Mortgage rates are threatening to rise above historic lows – especially
with the Fed’s announcement Wednesday that it may no longer be “patient”
with a rate hike – so many homeowners will be scrambling to refinance
this spring. If you’re one of those folks, it is important to realize
that whether or not it will work to your advantage depends, in part, on whether
your home will appraise. In many areas of the US real estate prices are not
back up to pre-2008 levels, and that can make that your chances of a refinance
hinges on the appraisal of your property.
Although an appraiser is, theoretically, a disinterested third party, he or
she will protect the bank or the lender by ensuring that the loan amount you
get is not worth more than the value of your property. In the event of a foreclosure,
the lender must be able to resell your home and get the money back.
There are alternatives – if you don’t think your home will appraise
well, you may be able to arrange refinancing that doesn’t require a
formal appraisal. These are the Federal Housing Administration’s streamline
finance, Home Affordable Refinance Program, and the Veterans Administration’s
Interest Rate Reduction Refinance Loan.
I Don’t Qualify: I’ll Need a Home Appraisal!
If you don’t qualify for any of these, the good news is there are ways to make
the most of home appraisal. It is just a matter of knowing what to expect throughout
Inside and outside inspection
An appraiser usually just takes 30 minutes to 1 hour to come up with a home
valuation, but it can take longer if your house is very large. Within this period,
he or she will check the exterior of your home, take measurements and pictures,
and walk through each room in your home. Here are some ideas from 7
Sure-Fire Tips for Getting the Most out of your Home Appraisal:
Check on home features
Certain features of your home can have an impact on your property’s appraisal
value, these include the number of bedrooms and bathrooms, the type of flooring
used, heating and cooling, and the existence of other amenities such as a swimming
pool or fireplace. Find out which elements can increase property value and use
them to your advantage, which usually include renovating the kitchen and bathroom,
landscaping, using wood flooring, and adding an enclosed garage.
A look into your home’s condition and quality
If there are distressed properties in your neighborhood, make sure your home
stands out above them. Iif you want to raise the financial value your home,
you should carry out updates and improvements that add the most value. Make
sure to make sure the appraiser is aware of every improvement you made to the
property. The smart home owner will document all changes and upgrades made to
the home with before and after photos and make the photos available to the appraiser.
In addition, be prepared to answer certain questions about when you bought
your home, the improvements you’ve carried out since you purchased the property,
any appliances or features that work and don’t work, and other questions that
are related to the appraisal.
You should also research about other properties that make a good comparison
with yours. Avoid choosing dissimilar homes, as an appraiser will understand
which are comparable homes and which are not. Sometimes, finding similar homes
can be a challenge. Strong research on average per square foot values can help
with such an appraisal, and you may need the help of a good Realtor to help
you find out what’s going on in your neighborhood. Real estate agents are usually
happy to help, since you may list with them in the future if they help you now.