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Do Not Waste Money On A Home Appraisal Without Enough Equity To Justify It
For many homeowners seeking help to stop foreclosure, refinancing their current mortgage is quickly becoming the option of choice, especially if they feel their home has enough equity in it to justify the decision. The only way this can be determined, however, is through a property appraisal. The problem with this is most home owners havent a clue as to their homes real value as compared to the housing market where they live. Dont order a home appraisal prematurely unless you can stand the possibility of losing $300 - $500. First do some ground work to get an idea of your homes approximate market value. Speak with a knowledgeable local realtor. Find one who has been selling homes in your area for a number of years and has a feel for the current housing market. Ask for a comparative market analysis. This will save you valuable time, not to mention money; both which you cannot afford to waste, especially if you are facing possible foreclosure.Treat the refinance as if you are selling the house (in essence you are, as you are buying it back). Make sure all the maintenance you can do is done; this includes clearing and trimming the yard to painting the house. Make a list of all home improvements - new windows, new floors, the finished basement, and any other item you feel has increased the value of the home. All this is necessary if you want the property to be valued as high as possible.Keep in mind that the lender is concerned with the propertys value as it relates to loan amount. This is commonly referred to a LTV, or loan to value. The lower this number the more likely the lender will approve the mortgage loan. The lower percentage also allows the lender consider higher-risk borrowers, such as those with low credit scores, previous late payments in their mortgage history, high debt-to-income ratios, high loan amounts or cash-out requirements, insufficient reserves and/or no income documentation. The more you can do to improve the properties value the lower the LTV, and the higher your chances of being approved for the loan.Once you are satisfied the numbers will work in your favor it is time to order the appraisal. Lenders normally order this using one of their own appraisers, but rest assured you will pay for it regardless of the outcome.A home appraisal is really an opinion of the propertys market value. The home appraisal is a detailed report that looks at such items as the condition of the home, the neighborhood, what similar homes are selling for, and how quickly similar homes sell. Part of the process is a sales comparison that looks at other properties in your neighborhood and what they are selling for and then figure how they compare to your home. And finally, dont be caught off guard. Know what you options are if the appraisal doesnt come in with the numbers in your favor. Be prepared to challenge the lenders appraisal with your own information. Theres a chance you can get them to reconsider, especially if the appraiser overlooked anything. If youve done all your homework you lessen the likelihood of squandering your time and money, neither of which you can afford to lose.
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