I locked the rates 25 days before and refinance went without any glitches yesterday evening. Just before I locked the mortgage rate, I was talking to 3 mortgage brokers. Also, I had reference for 2 more brokers. I decided to go with National Mortgage Alliance ( Upfront mortgage broker – suggested by Mortgage Professor) and when I told other broker that I locked the rates with NMA and I paid $300 as deposit to lock the rates, within few minutes he offered the rate match, 300 credit and process the loan without ordering home value appraisal. My current loan balance was 216,000 and estimated home value from Zillow and property tax value was 270,000 to 275,000. Since 805 of 270,000 is 216,000, if the home appraisal came less than 270,000 I will have to pay PMI.
I called up NMA to explain the offer other broker was giving me. NMA said, even they are not ordering appraisal. That was good news for me and so the loan approval process went smooth and so does the closing.
I came to know that NMA is not ordering appraisal, that could happen with any brokers or lenders. They could charge the borrower $300 to $600 home appraisal, but they could process the loan, without paying for appraisal. End of the day, its free money for them.
How to Avoid this?
I think, the best way to make sure home loan lender orders appraisal is to get a copy of the appraisal report. In that way, we can be sure, if we are not paying free money to them. Also, based on Credit Score and home value estimate they have is used to determine if appraisal is necessary.
Do you have any thought on this?