Your appraisal is the financial snapshot lenders need to be confident in your loan request. But unlike when buying a home, appraisals aren’t usually required for refinancing. It’s up to the lender to decide whether they need one and how many times they will ask for it. If your lender wants one, it’s a good idea to get a refinancing appraisal to know what kind of deal is available to you and how easy it will be for you to get approved. Understanding those things beforehand makes your refinance process smoother and gives you more power over your final loan terms. Moreover, a commercial real estate appraiser in Burlington can help you determine if an appraisal is necessary and help you find a qualified inspector who can get the job done quickly.
What does it mean to refinance your home?
If you own a home, chances are good that you have heard of refinancing. But what refinancing actually is?
In easy terms, refinancing is obtaining new financing on an existing mortgage loan by replacing your current loan with another loan with better terms (e.g., a lower interest rate). The term “refinance” can also refer to taking out a new mortgage instead of an existing one.
There are several reasons to consider refinancing appraisal:
- To lower monthly payments and reduce their monthly costs;
- Convert a variable-rate mortgage into a fixed-rate one; this could provide peace of mind when rates inevitably rise again in the future;
- Access equity without selling the property or paying off all outstanding debt owed against it (this option may not be available if there’s negative equity);
Why you need a refinancing appraisal
You might choose to have a refinancing appraisal of your home for many reasons. The main reason is that the lender will want to know how much your home is worth to determine how much they can lend you and at what rate.
Another reason is that if you are paying too much for your home and want to lower monthly payments, an appraisal may be required as part of a loan modification process. The lender’s underwriter must verify that there isn’t another way for the borrower to avoid foreclosure before approving any loan modification plan offered by their customer service representatives.
Finally, if none of these reasons apply but rather curiosity regarding whether or not it would make sense financially speaking, then go ahead by all means.
How to skip your appraisal when refinancing
If you’re refinancing your home, you’ll probably need an appraisal. But if you have a home equity loan and are using the proceeds from that loan to pay off your current mortgage, you can used those funds as proof of value for your property instead of evaluating it by an outside party.
If this sounds confusing or complicated, don’t worry! Contact a professional commercial real estate appraiser in Burlington for the right help.
The benefits and drawbacks of refinance appraisal
You may be wondering if you need an appraisal when refinancing your mortgage. The answer to this question depends on several factors, including the type of loan you want and whether it is a refinance or purchase.
- Benefits: You can get a better interest rate on your new loan, lowering monthly payments and saving you money in the long run.
- Drawbacks: Your lender may require you to pay for the appraisal upfront, which means spending more money upfront before getting any savings from refinancing with them and possibly losing some time.
Another potential downside is that sometimes appraisals won’t come back with accurate estimates for lenders. If this happens and the bank refuses to give you another chance at completing your job correctly before giving out loans based on inaccurate information, then there might not be much recourse available other than simply walking away from all deals altogether.
The bottom line on refinance appraisals
Ultimately, you’ll have to decide whether an appraisal is worth your time and money. The best way to make that decision is by clearly understanding what an appraisal is and what it does. If you feel it’s right for you, go ahead with getting one.
If not, there are plenty of other ways to save on refinancing fees. You need some good information about how they work. A great place to start would be by talking with a lender who can help explain all the options available so that, together with your realtor (or whoever else represents buyers), everyone has all their questions answered before making any decisions regarding financing.
Refinancing a home is a big financial decision, so understand the process before jumping in.
Refinancing a home is a complex job. Once you understand how everything works and how it affects your finances, you might even look forward to the next time you need to refinance.
Conclusion
Homeowners who are considering refinancing their mortgages should make sure they understand the process and all of its implications. One important consideration is whether you need an appraisal or not, as this can add additional time to the refinance process and cost money in fees.
A property is a huge investment. Refinancing appraisal from Nicro Realty can help you save money on your monthly mortgage payments and increase your equity in your most valuable asset. We will make your home-buying process as convenient for you as possible.
