Mortgage justification is a key element of determining the soundness of any home loan. Banks and other lenders need to fully research information on a home to ensure that the mortgage applicants can afford to take on such a substantial debt and that the property is a good investment.
While banks will often look into a borrower's credit history and income to determine whether they will pose a credit risk, it is also important for them to consider if a home is properly priced and free from encumbrances and other issues before signing off on a loan.
By reviewing any records of building permits, banks may be able to see if there have been significant renovations made to a property since its prior sale, which could result in a significantly different valuation than was given in the past.
Further, other homes may need costly repairs, which could in turn affect the overall market value of a property.
Typically, lenders would need to obtain these records from local public works departments or city halls and make copies of important certificates for their records. However, using CRS Data's records, lenders can find all of this information without ever leaving the office. The tools give banking professionals access to a structure's history.
Lenders will also want to determine that a home is properly valued. While construction history can aid in settling on an appropriate value, additional information about the home will also be needed to get a clearer picture of actual real estate value.
For example, market home prices in the area can help banks determine if a property is priced accordingly. This information can be obtained by looking over tax records and data from previous sales in the area.
Tax records for the property in question may also help a lender decide if a selling price is accurate, which may in turn impact willingness to approve a mortgage application, as the debt to income ratio and subsequent credit risk is a driving force behind many banking decisions.
Tax history and comparable information will generally be available at a county tax assessor's office, or online. However, much of that data may be out of date or unavailable. For selling prices on equivalent neighborhood homes, banks may need to consult real estate agents or other professionals or visit many websites and take an average of the information they find.
With the CRS Data, obtaining and analyzing such information to justify a mortgage can be done in real time, without having to expend valuable resources.
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COLIN BARRETT - Tennessee Bankers Association