If you are considering a home refinance there are some things you should be aware that should be avoided. Here are the 10 top mistakes people make when refinancing a home:Drawing On Your Home Credit Line Before Doing A Home Refinance

Many lenders have “cash out” waiting requirements or “seasoning” as it is referred to in the industry. That means they want to see a set period of time elapse once you have withdrawn equity from your home prior to issuing a new loan. Cash-out followed by refinancing may indicate a pattern of irresponsible credit use; a red flag for a lender. This could lead to stricter requirements and possibly a rejection of your loan. The typical waiting requirement is six months.

Taking On A Second Mortgage Before Refinancing On Your First Mortgage

A lot of mortgage companies look at the combined loan amounts (i.e., the sum of the first and second loans) even when you’re only doing a home refinancing your first mortgage. Don’t be surprised if your first mortgage lender requires you to pay off both your first and second mortgages. Check with your lender to see if having a second loan will impact your refinancing.

In some instances lenders may allow you to keep your existing second mortgage while refinancing only the first. This is done by obtaining a “subordination agreement” from the lender who provided you with your second mortgage.

Paying For An Appraisal When You Think The Appraised Value May Be Too Low

Don’t pay for a formal appraisal if you think the home has a low appraised value. Home value is determined by many things, including the home’s location. Both lenders and Realtors use a market analysis based on the value of homes in your area to determine value. Paying for an appraisal shouldn’t be necessary.

Their comparable rate comparison should allow them to determine if your home is within the expected parameters of the financing you have requested. Especially in today’s market where home prices have stabilized or even declined a little, it pays to save your hard earned cash.

Not Doing A Break Even Analysis

Evaluate the money you will spend in getting the home refinance loan to determine if it is cost effective. It’s important to compare the total loan costs with how much you will save each month by lowering your monthly payment. Very simply, just divide the transaction costs by your anticipated monthly savings to figure the number of months you will have to stay in the loan to recoup your refinancing costs.

For example, if the costs of the home refinance total $2,000, and your monthly savings are $50, your break-even point is 2,000/50 = 40 months. In this case you should only refinance if you plan to stay with this new financing for at least 40 months.

Failing To Choose The Best Home Refinance Loan

There is more than one home refinance loan out there. There are fixed-rate loans, adjustable rate refinance loans, etc. While we at 1-800BadCredit don’t recommend the adjustable rate mortgages (ARM), there are people who insist on them. The loan that is best for you depends on your situation. We don’t recommend them because many people have been caught in a squeeze situation with ARM loans and have been unable to qualify to refinance.

For example, in some cases a 15-year term is better than a 30-year term and vise-versa. Think about your long and short term goals before you refinance and choose the loan program that fits those goals best.

Paying Too Much For Mortgage Insurance

Mortgage insurance, or PMI, is what you pay on your home in case you default on your mortgage. PMI adds a lot to your mortgage payment, but you don’t have to pay PMI if you have an 80% equity stake in your home. If you refinance at less than 80% then you could wind up paying too much for PMI.

Using Your Current Lender When Doing A Home Refinance

Although you may have an excellent history with your current lender, you may not always get the best deal when considering a home refinance. That’s the reason why we give you so many choices.

Your original lender will need the same documentation as any other lender. Each time you refinance your financial picture has to be re-verified. You will be subject to re-qualification, even if you have developed a relationship with your lender. So you might as well shop around and get a couple quotes just to make sure you’re getting the best rates and fees.

Not Getting A Good Faith Estimate

You always want a written Good Faith Estimate (GFE) when securing a home refinance loan. Within three working days after receipt of your completed loan application, your mortgage company is required to provide you with a written GFE of closing costs. However don’t make the mistake of shopping for your mortgage via a simple GFE.

In fact, if the GFE has a substantial portion of the fees marked zero may be a warning sign that not all fees are being disclosed up front. Be sure to ask if all the fees are accurately reflected on the document.

NOTE: if you are considering a “no cost” home refinance many of the fees may be blank. Be sure to ask.

