Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
Well, this is a new one for us. We're in the process of a BRRRR. We're doing a cash out refi from our hard money loan into a conventional 30 yr fixed. The property has been rented since December of 2020 and we have the tenant in there with a 1 year lease. It is managed by a professional property management company in our area. The house itself was already appraised for about what we expected it to. But now the lender is requiring a "rent appraisal" evidently to determine how much it should rent for. Why would they require this when we can show them a 1 yr lease and receipts for what it is actually renting for?? We're confident it's in line with the market so I'm more annoyed than concerned, but it feels like just yet another delay tactic and hurdle. Can any lenders out there explain what this is about?
@Bonnie Low similar to what Patrick said, I suspect it could be the appraisal's fair market rent was either not included or the range was too wide for the lender's standards.
Although you have a 1-year lease in place, the lender is committing to you for 15-30 years. It's certainly an annoyance and delays the process for 2-3 weeks. I would ask the lender why and how this happened. If it's related to an issue from the first appraisal I would ask the lender to waive the fees on the 2nd appraisal.
It's always good to network with other lenders in case you need them!
Simply put, I guess either the appraiser or the lender think that whatever you're charging is probably too low or too high. Although less likely, there's a chance that the appraiser forgot to provide that fair market rental amount in the first appraisal and the lender wants that done.
Check your first appraisal and see if there's anything about fair market rent in it.
Lenders do not choose to delay closings just for kicks and gigs. Although evidence points to the contrary, lenders are not sitting around rubbing their hands together greedily, savoring the pain and suffering they've caused borrowers. They're too busy counting their take.
They only get paid at closing just like most people involved in the process and want to see it wrapped up as well.
@Bonnie Low similar to what Patrick said, I suspect it could be the appraisal's fair market rent was either not included or the range was too wide for the lender's standards.
Although you have a 1-year lease in place, the lender is committing to you for 15-30 years. It's certainly an annoyance and delays the process for 2-3 weeks. I would ask the lender why and how this happened. If it's related to an issue from the first appraisal I would ask the lender to waive the fees on the 2nd appraisal.
It's always good to network with other lenders in case you need them!
Good feedback @Jon Kelly. We haven't received a copy of the property appraisal yet - our mortgage broker has just told us what it appraised for - but I will check to see whether rental appraisal was included in the initial appraisal and check to see if they're charging us now for that piece. Thanks!
Why does your broker have the appraisal before you have it? Mortgage broker should have ordered single family rent schedule or 1007 form from the appraiser. Are they asking for a different appraiser to verify what is on the report? Lenders are scared of tenants not paying due to covid 19 and borrowers going into forbearance. My guess is your lender didn't order the rent schedule in error