Refinancing in today’s credit-crunched market can be challenging at best. A successful refinance all begins with the appraisal, used to set the maximum amount you’re allowed to borrow against your home. The problem is, in today’s market, sinking home values are often lowering appraisals as well. If you are considering refinancing your home, heeding these important tips on appraisals before proceeding can improve your refinancing options and save you time and money:
1. Continuously research the value of your home
and the other homes in your neighborhood; pay attention to foreclosures in your area as they may drive down the value of your home. As a member of the Top 5 in Real Estate Network®, I am well-equipped to provide you with a detailed assessment of the current value of your home.
2. Since appraisers use “comps” (comparable market sales) of local properties sold within the last six months to value your home, make sure your loan officer leverages their knowledge to research comps in your area, before ordering the appraisal.
3. If you use your own appraiser, research them first
and ask your lender to cross check them for any potential issues that may delay the process. Great loan officers will always confirm your appraiser’s credentials. I can also recommend a credible appraiser to work with.
4. Direct your loan officer to work with local, experienced appraisal companies.
Local appraisers have a deeper knowledge of the surrounding neighborhood and will likely be more readily available for the home inspection to speed your appraisal process.
5. The appraisal report is yours to keep.
Find out in advance who pays for the appraisal—many times appraisal fees are the homeowner’s responsibility and have to be paid up front.
6. New lending regulations require two appraisals in some situations
—ask at the beginning whether you’ll need one or two.
7. Commit to your lender before committing to an appraisal.
Being comfortable working with your loan officer is imperative. They often will be the liaison between you and the appraisal company.
8. Make sure any major repairs are completed before moving forward with your refinance.
Structural damages drive your home value down and jeopardize the approval process for today’s popular government-backed FHA loans.
9. Don’t overestimate the value of making cosmetic home improvements.
The expense is rarely justified because in the appraisal world, only improvements that add square footage will significantly increase home value.
10. Rely on market value rather than tax assessments
for a realistic appraisal value—in today’s market, tax value and current market value may differ widely, but your lender can only go by appraisal value.
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