Not Getting Your Rate Lock In Writing

Know the length of time the rate lock is in effect and check all particulars, such as APR, closing costs and any other fees that are listed. A loan officer can tell you verbally that the rate is a certain amount and the interest rate can change radically within the next few hours based on the economic rates that are always in flux. When a mortgage company tells you they will give you the home refinance loan for a certain amount, get a written statement to that effect, the length of time it’s guaranteed and any other particulars about the loan. This information is readily available by a Rate Lock Commitment. Request a copy for your records.

Signing Documents Without Reading Them

Never sign documents in a hurry. And don’t expect to read them at the time of signing. Sitting in front of the escrow company’s desk having form after form thrust at you for signing is intimidating and can make reading them thoroughly difficult.

As soon as possible, request a copy of the home refinance loan documents in order to review what you will be signing at the close of escrow. This way you can read them at your leisure and get any questions answered ahead of time.

Make sure you understand what you are signing! Don’t be afraid to ask questions because you are entering into a long-term relationship. Be sure to bring your Good Faith Estimate when you go to sign the final papers.

Video related to home refinance

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Frequently question about home refinance

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Reference: Advantage Mortgage; National Federation of Realtors; Harris-Rush
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An appraisal helps determine the market value of your property. This is also known as the fair market value comparison or a market analysis. A home appraisal is an estimate of the worth of your property in an open and competitive market.

Whether you are buying, selling or trying to get a home equity loan, an appraisal is important.  Being the seller, you would want the best possible price for your home and the appraisal process can help you. On the other hand, a buyer has to know whether the appraised value of the property is less or more than the asking price.

If you want to hire a professional to appraise your property, be prepared for an expensive and time-consuming appraisal.  If you want a quick and affordable one, you can consult a service on the internet that could access all the data and report to your fast. Both appraisals contain the same important information and have the same guidelines.

A good appraisal should be an unbiased, professionally based opinion of your home and its market value based on the quality of functionality, appearance, construction and the value of similar homes in the real estate market.

Steps in a Home Appraisal:

1.  Your homes’ value can be estimated by comparing similar homes that have sold recently. You can initially appraise by looking at the neighborhood and find similar property in the neighorhood that have the same surroundings, lifestyle, income, average age and home values. Recreational facilities and amenities should also be considered.

2. To determine the price of your property, you should be able to compare it to the fair market value. This process uses the principle of substation. This means that the maximum value of your home is set by the price of comparable substitute home for a certain day and time.  You should at least find three homes that have sold recently that have the same amenities and characteristics that your home have.

3. Make the necessary value adjustments between similar homes and your home. This put the properties being compared as equal. The comparable homes are adjusted to get the value of the subject, which is your home. Do not adjust the value of your property.  If the two similar homes are identical with yours, except that your home has a deck, then it means your home will have a higher appraisal value than the two homes in comparison.

To get ready for an appraisal, it is necessary to clean your home and make it appear cozy and conducive to living. Clutters should be removed and if possible, you can upgrade your home and add a fresh new paint to it. This could add to the appraisal value of your property. The best way to an appraisal is to have a thorough research of the final criterion. The value of comparable properties in the neighborhood, determine the market trends.  Be alert on this and change your selling strategies and timing in order to get much benefit from an appraisal.

Watch the video related to home appraisal

Quicken Loans TV takes you through a full home appraisal inspection in this informative video – part 5 (outside, the exterior of the home and a discussion of comparables) of the Quicken Loans Appraisal series. A home appraisal is something youll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com

Help answer the question about home appraisal

Are home appraisals by a county tax assessor generally the same value as a home appraisal, or are they less?
I recently inherited a house. The value appraised by the county tax office was recently determined. It’s about $100K lower than the market value based on an independent survey of comparable homes in the neighborhood done a few months ago. From what others have told me, the county’s appraisal for tax purposes is generally much less than the actual market value. Is this true?

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Don’t jump into anything blindly or sign any real estate contract or home mortgage loan contract or any type of contract without giving it serious thought. This year alone, Americans are expected to borrow $1.33 trillion in acquiring 7.4 million houses, condominiums and co-ops. If you have monthly obligations like car payments, credit card payments, personal loan payments, student loan payments, etc., be sure to take these into account when you’re determining your bottom-line affordability figure.

