-backed securities.
  2. McMansions are making a comeback.  As the Fed stops their purchase of securities, private investors will have to pick up the slack.  Guess what?  Private investors demand a better payoff which means raising rates for borrowers.
  3. The economy is no longer reeling.  During the recession, the Fed lowered its short-term interest rate to near zero to stimulate the economy.  Economic conditions have considerably improved over the past 4 years.  Therefore, we are seeing rate increases.

Low mortgage rates happen when the economy is in distress or in the case of the late 1990s when the Chinese bought Treasury bonds.  Any return to normal economic conditions translates into higher mortgage interest rates.

Don’t jump off the cliff yet.  Is a rate of 4.5% on the 30 year fixed mortgage really so bad?  Most of us remember when a rate of 10 – 15% was actually good!

What can you do to lower your mortgage interest rate?  First of all be sure you have an excellent credit score.  Your target should be a credit score of at least 740.  Anything lower and you may have to pay a higher rate.  An excellent credit score means that you pay your bills on time, you do not owe more than 40% of your credit limit on credit cards,  you have just 3 major credit cards (there’s no need to have 10 store credit cards) and you actually have a credit history.  Paying cash for everything does not increase your credit score.

Save for your down payment.  Some mortgage programs require a minimal down payment but a larger down payment may help to avoid or reduce monthly private mortgage insurance.

In the foreseeable future, we are headed for a very painful adjustment period in terms of mortgage rates thanks to the Federal Reserve.

cathy dylAbout the author:
Cathy Dyl is a Senior loan officer at Stoneham Bank

(NMLS Originator ID # 49343) and has been working in the mortgage industry for over 17 years.You can contact her directly at
or learn more about her here

Being in the mortgage business for over 17 years, the first question asked of me is what can I afford to buy?  I then answer their question with a question.  What do you want to afford?  The customer looks at me and says you’re the professional.  I ask, “Do you have a budget, do you know what all your bills are and what projected bills will be?”  How are you tracking this information?

It is sad to say but not many people prepare a household budget.  I believe the reason for this is because people don’t want to know or see what they spend their money on.  By putting it down on a spread sheet it makes you accountable for what you are doing with your money.

So back to your mortgage:  how can you make a decision on what you can spend on a home if you have no idea what you spend now!

So how do you start?  Just do it!  On a spread sheet start inputting bills as they come in and as you spend money.  Just by doing this one action you will find that you end up saving 25% more than you did prior to this.  Just being aware will make you not buy that extra coffee, candy bar, or shirt.

Below is a link to a great article to help start a budget.

Below is a link for free budget planning software.

So with this useful information, you can now determine where your money is going, how much can you save, and what you can afford for a mortgage and the cost of the home.

Now that you have this valuable information, it’s time to sit down with your qualified mortgage professional to see what you can pay for a house.

About the author: Fred DaMore is a Mortgage Specialist at Ross Mortgage. You can contact him at


The Importance of a
Solid Commitment for Financing

mortgageMost residential real estate transactions include a financing contingency which typically provides that the Buyer has until a certain date to obtain a commitment for mortgage financing.  This contingency has never been as important as it is today, but in order to maximize their protection under this contingency, a Buyer needs to understand the potential dangers involved in the ‘standard’ financing contingency and realize that once the contingency is satisfied, there are few remaining protections built into the agreement to protect the Buyer.

In order to preserve the contingency, it is standard that the Buyer must submit a complete mortgage application by a certain date.  Submitting a complete loan application is a relatively simple process, and can typically be completed over the phone, or in some cases via the internet.  It is extremely important to submit the application by the required date.  With the loan process taking longer than ever, Buyers should take care to start the financing process as early as possible in order to meet the commitment and closing dates.

As the transaction proceeds, some mortgage lenders will issue a loan commitment in haste in a misguided attempt to impress the client and/or the Realtors involved in the transaction.  In some cases where a commitment is issued far before the expiration of the mortgage contingency the Realtors involved may comment how great the loan originator or lender is, but in reality the originator may have unwittingly put the Buyer at risk.

Quick commitments usually are not solid commitments.  If a commitment is issued with conditions that could jeopardize whether the Buyer (or the property) will ultimately be granted the loan (ie. subject to an appraisal, homeowners’ association questionnaire, etc.) the loan originator may be putting the Buyer’s deposit in jeopardy.  I have even seen loan commitments, from reputable lenders, which were issued subject to the review of the Buyer’s income tax returns or, in one case, an FHA approval for the condominium project.  In both of these cases the lenders issued commitments but ultimately denied the loans.  A Realtor who is acting as a Buyer’s agent should recognize that a commitment which is not a ‘solid’ commitment does nothing for the transaction and ultimately puts the Buyer’s deposit at risk, and should insist that such a commitment should not be issued.

Having a commitment, whether or not the lender ultimately delivers on said commitment, satisfies the mortgage financing contingency.  It is at this point the contingency no longer protects the Buyer and the Buyer must fulfill their obligations under the Purchase and Sale agreement or be in default.  In the past I have seen a situation where the lender issued a clean commitment three weeks prior to the expiration of the financing deadline.  While this is seemingly a good thing, what the lender did not know when they issued the commitment is that ‘life happens’.  This particular Buyer lost their job and as a result was no longer eligible for the loan.  This is just one of many issues that could arise, lender insolvency being another, where the ‘early’ commitment could come back to hurt the Buyer.  In these instances, the Buyers no longer had the protection of the financing contingency and their deposit was in jeopardy.

