What are some common issues with appraisals?
When you buy or refinance a home, the property is used as collateral for the loan. To reduce their risk, most lenders require an approved appraiser inspect the property. The appraiser is responsible for providing a report about the property to the lender. The report includes their opinion on the overall condition and the estimated value of the home. However, the appraiser is generally looking for major issues or concerns regarding the property and is not a full-fledged home inspector. You should consider hiring a home inspector to be sure you are fully comfortable with the condition of the property.
Periodically, appraisals can create issues for borrowers during the application process. Typical issues include: When interest rates remain extremely low, many appraisers are unable to keep up with the large demand. Some can get booked for eight to twelve weeks in advance, seriously delaying final loan approvals. In some parts of the country when home prices are rising very rapidly, appraised values can actually be lower than asking prices. If you are purchasing a home and the appraised value comes in lower than the purchase price, you may have to increase your down payment to qualify for the mortgage. Low appraisal values can often cause problems for homeowners who want to refinance. This can occur when the homeowner has already used maximum financing (greater than 95 percent LTV) to acquire the property and the value of the property has not appreciated enough to refinance. This can also be a problem when the value of the property has declined since the time the property was acquired or refinanced. Ask your real estate agent for advice on local conditions.
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