Be careful when working on your real estate financing; if you make too many loan inquiries, with applications, it may look like you’re shopping for credit; this can be a glaring red flag for many lenders. If you’re working with a local builder within a sub-division or housing development and just making carpeting, lighting and appliance selections for a brand new home, you’ll probably be able to get a standard mortgage loan; but if you’re hiring contractors, electricians, plumbers, and painters, you will probably need a construction loan, which provides funds to pay the subcontractors as the work progresses. Get an estimate of your real estate financing closing costs from the lender you’ve chosen; by law, the lender is required to provide his statement to you within three days of receiving your loan application.

When financing real estate it’s important to know that a low FICO credit score does not mean you won’t qualify for a home loan or home mortgage. Some lenders may impose limits on how much of your down payment can come from borrowing from other sources. 15-year fixed-rate mortgages mean consistent monthly payments for all 15 years that you have the mortgage; you build equity even more quickly than with a 30-year or 20-year loan, and paying less in interest, you save money in the long run.

Keep in mind that adjustable rate mortgages are best for homeowners who aren’t planning on staying with a property for a long period of time. If you’re buying a second home or second property, you’ll need to identify the sources for your down payment, since you will not be selling your current house and using the proceeds, and you’ll need to expect a larger monthly payments for housing or other expenses too. If you have a less-than-perfect or a ‘bad credit’ credit report it may not be a problem.

With adjustable rate mortgages the initial interest rate is usually lower than with a fixed-rate mortgage and the monthly payment would also be lower. There are plenty of options that are ideal for those who have a few bad credit marks on their credit report. The real estate financing situation for each buyer is unique.

Disadvantages of an adjustable rate mortgage include the possibility of increasing monthly payments if interest rates go up. People usually are not aware that they may be able to customize their loans; just ask the mortgage broker or lender; although lenders advertise 15-year loans and 30-year fixed rate mortgages, applicants can ask for 20 years, 25 years or any other number of years; this may allow borrowers to build up equity faster but keep monthly payments affordable. If you’re having a problem getting a home mortgage and the seller still owes money on the home you can check with your lender and see if you can get a wraparound mortgage; although not legal in all states, it will allow you to pay the monthly payment on the existing mortgage and an additional payment to pay the difference; make sure that a wraparound mortgage will not trigger a due-on-sale clause.

If you’ve applied to other lenders, when you finally do select a good lender you may have to explain why there are other inquiries from lending institutions on your credit report. If you do borrow money for a down payment it must be disclosed to the lender or if any of your money for your down payment was a gift, provide proof for it.

Take your time, study all the resources available online and offline and get lots of advice from several mortgage and real estate brokers and professionals before you do any real estate financing or investing. You have to be careful not to assume that you can cut back on your expenses and stretch yourself into a house payment; you don’t want to be cutting into healthy eating habits by eating fast food or junk food for a house that you may not be well enough to live in for a long time – consider this when you first start out searching for the best real estate financing. Remember that buying a home may be the single biggest investment you’ll ever make; invest carefully.

Watch the video related to real estate financing

Quicken Loans TV takes you through a full real estate appraisal home inspection in this informative video – part 1 (steps of the appraisal and the front room appraisal) of the Quicken Loans Appraisal series. A home appraisal is something you’ll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com

Help answer the question about real estate financing

I cant afford a four year degree in Real Estate or Finance, but to get into property managment I read you have?
to have a four year degree in real estate, finance, business managment, accounting, or liberal arts. I really want to get experience in real estate, but people usually get hired if they have a bachelors or masters degree. I really want to do this and I got a ton of books from the library Im going to read. Is there a way to get experience so I can get into property managment without a formal education? Any advice or suggestions would be much appreciated.

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For more information on bad credit real estate financing and finding the best home or commercial loan or mortgage go to http://www.Real-Estate-Financing-Tips.com a real estate broker’s website specializing in real estate financing tips, help, quotes and resources including refinancing and creative financing

One of the most important aspects of the short sale business is determining the value of the property you have under contract. It’s impossible to formulate your offer to the short sale lender without knowing the home appraisal value of the property you are interested in. Likewise, knowing the appraisal value of the property is just as important to the loss mitigator at the bank. The loss mitigator must establish an appraised value for the short sale property so he has a baseline price for negotiation. The appraised value of the property establishes the playing field on which we negotiate the short sale price of the property.

