Refinance Appraisal

If you are thinking about refinancing your home you will need to undergo a refinance appraisal. It may seem intrusive to open your home to have an inspection take place if you already have a mortgage on your home. It also may seem confusing why a second appraisal is even necessary.

What is a refinance appraisal?

The home appraisal process may have slipped your mind if you have been liviing somewhere for a long period of time. A purchase appraisal is similar to a refinance appraisal. This is important because it provides a professional opinion on your homes current value and details how much equity you will be able to borrow against.

Whats the point of a lender doing an Appraisal For A Refinance?

Your lender wants to be confident that the value of your home will cover the new balance of your new loan. This is because, in case you default on your mortgage, your lender can recoup it’s losses by selling the home. This in turn is the security of the home.

The value of your home is basically based off two main factors: the market and how it compares your home. How well you’ve maintained the home.

Homes for the most part appreciate in value especially in today’s market. They can also unfortunately go the other way. This happens frequently when you purchase at the top of the market. An economic event or drop in demand can cause the values in an area to come down. If your home goes onto the market during one of these events, you may lose value that you once had. In extreme cases, you can end up “underwater’ or “upside down”, meaning you owe more than the property is worth. If your appraised value is below what you owe, the amount you’re are eligible to borrow may be lower as well. In a worse case scenario, you may not even be eligible to refinance.


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Sierra Pacific Mortgage Company, Inc.

Sierra Pacific Mortgage NMLS# 1788. Michael Shotnik NMLS: 218281, CO License: 100017466. Not licensed in Alaska or New York.  To check license status of mortgage loan originator, visit D.O.R.A. and NMLS consumer access.