Typically, I do not have any complaints about the Appraisal Process. Ultimately, the Price Listed by the appraiser is based on the sales within the neighborhood over the past 3 months to 1 year.
This week was not a great week for appraisal values in my area. In one situation, the borrower did not currently have Mortgage Insurance (required for loans over 80% of your homes value). The borrower insisted that the home was XXX amount, even though there were signs leaning towards the home being slightly less than that amount.
Well, we moved forward with the understanding that we may need to come up with other alternatives, should the appraised value become less than expected. Sure enough, the home was $20K less than the client anticipated (and even a few thousand less than what we thought the value would be).
Unfortunately, that meant that the borrower would be able to still refinance to a MUCH lower interest rate.... however, because they needed Mortgage Insurance now, much of the savings would be lost because the MI amounts have increased so much (specifically FHA MIP Premiums).
After we ran the numbers again, the overall savings to this client did not justify the interest savings.
For the second client, the home also came in low. But with this situation, we were still able to save the client a ton of money in interest. Sure, they are having to add MI, but they are also combining the 1st and 2nd mortgage, and lowering the interest.
In most cases, I only have Appraisal Issues when it comes to refinancing a home. During purchase transactions, it typically means the buyer/seller need to negotiate on the price a little biit. The other time that an appraisal could mess with a purchase transaction is usually with FHA loans. For FHA Loans, the appraiser must be a little more thorough with thier analysis to ensure the home is in livable condition.
Overall, I have had many good experiences with the new appraisal process (knock on wood).
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John R Cannata P#214.728.0449
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