Did you know that 43% of homeowners with a 30-year mortgage loan are eligible to refinance their homes? If you are considering refinancing your home, you are in the place. You might not realize that a big part of refinancing depends on the appraisal your home receives.
If your home’s value is less than your loan then you will not be able to refinance. Keep reading to learn the top home appraisal tips to help you successfully refinance your house.
How Appraisals Work
First, we want to make sure you are aware that there are two types of refinancing transactions where you will not need an appraisal. If you are doing a Veterans Administration (VA) Interest Rate Reduction Administration or a Federal Housing Administration (FHA) refinance. Every other refinancing will need an appraisal.
Because of the housing crisis that happened a couple of years ago, the government stepped in and placed a few regulations on how lenders and appraisers have to deal with the appraisal process. The lenders will order the appraisal via a third party known as the AMC or Appraisal Management Company.
The appraiser that is chosen should have knowledge of the local area and they have to follow the Uniform Standards of Professional Appraisal Practice that the Appraisal Foundation has set forth.
Preparing for an Appraisal
When you are preparing the house for the appraiser, it is different than preparing your home for a potential buyer. When you prepare for a buyer you are triggering emotional responses and setting up the home to make them visualize the buyer living in it.
With an appraiser, they will be looking for any problems and asking questions as they go along. Do not be surprised if they lift carpets up to see how the floor looks underneath. When you are preparing make sure that any issues that you know about you take care of them before the appraisal appointment.
Make your home as comfortable as you can. Making it more comfortable will influence the assessment. Put away the kid’s toys that are laying around and do a final check of your property’s curb appeal.
What Are They Looking for?
The appraiser will look at all of the recent sales in your area that are comparable to your home when they are giving your home its value. You want to make sure that you take the time to clean your home inside and out. This will not only give the appraiser a better first impression but it will also make it easier for him/her to inspect the home.
If you have any pets, make sure that they are contained and that it does not smell like pets inside the home. Keep in mind that technically it does not matter if the house is a mess or your lawn is not mowed but an unkept or dirty home will give the illusion that your home has a lot of wear and tear and it will affect the final value.
Appraisers look at how many rooms your home has, the condition of the outside of your home and the condition inside, and the condition of your HVAC system, plumbing, and electrical systems. If you have any detached garages, pools, hot tubs, decks, porches, this can add value to your home as long as they are well kept.
You might want to consider spending some money on improvements that will pay off. If your bathroom or kitchen can use a bit of updating, this investment can add thousands of dollars to your home’s value. Replacing sinks that are dated, faucets, and light fixtures can help your home appraise higher.
If you have time before the appraisal, consider buying new appliances, updating the floors and cabinets.
Make Sure Everything Is Working
If you have a beautiful home with a ton of modern features that are not working then you might end up with a lower appraisal than you want. Go through your entire home and check every fan, vent, outlet, and light switch to make sure they are working.
Any visible cracks in the walls make sure to repair them before your appraisal date to make sure that the mortgage company is on board with your refinancing.
Clutter Be Gone
If the home is cluttered inside it will affect the appraised value because it is an eyesore and gives a negative illusion of the maintenance on the home. Take the time to declutter the basement, garage, and closets before the appraisal appointment. If you have too much stuff you might want to consider renting a short-term storage unit to put everything in temporarily or donate them to someone in need.
If you have really large oversized furniture you might want to remove them or put them in storage for a bit as well. Larger furniture will give the appearance of clutter and less square footage.
You want to take the time to do your own research before your appraisal. Look at what the local properties that are similar to yours are selling for. The reason you want to have an idea about it is that local property values play into the amount that your home is worth.
Time to Apply Our Home Appraisal Tips
We hope that our home appraisal tips will come in handy and help you out when you are ready to refinance your own home.
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