Overview of Real Estate Financing

Some of the major players in the housing financing system include the Federal Housing Administration,  the Veterans Administration, Ginnie Mae, Fannie Mae, and Freddie Mac.

FHA: created in 1934 to restore confidence in the mortgage market system, helped establish rigorous borrowing and lending standards that reduced lenders' risk and promoted use of long term, fully amortizing loans that were more consistent with household budgets than the interest only loans that were prevalent at the time.
Veterans Administration: began to guarantee mortgage loans on a large scale as a part of the so-called GI Bill of Rights, allowed veterans to obtain mortgage loans for home purchases with little or no down payment and low interest rates.
Ginnie Mae: organized as a vehicle for providing subsidized loans to borrowers through various FHA loan programs.
Fannie Mae: created to buy mortgages from lenders and to serve as a clearinghouse for the secondary mortgage market, originally established to operate a secondary market for FHA insured loans and provide FHA insured loans to low income borrowers in remote areas.
Freddie Mac: created to operate a secondary market for conventional loans similar to the one provided by Fannie Mae and Ginnie Mar for FHA and VA mortgages.

If you're looking for a job in real estate finance, there are numerous opportunities available to you. You can work with private mortgage insurers, mortgage bankers, mortgage brokers, commercial banks, and many others. Click this link to read a brief summary of different careers in real estate finance.

One topic that arises in real estate financing is foreclosure. In this article by CNN Money, states that foreclosures fell in 62% of major markets. Many see this as a sign that the housing market is starting to stabilize. The article argues that "most of the nation's housing markets are past the worst of the foreclosure problem."  

Real Estate Appraisal

What is real estate appraisal? The following video explains what an appraisal is, why it is important,  and how it is done.

There are three approaches to real estate valuation. This link summarizes the sales approach, the cost approach, and the income approach and what steps each approach involves. The sales approach is commonly used in appraising single family homes and land. The cost approach is used to estimate the value of properties that have been improved by one or more buildings, and the income approach is based on the relationship between the rate of return an investor requires and the net income the property produces. 

Appraisers are often viewed as having no stake in doing a good or timely job. There is some debate over whether or not real estate appraisal will be a viable career in the future. The following link discusses two views on the future of appraisal. One view is that appraisals will no longer be needed, and the opposite view is that appraisals will always be needed and that the industry is growing.

What is takes to be a Real Estate Appraiser

So how do you become an appraiser?

There are four different categories of appraisers. The first category is a trainee appraiser. Under this category, you must work under the supervision of a licensed/certified appraiser who is ultimately responsible for the work you perform. To be a trainee appraiser you must complete at least 75 hours or classroom training in appraisal topics. There is no experience required and no exam to be passed. As you gain experience you can move on the the next category, a licensed real property appraiser. Licensed appraiser can perform appraisals involving one- to four- unit residential properties in transactions less than $250,000, and noncomplex properties in transactions less than $1,000,000. To become a licensed appraiser you must complete 150 hours of classroom training, must pass a written exam on appraisal topics, and must have at least 2000 hours of experience. The third category is a certified residential appraiser. This kind of appraiser can perform appraisals on residential one to four units without regard to transaction amount or complexity. To become a certified  residential appraiser you must complete 200 hours of classroom training, pass an exam, and must have at least 2500 hours of experience. Finally the last and most advanced category is a certified general appraiser. This appraiser can appraise any type of property. To be a certified general appraiser you must complete 300 classroom hours, pass an exam, and have a minimum of 3000 hours of experience.

So what does a real appraiser actually do? The video below gives a quick, but informational summary of an appraisers job description.

With so many appraisal companies out there, you could feel overwhelmed by who to choose. I have provided a website link that lists the Top 10 Appraisal Management Companies in the United States. These ten companies can help you no matter what state you live in or what kind of property you need appraised.

Now if you have an interest in becoming a real estate appraiser, you probably want to know how and how much you get paid. CNN's money magazine has named this career one of the best jobs in America. Click on the link to get all the statistics on what real estate appraisers make and the opportunities if you decide to pursue this career.