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Sandy Gadow

Sandy Gadow, a featured guest on CNN's "Open House," and a speaker on national radio as the escrow expert and has more than 25 years experience in escrow, title and real estate. A  mortgage broker and real estate sales associate, Sandy is a member of the American Land Title Association, the National Association of Realtors, and on the advisory council for the Escrow Career Center. She is the author of The Complete Guide to Your Real Estate Closing and a guest contributor to Nolo's Essential Guide to Buying your First Home. She specializes in assisting the American as well as international client. If you have questions for Sandy see our Ask Sandy page. Here are a few recent articles.

How much can I borrow?

Depending on your annual income, cash reserves, credit worthiness, and the appraised value of the property, you may be able to borrow up to 100% of the value of the home.  A typical home mortgage is 80% of the home's appraised value.  Which loan program fits your needs will also be based on your intended use of the property, whether it will be your personal residence or if you will be using the property for rental or investment purposes.  Lenders typically lend only 70% or 75% of the purchase price for investment or commercial properties. Investment properties may also require additional qualifying criteria and use a different appraisal process.

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Why is the appraisal so important?

The amount of money which you can borrow will depend on several factors, but one of the most important is the "LTV" or "Loan to Value" ratio which is based on the appraised value of the property in relation to the amount of money you wish to borrow. A higher appraisal value will normally result in the opportunity for a larger loan amount. For example, most loans are based on a 80% Loan to Value ratio, meaning the lender will loan you 80% of your property's value.  Keep in mind that this amount may vary for a refinance, an investment property, or based on your credit history or FICO scores.

Comparables are an important part of the appraiser's analysis and will be included in the report. You can help the appraiser by supplying all known recent sales in your immediate area,  some which may not yet appear yet in the public records.  In addition, be sure to supply the appraiser with any recent remodeling or major improvements which you have made to the property, and the cost of those changes. Any information on recent improvements in the area, such as new schools, roads, or other community services which will enhance your neighborhood's value may help the appraiser's valuation.

What is PMI insurance?

PMI or Private Mortgage Insurance insures lenders against losses when they have to foreclose and can only sell their foreclosure properties for less than the loan balances.  Most lenders now require PMI whenever they lend more than 80% of the appraised value of a property.  Some lenders will even lend as much as 95% of appraised value so long as the borrower secures private mortgage insurance. 

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All information is deemed reliable but is not guaranteed and should be independently verified.