Assignment Questions

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Principles of Real Estate

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Principles of Real Estate

1. Three methods used to appraise the value of townhouse and recommendation for the most appropriate method to use.

Property value can be assessed by employing three appraisal methods, including

The Sales Comparison The technique is used for the valuation of standard, single-family homes and known as the favored method for accumulating the typical information required for a mortgage.

The Income Appraisal The income appraisal method scrutinizes the value of a property from its income standpoint. Such implications embrace the idea of tenant and rental space, both for office or apartments and double family homes.

The Cost Appraisal Method The method involves the evaluation of commercial properties that do not intend to be utilized as an income land. In due course, the vast properties that are needed to be redeveloped are valuated through this technique. Moreover, single-family homes that are not subject to be sold on a frequent basis are also included in this category (Appraisal IQ, 2019).

According to the situation of Jean and Jude, the method of income appraisal is viable. Jean and Jude are carrying the burden of a mortgage and want to move somewhere else. Renting out space will be a feasible option to generate income and while still possessing the property.

2. The information included on the TRID form and its benefits the home buyer

TILA RESPA Integrated Disclosure (TRID) application features the following information.

Name of the consumers

Income of the consumers

Social security number of the consumer to attain a credit report

Address of property

Estimation of the propertys value

The sought amount of mortgage loan

TRID allows buyers to have ample time in order to inquest their concerned queries. All such questions are imperative for buyers to know before sealing the deal. The process lessens the paperwork and emphasizes on the enhanced and well-organized closing process.

3. No Pet Tenants and Government Regulation

According to law, landlords have the authority to exclude pet presence in a rental agreement. In such cases, tenants need the written consent of the landlord to keep a pet, if unavoidable. The newly considered governmental regulations are devising ways to impede the landlords irrational refutation in such case scenarios (Rizmal, 2018).

4. Steps in the loan process used to qualify for a mortgage and the ways current mortgage balance may impact the qualification decision for Jean and Jude

The loan process of determining the qualifying attributes of mortgage follows the steps listing below.

Pre-approval for mortgage

Purchase pact and hunting for a house

Application For Mortgage Loan

Mortgage Processing

Underwriting of mortgage

approval and closing of the mortgage loan (Cornett, 2019)

The case of Jude and Jean depicts that their mortgages have exceeded even the actual value of their property that could cause some hindrance in the mortgage qualifying process. Step five of the process that is comprised of the underwriting of mortgage, assesses the income history and debt payable on behalf of the applicants. The exacerbated amount of Jean and Judes mortgage could impact the three Cs of underwriting i.e., capacity, credit, and collateral, which in turn will affect the mortgage approval decision of the lender.

5. Advantages and disadvantages of selling or renting townhouse. Assume that we would have to take an early distribution from our individual 401Ks to make the down payment on a new home.

The advantages of selling the renting house may include income from the rental tenants, prospect growth of properties market value, and any renovation that could elevate the price and rent of the home. On the other hand, the concentration of assets, risk of default tenants, and taxes and insurance are significant disadvantages of renting the townhouse. If Jean and Jude need to have 401Ks for the initial down payment, they could also evaluate the possibilities of the ground lease agreement.

6. Stopping making the monthly mortgage and escrow payments and actions the bank would take

In such a case, a late fee will be charged for a delay of fifteen days after 30 days, the loan will be titled as default officially. Subsequently, the lender will contact the credit bureau for overdue payments, and the overall credit score will be impacted. The foreclosure process takes place after 120 days, and finally, the lender will claim the property and will remove the landlord form property. Afterward, the sale of the property will be arranged to offset the borrowed and overdue amount.

7. Selling the townhouse, renting the townhouse, or stopping the mortgage and escrow

Selling the house can mitigate the perceived advantages of renting the property selling the home will leave Jude and Jean without property and a hefty mortgage, and stopping the mortgage and escrow is not a rational and practical option in such a situation. Therefore, it is suggested for them to rent out the house and renovate the place to obtain a handsome rental package.

References

Appraisal IQ. (2019). Approaches to Value in Real Estate Appraisal. Retrieved 7  December 2019, from HYPERLINK http//theappraisaliq.com/industry/approaches-to-value/ http//theappraisaliq.com/industry/approaches-to-value/

Cornnett, B. (2019). Mortgage Loan Approval Process Explained The 6 Steps to Closing  HBI Blog. Retrieved 7 December 2019, from  HYPERLINK http//www.homebuyinginstitute.com/mortgage/mortgage-approval-process-six- steps/ http//www.homebuyinginstitute.com/mortgage/mortgage-approval-process-six- steps/

Rizmal, Z. (2018). Laws to allow pets in Victorian rentals to be introduced this week  but will they pass. Retrieved 7 December 2019, from  HYPERLINK https//www.abc.net.au/news/2018-08-06/rental-laws-pet-friendly-legislation-lag- in-victoria/10041102 https//www.abc.net.au/news/2018-08-06/rental-laws-pet-friendly-legislation-lag- in-victoria/10041102

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