Getting Property Comparisons The best way to determine the home appraisal value of a property is by using property comparisons (comps). Look at the properties in the same area of the short sale property.

You can get these comps with a little effort. There are a few ways to find market value comparisons for your area:

• Subscription programs (one is Haines, a subscription service on disc)
• Multiple Listing Service (MLS) if you have access
• Network with a realtor who can pull comps for you
• Free comps services on the Internet

It’s not recommended that you use the free market comparison services found on the Internet. These free services are worth about as much as you pay for them. If you have to spend some money getting comps, that’s a good thing. It means that someone is actually doing research behind the website or program.

Finding Home Appraisal Value: An Example A busy real estate investor may outsource their home appraisal needs to another company or a certified FHA appraiser.

When a deal comes in the real estate investor will email the FHA appraiser, the address and owner’s name. In about 24 to 48 hours the appraiser will send back a limited desktop appraisal with three comparison prices on other similar sold properties and the market value that the appraiser has determined for the property that the company is interested in. The appraisal may also include some additional information and a map.

This appraisal gives an idea of the market value of the property in comparison with other distressed properties in the area. When looking for comps, don’t look for sales of well maintained properties, instead look for comparisons of other properties in foreclosure, REO properties, or corporate-owned properties.

Be Prepared to Pay for it!
Companies spend money getting their comps because they want good, accurate market value comparisons. When you are figuring the budget for your short sale business, remember to allocate some funds to pay a company or a certified FHA appraiser for that home appraisal. It’s well worth it to pay for a home appraisal so that you have accurate comps from third person parties or neutral parties outside of your short sale deal. You present their appraisals as objective evidence to convince the bank to accept your short sale offer.

Factoring in Cost Estimates for Repairs The physical condition of the property is just as important as comps in a home appraisal. See if there are any repairs to be made on the short sale property. Make notes of what’s wrong, take photos, and get construction estimates for the cost of repairs.

When you do your cost estimates remember that the bank will be making the repairs, not you. Get cost estimates from a general contractor the bank would typically hire.

The best way to get cost estimates for your home appraisal is to hire a certified home inspector. You can look one up in the yellow pages. There’s also an organization called the National Association of Home Inspectors (NAHI). NAHI has high standards and finding a home inspector affiliated with this organization is a good way of making sure you get a thorough inspection.

A typical home inspection can take two and a half to three hours. The inspector gets up on the roof, checks the crawlspace and goes over the home with a fine-toothed comb. On completion of the home inspection the inspector hands over a report that can be 20 pages with detailed information about the property defects. Home inspectors may also takes photos and provide detailed cost estimates.

Paying a home inspector to get cost estimates is a great way to calculate the home appraisal value for your property. You’ll know exactly what’s wrong with that house because you’ve gone to a neutral third party expert.

Getting the Cost Estimates: An Example Dan Shields is a typical home inspector. He’s a member of NAHI and does all of the home appraisal evaluations and repair estimates for many investors.

Dan states that a home inspector will start an inspection from the outside of the property to get a look at the big picture. He’ll check the roofing, gutters, siding, and windows to make sure they’re properly installed and flashed. He will also check out porches, columns, etc.

From there the home inspector enters the home for the interior survey, to document built-in amenities, appliances, and flooring. He will next go to the mechanical room and check the heating/cooling package and plumbing. Finally, the home inspector will check the attic and find the insulation factor for the short sale property, literally working from the ground up on the home inspection.

A Broker’s Price Opinion Value
When you complete your home appraisal and submit the short sale package to the bank you will be assigned to a specific loss mitigator who will want to determine their own estimate of property value.

The loss mitigator orders the bank’s appraiser to go look at the property and get a broker’s price opinion (BPO) or market value. Sometimes it’s done by a realtor, sometimes an appraiser. It’s your job to be the contact person that the appraiser goes through to get into that property. It’s very important that you meet the appraiser at the property to convince him your home appraisal value is about the same as the BPO value.

