Refinancing my home, but it's appraised too low.
June 27, 2007 6:19 AM   Subscribe

Trying to Refinance my home (& consolidate some bills). 1 year ago it was appraised at $410k. In the middle of this process, my lender indicated that 2 different appraisers indicated that it's only worth $350k compare to other similar homes in my area... although they haven't come out to do the appraisal yet. I'm concerned that because this is what they believe the value to be, it will be that or close to it. In order for me to do what I need to do (with my bills), I need the value of my home to be at $410. What can/should I do?

I have a $325k balance on my home, i need about $30k ... so at 90% (yes, not 80, but I had to go to 90 ... and that was using $410k) Loan to Value, I can accomplish what I need to.

If the appraisers are correct (which they probably are) there anything I can do to increase the value of my home in their eyes, or is there anyway the lender can use the appraisal from a year ago or something?

What can I do, if anything?
posted by foodybat to Work & Money (11 answers total) 2 users marked this as a favorite
Appraisers mostly rely on the value of the houses around you to determine the value of your house. There's not much you can do to change this. The best you can probably do at this point is to make sure your house appears well maintained.
posted by electroboy at 6:28 AM on June 27, 2007

House prices (and appraised values) are falling like a rock right now in many areas - chances are yours too.

Appraisers are usually pretty generous, unfortunately. If it's dropped $60k in one year, there's not much that you can do about it - it's a market thing.
posted by unixrat at 6:34 AM on June 27, 2007

Appraisers don't always have the latest and greatest sales data. Do you know a realtor? A realtor will have access to this, and you can ask the appraiser to consider them—they usually will.
posted by deadfather at 6:36 AM on June 27, 2007

You might try a different mortgage company. Appraisals are an opinion, and sometimes they will work to find the appraisal they need (within reason) - particularly if you are a good credit risk.

My email is in my profile if you want the number of the guy that I've done a couple of mortgages with, and been very happy both times.
posted by COD at 6:41 AM on June 27, 2007

Ask a good realtor for a recommendation. They know who is generous with the appraisals and who isn't.
posted by konolia at 6:48 AM on June 27, 2007

What you need to do (really), is to step away from the urge to acquire more debt.

The process of refinancing will cost you many thousands of dollars. Bank fees, "points", various other costs, higher interest rates.... It's highly unlikely that you're improving your overall financial situation by transferring debt from [one place] to [another] while incurring more debt in the process. You're trying to get $30,000 out of your house. It's very likely that the refinancing will cost you at least $5,000. Even if the mortgage debt is at a lower interest rate than your current debts, you won't recoup that $5,000. You will *worsen* your financial position by refinancing, which I believe is not what you want.

[Note to moderators: I am answering the real question that was asked, which I take to be "What should I do about my debts?"]
posted by jellicle at 6:53 AM on June 27, 2007 [2 favorites]

Your home is only worth what someone else is willing to pay for it. If the house next door can be bought for $350 and your home is on the market for $410, what is going to prompt a buyer to pay a premium for your house?

That's why appraisers base their appraisal more on the value of the other homes in your neighborhood than on other factors.

So unless you can find some sneaky way to increase the value of your entire neighborhood, you're unlikely to affect the appraisal of your home.

And jellicle is right. Don't take on more debt if you're already in a very deep hole.
posted by bshort at 7:07 AM on June 27, 2007

Best answer: Good advice from jellicle, but if you really do want to do this, yes, you may be able to influence the value. It sounds like you haven't had an actual fresh appraisal, but just that the bank had a couple appraisers do comps. You can have a real appraisal. It's not likely the bank will use a year old appraisal. Appraisals generally have an "expiration date."

As stated above: make sure the home has great curb appeal, everything is tidy, and it's not cluttered. If any rooms need a fresh coat of paint, this is one of the least expensive ways to increase value. If you do have a lot of clutter (or what others may consider clutter) it's even worth it to rent a storage locker temporarily to get it out of there. Basically, do just about anything you would do to prepare to sell the house. An appraiser uses opinion as well as strict math and comparables.

If the official appraisal comes in under what you need, you still have some recourse. It's up to the bank to decide to make the loan or not. I once wanted to buy a house where there was a problem with the appraisal. Some members of the bank board actually came to the house and looked at it for themselves, and signed off on the mortgage despite the appraisal.

You can also do some homework of your own, and find your own comparables. Do a web search in your area, and print out comps. Go take photos yourself if you have to. You can present these to the bank and ask them to reconsider the loan.

Just ask yourself: is it worth the work, and are you willing to risk the cost of an appraisal? If so, it may be worth a shot.
posted by The Deej at 7:18 AM on June 27, 2007

I agree with Jelicle.
posted by Melsky at 7:26 AM on June 27, 2007

I also agree with Jellicle. You'll be very unhappy if you mortgage your home for more than it's worth, unless you have a crazy bubble mortgage now where your payment is tripling and you'll lose your home without a refinancing.

A cash-out refinancing sounds like it will only postpone and exacerbate problems you already have. Speak with a financial advisor who can help you get a handle on your debt situation and budget.
posted by commander_cool at 11:17 AM on June 27, 2007

There is not much you can do to influence the appraiser. He is just going to drive by to make sure that it is not a bombed out shell, then price it according to recent sales of similar houses in the area. Unless you recently had a $50,000 kitchen remodel that you tell him about, he won't even set foot on your property, let alone bother looking inside. Your only strategy might be to find a mortgage broker who has a "customer friendly" appraiser.

But jellicle also has some pretty good advice.
posted by JackFlash at 2:47 PM on June 27, 2007

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