No Mandatory AMC Use

F F says:

They have 3 packages $50, $100 and $500. The $100 package is the most popular. Keep in mind that you’d still have to maintain your Alamode, Bradford, … appraisal software subscription for non-UWM work.

Baggins says:

Hold on. The fee is the local standard for appraiser vendor services average, with no middle men raking any portion of the fee. Best reflected on the VA appraisal panel fees, taken from mortgage disclosures, so look at that for comparative fee relationships first. The average cost, clarify cost. The average consumer charge, vendor fee if operating under third party assignment services, or not? Lots of comps? So there is a high turnover or it’s a very large subdivision? Please clarify. Specifically what makes more data easier to sort through than less data, both can be quite time consuming. When utilizing voice communication, it’s important to use industry standard language for better articulation or the request. If appraisers are going to pay such substantial overhead, abide such complex rule sets from a multitude of regulatory agencies, shoulder liability, like any other professional, fairly compensated. There is always non qe lending if you’re not o.k. with typical mortgage lending terms.

This is an important post which illustrates how consumers often perceive costs and fees when engaging mortgage lenders. Specifically on the topic of soft costs vs hard costs. For the laymen; hard costs are what a consumer pays out of pocket, actual money paid which is not a promissory note and not a loan in any form. Hard costs represent real world limitations to accessing mortgage services, like any other retail product offered to consumers. A product is offered, a cost is paid to access said product. Hard costs, pull the money out or walk away from the product. Soft costs are financed into a loan package, otherwise described as various financing fees, something consumers can simply sign for and not actually pay out of pocket upfront for. The financing fees are commonly added on top of the products price, actually increasing total out of pocket costs, compared to paying all fees hard costs which would have been cheaper, because the costs were not financed and amortized to be paid incrementally later on.

There is usually a lending rate to represent the cost of borrowing money to afford the purchase price, which effects the total cash equivalent payment amount, ie the amortized cash equivalent based on the lending rate. If you pay $200k for something cash, you own it outright. You only pay $200k. If you borrow $200k for something, you may hold possession, but do not have true unencumbered ownership, while maintaining a commitment to pay for said product or face repossession, ie the lender maintains first position should the borrower default on the purchase payment plan commitment. And you pay the financing fees necessary to create and service the loan.

Enter soft cost fees. Mortgage lending processing fees, of which there are many. We’ll use a conservative figure presuming the consumer has a credit union rather than a bank, $3.5k mortgage closing costs. $3.5kTack on hard costs like appraisal, home inspector, various utility inspectors, the costs add up quickly. Just on the buy side, it’s easy to spend $7k – $10k or more just to facilitate the sale inspection and new loan. The seller also shoulders the agency fees so tag on another $10k-$15k or so for even a low $200k home price number. Seller pays the most substantial hard costs of them all, realty agents don’t wait for commission payments, they are due upon closing.

Let’s talk about putting that much commitment on the line, and skimping the hard costs. FYI, hard costs are among the most important efforts a buyer can commit to for protection for financial commitment reasons. The appraiser is paid irregardless if they move the show along or not, one of the quite limited few independent checks and balances within the lending pipeline not controlled by large corporations or their subsidiaries and not dependent upon sales commissions.

People don’t mind rolling in tens of thousands of soft cost financing which is added on to long term amortized loan commitments, before the amount is actually amortized, but will balk and walk for a few hundred difference in hard cost fees for things like the appraisal service. It’s an easy decision to decide to trade quality for cost of service. We’re so happy UWM stepped away from appraisal management companies, prioritizing quality of appraisal services over dangerously low discounted vendor fees which create more liability than cost savings. Jeff, keep saving. Purchasing is superior to renting and up front hard costs are basically a non issue from a buyers perspective. Buyers should ideally have $5k or more cash on hand. You need to focus on lending terms, reliability of the lending companies, how they handle loan payment servicing, a hundred other considerations. Don’t skip the quality appraisal and don’t skip the quality home inspector. Get better lower power rates, by pay your closing costs up front, try to finance the least amount possible. Keep saving.