When you meet with the bank’s property appraiser let him know the property is in foreclosure and that you’ve been working with the seller to try to do a short sale with the bank. Get that point across immediately.

You don’t want the meeting with the bank’s appraiser to be a confrontation. This is first impression time, so just be yourself and let your personality shine. Shake hands with the property appraiser. Get to know him for the five minutes before you start shoving your material on him.

The whole BPO process will probably take less than 15 minutes. You have 15 minutes to let your personality shine so make it your best effort.

During the BPO When you go out to these appraisals, take three things; a copy of the Real Estate Purchase Contract with your offer amount, your market value comparisons and a copy of your home inspector’s report

Try to present the material in a conversational tone. Ask if he’d like a copy of the offer you have made on the property and so on. If it’s an appraiser, he will always want a copy. Realtors are a different story—you can never tell what they’re going to take. Just ask and see what he’ll take from you. An appraiser will always take the property inspection report because it’s a good, neutral indication of property damage.

Let the appraiser know that your Purchase Contract has been at least preliminarily accepted by the bank and that’s why he is appraising the market value. You’d be surprised how often the bank’s appraiser doesn’t even realize the property is in foreclosure.

You also want to share comps with the home appraiser. Most of the time, app
raisers have pulled comps before they go out to the property, so you may be able to share comps to get an idea of the BPO. Make sure the appraiser knows about specific problems with the property such as; mold, termites, or foundational problems that are not readily apparent. This is something the appraiser won’t spot during his 15 minutes with the property.

Once you get these three documents into the hands of the bank’s home appraiser chances are higher that the bank’s BPO comes in close to your home appraisal value. When you get a good home appraisal value and cost estimates on that short sale property. You’ll have armed yourself with the best tools in convincing the bank to accept your low short sale offer.

Pick up more information about real estate shortsaling at Real Estate Investor.com. This is the place to go for the latest real estate news and advice. You’ll find a network of other real estate investors ready to help you out, along with free articles, blogs, contracts and documents for your use

Watch the video related to home appraisal

Quicken Loans TV takes you through a full home appraisal inspection in this informative video – part 2 (kitchen appraisal and basement appraisal) of the Quicken Loans Appraisal series. A home appraisal is something youll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com

Help answer the question about home appraisal

Do I have to pay for another home appraisal?
I paid for a home appraisal for refinancing. My loan agent told that she could use that appraisal for another lender just in case things didn’t work well. Now she told me I needed to do another home appraisal for another lender. Do you have any advice for me not to waste my money?

About Author

Colin Egbert is an experienced
Real Estate Investor with plenty of short sale techniques to aid fellow investors in their quest to succeed and make huge profits. He’s the author of the ebook “Getting Started with Short Sales” providing the tools needed to start your own real estate investing business. Colin is also the CEO of Realestateinvestor.com a website dedicated to helping investors make the most of their business.

A full home appraisal may cost you anywhere from $250 up. It depends on the charging methods the real estate appraiser uses. The home appraisal fee could vary depending on where you live and the type of property being appraised. The appraiser might base the fee on the property value and the complexity of the appraisal.

A home appraisal will involve the Certified Real Estate Appraiser visiting your property for an inspection. He or she will take photos, measurements and prepare a full home appraisal report including real estate market comparisons.

#1. Adds Credibility To Your Asking Price

Home buyer’s are suspicious of price and will probably believe that your asking price is grossly inflated. A formal written home appraisal could put a stop to any argument. A written home appraisal (by a Certified Real Estate Appraiser), is irrefutable evidence that the price was arrived at in a scientific way, rather than just by “pulling figures out of the air.”

A real estate appraisal should include photos, measurements and details of comparable property sales. It is a professionally prepared valuation document prepared by a Certified Real Estate Appraiser that you can show to any prospective buyer.

A full home appraisal can be the best way for a motivated, serious home seller to determine the most profitable asking price.

#2. Speeds Up The Whole Sales Process

Having a full written appraisal can put everyone’s minds at ease. The buyer will feel assured that they are not being taken advantage of. No one likes to get “ripped off.” Having a full home appraisal may “fast track” the negotiations, as your buyer may have more confidence in finalizing the deal.

