RISMEDIA, March 19, 2011-Mortgage rates are at near-historic lows, but sinking home values are often lowering appraisals as well. If you are considering refinancing your home, what do you need to know about the appraisal process to help ensure you get the best possible appraisal on your home? Seasoned loan officer and mortgage industry insider Len Finelli shares ten important tips on understanding the appraisal process. If you are a homeowner seeking to refinance, heeding these important tips on appraisals before proceeding can improve your refinancing options and save you time and money.
Top 10 Appraisal Tips to Help You Save 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; they may drive down the 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 to work with a great loan officer who will leverage 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.
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.
Finally, homeowners should expect their lender to explain the appraisal process and all of the steps for refinancing clearly and up front. "Homeowners have a right to understand the process fully before going forward with their appraisal and refinance," Len says. "Ask questions, and if they aren't answered to your satisfaction, find another lender that has the answers. Today's market offers many opportunities for homeowners to refinance, and a reputable lender can help homeowners find great options to consolidate debt, shorten terms and lower payments. And it all starts with an appraisal."
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