Refinance Appraisal Vs. Purchase Appraisal
A professional estimate of your home’s value can show the lender that you won’t be borrowing more money than the property is worth. Many homeowners are not aware that they will likely need a new appraisal before they can refinance their mortgage. Let’s go over some differences between a refinance appraisal and a purchase appraisal.
What is a Home Appraisal?
A home appraisal is a rough estimate of how much your home is worth. A home value professional will look around your property and survey the general condition of the home. The appraiser will also take measurements of the entire home either by personally measuring the building(s) or using online sources such as MLS, or BC Assessment, and research comparable properties in the area to determine the final value of your home.
Appraisals usually act as the upper limit for the amount of money you can borrow from a lender. This can protect lenders from financial loss and also keep you from investing too much in an overpriced property.
Refinance Home Appraisal
Home appraisals are often needed to refinance your mortgage. This process is almost the same as the process that you went through when you bought the property. In some cases, you may be able to refinance your loan term, rate, or structure without getting a new appraisal, but you will need a new appraisal if you want to change your loan type or take out a cash-out refinance.
The main difference between refinance home appraisals and the purchase appraisal is since you own your own home, you are able to attend the appraisal. This can allow you to guide your appraiser’s attention to any renovations or upgrades that you have made since you’ve owned the property and you may see a higher home value.
You will need to get an appraisal before you can qualify for a home loan when you buy a property. The only way you can avoid getting an appraisal is by paying cash for the home and skipping the mortgage.
As a buyer, an appraisal also protects you from buying a home for more than it is worth. As a seller, it may be a good idea to make last-minute repairs before you receive offers on your home. The buyer will likely request an appraisal and an inspection if you are a seller.
How to Prepare for a Home Appraisal
A low appraisal can be a problem if you are selling or refinancing your home. Try taking a few steps to increase your chances of a successful appraisal.
Make a list of any upgrades, renovations, or improvements: Some permanent improvements you’ve made to your homes such as balcony additions or kitchen renovations can increase the value of your property. Create a list of all the upgrades you’ve made to share with your appraiser.
Provide an offer list: It may be beneficial to provide your appraiser with a list of offers if you are selling your home. Multiple offers at about the same price point may indicate that the home is at the right price.
Use staging tricks: You can maximize the look and feel of your space by using a few staging techniques. Clearing your kitchen counters, adding mirrors to your walls, and even changing old light bulbs with brighter ones can make your place appear larger.
Keep in mind that the appraisal process is not the same as a home inspection. An inspector will walk around the home recording any issues and will let you know of the exact condition of the home while an appraiser will only consider the overall condition of the home. Minor repairs should not decrease the value of the home. Make sure to get both an appraisal and an inspection before you commit to buying a property.