#3. Helps The Buyer Qualify For Mortgage Finance

A full written appraisal my help the buyer borrow the required funds to buy the property. Lenders always want “hard” evidence of a property valuation before they are willing to risk their money. More than likely, the lender will insist on an appraisal that has been prepared by a Certified Real Estate Appraiser.

#4. Stops Bargain Hunters Disputing Your Asking Price

A written home appraisal might prove to be good ammunition to fire back at “bargain hunters” who will try to pressure you into selling your home at a “giveaway” price. A written appraisal is hard for any real estate buyer to argue against.

Watch the video related to home appraisal

Quicken Loans TV takes you through a full home appraisal inspection in this informative video – part 4 (upstairs appraisal and an overview of the steps of the appraisal process) of the Quicken Loans Appraisal series. A home appraisal is something youll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com

Help answer the question about home appraisal

What should i do before a Home appraisal?
Im in the middle of an appraisal and I need to rise the price of my home about 10,000 dollars in order for them to drop the PMI and the extra fees that come along with not owning 20% of the property. I already finished off a 12 by 12 room above the garage and we added new Appliances in the kitchen but for the most part that is it. Does anyone think that will be enough?

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Your home might be worth more than you think. Whether you’re happily settled, or getting ready to sell, it never hurts to know how your investment is doing, especially if you’ve lived in your home for a long time. Population increases, new homes or amenities nearby, and economic trends can all impact on property value, and might change how you feel about your investment.

As an expanding industry, property valuation has become very accessible to homeowners who want some quick numbers. There are a variety of new property evaluation services competing to appraise your property first, and many of them are free. As a result, service from traditional home evaluators has also improved dramatically in recent years.

Getting a home value estimate from a professional appraiser is still the most reliable way of checking your home’s value. In the U.S., the quickest and easiest way to find someone for this is through the Appraisal Institutes’s list of Associate Members. The Appraisal Institute is the largest and oldest group of professional real estate appraisers in the world, with more than 22,000 members. Here you’re likely to find one or two home evaluation professionals in your area, no matter how remote it is. A typical fee from an appraisal institute associate can range anywhere from $200 to $500, depending on the size of your property, and number of buildings on it. Outside the U.S., prominent industry groups include the Appraisal Institute of Canada, and the Royal Institution of Chartered Surveyors.

A professional real estate appraiser can typically use three approaches when evaluating your home: the cost approach; the sales comparison approach; and the income approach. The cost approach estimates the value of your property by summing the land and depreciated value of any improvements, while the sales comparison approach examines the price of similar properties in your area, and the income capitalization approach capitalizes an income stream into a present value, for commercial and investment properties.

Many real estate professionals also offer home appraisals, which they commonly referred to as Comparative Market Analysis. This service usually involves the sales comparison approach, and is almost always offered free of charge, since real estate agents see it as a valuable lead generation tool. A real estate agent can also provide a reliable referral to a professional appraiser.

While hiring a traditional appraiser might provide the most accurate estimate of your home’s value, many property owners are taking advantage of free home appraisal services that offer a less accurate figure. The most prominent of these is real estate media source Zillow, which compiles as much information as possible on an area to provide home value estimates.

Knowing your home’s value can help you plan for the future more effectively, and decide whether or not it’s time to sell. With all the property evaluation resources available these days, you can check up on your investment with little stress and effort.

Watch the video related to home appraisal

Why you should get a real estate appraisal as discussed on CNN.

Help answer the question about home appraisal

Where can I get a free appraisal on a mobile home?
Does anyone know where I can obtain a free mobile home appraisal? I’m looking at purchasing a 1993 Liberty and would like to have an idea of its value. NADA charges $30. I’ll use them if I absolutely have to, but if anyone knows a free site, help me out please!

About Author

Twin Cities top urban REALTOR® Andy Asbury knows Minneapolis condos and loves helping clients make intelligent real estate decisions. He represents clients seeking to rent, buy or sell at the Carlyle Minneapolis which has brought New York style luxury to Minneapolis. Come discover it for yourself!