While there is no way to totally eliminate risk to the Buyer in a real estate transaction, using a good Realtor in the capacity of a Buyer’s Agent and the use of a qualified real estate attorney will go a long way toward managing that risk.  A good real estate attorney will typically modify the purchase and sale agreement to address the issue of receiving a ‘less than solid’ mortgage commitment or even any potential lender insolvency.  Also, it is best to work with a mortgage lender who realizes how their actions could put you at risk.  Ideally, your lender will not only have a mortgage commitment, but a clear to close, which is the last step in the financing process prior to closing, on or before the expiration of the mortgage contingency and should only issue a commitment on the actual day the contingency expires.

The Buyer is best served when their Realtor, attorney and mortgage lender all understand their respective roles in making the transaction as smooth, and low risk, as possible and understand the financing contingency.

About The Author: Douglas M. Mercurio, Esq. is the founder and principal of the Law Office of Douglas M. Mercurio, PC. where he regularly represents Buyers, Sellers and Lenders in residential and commercial purchase, refinance and reverse mortgage transactions and has closed thousands of real estate transactions. Doug can be reached at or by phone at 978-276-3100.

The spring market is here but, it seems a little different this year. Traditionally by April there are quite a few properties available for sale.  However in our current market this is not the case.  Listing inventory is down & when the supply does not meet the demand multiple offers and buyer frustration will follow.

When sale prices start to rise, it can also create a problem with bank appraisals.  Before a buyer can obtain a mortgage, the bank sends an appraiser to verify the sale price.  If there are not enough prior sales to compare, it can be difficult to justify the value. When this happens an adjustment must be made to either the sale price, or the buyer’s down payment. Otherwise the bank will not issue a commitment letter to the buyer.

In a market like this buyers have to be ready to sign on the dotted line if they want to be successful.  This is difficult to do when making such a big decision.  When investing a large amount of money time is needed to consider all options.

If you are thinking about selling, now is the time. The market is on the rise & with the lack of competition you could spring into a great deal!

About the Author: Sharon Potts is a Realtor at RE/MAX Legacy and looks forward to the  the spring market! You can contact her directly through her website at

The Fiscal Cliff fast approaches.  What does this mean for mortgage rates?  Let’s start at the beginning.  What is the Fiscal Cliff?  At midnight on December 31, 2012, the Budget Control Act of 2011 will begin to take effect.  This Act was designed to cut government spending and end certain tax breaks. Most people will have fewer dollars to spend because of higher payroll  taxes and few tax breaks.  The government would slash certain programs.  The impact of the Fiscal Cliff could be dramatic and lead to a recession.

The fact that no compromise on the tax and spending bill has yet to be reached by Congress creates worries in the market. Stocks fell but mortgage rates on fix rate programs have either declined or held steady.  Going over the fiscal cliff has investors worried about an economic  slowdown.  In turn this creates a demand for the safety and security of US government bonds.  Mortgage rates are determined by the  long term  bond market.  Generally, bad economic news results in lower mortgage rates.  Just last April the mortgage rates on a 30 year fixed rate mortgages were just over 5.00%!  Here we are less than a year later with rates hovering around 3.375%.

Mortgage rates continue to operate near all time best levels.  However, the uncertainty of the fiscal cliff means that rates could easily move higher or lower.  The feeling is that there’s more risk in waiting to lock in a mortgage because rates remain very low so rates are more likely to move up than down .

It’s the winter but mortgage rates make it a great time to shop for a home.  Rates remain low and homebuyers have less competition.

About the author: Cathy Dyl is a mortgage loan officer at Stoneham Bank (NMLS#49343) with over 20 years of mortgage lending experience.  Read more about her on her personal site

Mortgage rates have dropped to historic  lows.  Home prices are down from where they were a few years ago.  Rents continue to steadily increase.  In fact, this is the most affordable time since the 1970s to buy a home.  So why wouldn’t you buy a home?

Too many potential home buyers think they will not qualify for a mortgage.  There’s been many newspapers articles and television broadcasts stating that Mortgage Lenders have tightened mortgage lending guidelines.  True.  HOWEVER, it’s not as difficult to get a mortgage as most people perceive.  You don’t know until you sit down with an experienced Mortgage Loan Officer.

Much of my time is devoted to counseling potential home buyers on the necessary steps needed to get pre-approved.   Most borrowers get pre-approved in 24 hours.  However, it’s not uncommon for me to work with future home buyers for 6 or 8 months before they get pre-approved for a mortgage.  During that time we work on improving the four “C”s of mortgage lending.   First and foremost is credit.  I can advise a borrower on ways to improve their credit score so they can qualify for a mortgage.  The second “c” is capital.  In some instances, a borrower needs to save more money before they purchase a house.  These days, there are several programs that require small down payments.  The third “C” is capacity to pay the mortgage in a timely manner.  We look at earnings and job history.   The final “C” is collateral or the value of the property that they decide to purchase.

So what are you waiting for?  Get out there and get pre-approved for a mortgage.  There may not be another time like this for many, many years to come!

About the author: Cathy Dyl is a Mortgage Loan Officer at Stoneham Bank. (NMLS# 49343) She has over 20 years of mortgage lending experience and is a preferred loan officer of RE/MAX Legacy.