The ability to refinance a home and use some of the equity for other purposes can be a huge benefit for homeowners. In fact, some homeowners depend on the use of their home's equity for large expenditures, such as medical care, college tuition, or home repairs. Homeowners may also utilize their equity to pay off consumer debt or take family vacations.
A home appraisal is required as part of the refinance process to prove to the lender that the value of the home is sufficient to cover their risk in making the loan. Because of this, appraisal results that come in lower than expected can endanger the owner's ability to refinance their mortgage. Homeowners who find themselves in this position can use the following tips to help rectify the situation and succeed in refinancing their home.
Verify the data
Busy real estate appraisal firms typically have multiple appraisals in progress at one time, making it possible for mistakes to occur. In addition, assistants may be helping with research or data entry, resulting in typos or other issues. Homeowners who receive an appraisal that is lower than they are expecting should immediately request a full copy of the report so they can verify all the facts and data for their home.
Some of the most important details to check for accuracy are those that directly influence value, such as square footage, property address, age of home, number of rooms, and room sizes.
Homeowners will also want to verify that the appraiser noted any changes made in the home since the original mortgage was obtained. Upgrades or replacements of major systems and big-ticket remodeling jobs, such a kitchen remodel, should be included on the report and have a positive effect on the value of the home.
Get another opinion
If no mistakes or omissions are found on the appraisal report, homeowners should turn their attention to the comparable properties used by the appraiser and consider asking a reputable real estate agent to provide a comparable market analysis (CMA).
While not an appraisal, a CMA provided by a competent real estate agent can provide the homeowner with the most current information about listed and sold homes in the area that are as similar as possible to their home. Once the CMA is completed, providing a copy to both the lender and the appraiser may be very helpful in obtaining a revised appraisal that more accurately reflects the true market value of the home.
To learn more about the real estate appraisal process, contact a real estate agent near you.Share