Think about why this is true. A good appraisal is the best reassurance that the lender won’t lose its pants on the transaction. If the borrower defaults, the lender still has a marketable property that can be sold to recoup its losses. All of which makes it understandable why lenders are so picky about appraisals. And with recent changes in the industry, the focus by lenders to obtain good appraisals is at the forefront.

Appraisals typically cost anywhere from $350 to $400. However, if the house is gigantic, multi-unit or in the boondocks, it could run more. The cost varies on property type, location and square footage.

The most common type of appraisal is the Uniform Residential Appraisal Report (URAR). It consists of interior and exterior photos and sometimes (depending on the age of the home), a complete cost breakdown of the property and comps (comparison sales of homes nearby that meet the proper criteria). These comps help determine the “market” approach. Each comp sale is adjusted in value when stacked against the home being evaluated (the one you’re buying or refinancing). Usually you will see a comp below the value of your home, in line with the value of your home, and a third above the value of your home. Kind of like the three bears. But if the valuation gets tricky, you can see fourth, fifth and sixth comps. The net value of the comps is estimated based upon the approaches used to come up with the appraised value of your property (meaning the appraiser performs some type of calculation that’s kind of like an average, but not necessarily a true average. Confused yet?)

URARs also, typically but not always, reflect a cost approach, which determines what the value would be based upon what is estimated it would cost to rebuild the home, less depreciation. The final estimated value of the home is then determined by using a melding of the market approach described above and cost approach (if applicable).

Lori Babb, Staff Appraiser for Mortgage Investors Group of Knoxville, TN, further explains comparables. “The best comparables are those similar in size, style (ranch, basement rancher, 2 story, etc.), age, and are close in proximity to the dwelling being appraised,” she explains. “Unique properties will typically require more adjustments than the average properties.”

So, say you’re Bill Gates and want to secure a mortgage on a $200,000 home (I know, it’s ridiculous, but I’m trying to make a point). He’s got the best credit profile a lender could imagine, yet the house appraises for $175,000. Deal or no deal? You better believe it’s no deal. The sales price will have to be lowered, or Mr. Gates will just have to pay cash for his new home (you think he can afford it?). The point is, your average Joe won’t go ahead with the deal without a price adjustment, and he will be obligated to pay for the appraisal regardless of the outcome of value.

Dan Tyrell, principal of Knoxville area’s Tyrell Appraisal Service, Inc., has this comment about value, “When determining value of a single family house, beauty is more than ‘skin deep’. Fresh paint, new carpet, new appliances, and nice landscaping all enhance the marketability of a house. Not so obvious items also impact the appraised value of a house. For instance older houses that have replaced plumbing/electrical systems, updated HVAC systems, newer roofs, replacement windows, etc. lower the effective age of the property which in turn increases the appraised value.”

There are other types of appraisals that are not as common, like an Automated Valuation Model (or AVM). In this case, different factors combine to ensure the value of the home (it’s worth $200K, but your loan amount is only $100K) and your unbelievable credit worthiness (800 credit score!), allowing you to skip purchasing a typical appraisal. You may also only be required to get a “drive by” appraisal, where the appraiser just inspects the exterior of the subject for size, looks at the lot and makes you wonder who that person standing by your mailbox is.

Most lenders control what appraiser is used to determine the value of your home. After all, it’s their money on the line. The appraisal is such an important factor to the mortgage transaction – make sure you’re satisfied with the results. Your lender will make sure it is satisfied!

Watch the video related to home appraisal

Quicken Loans TV takes you through a full real estate appraisal home inspection in this informative video – part 1 (steps of the appraisal and the front room appraisal) of the Quicken Loans Appraisal series. A home appraisal is something you’ll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com

Help answer the question about home appraisal

How to obtain a copy of my home appraisal?
I purchased a house 2 years ago and asked for an appraisal of my home at closing. To my knowledge, it was never sent to me. I’ve tried to contact the loan officer i worked with to see if she would have a copy of it in their records. She will not answer or return my calls. I need to have it by Sunday if at all possible. Does anyone know if my loan officer would have the appraisal in the first place, or do I need to enquire about it somewhere else?

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Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.