Getting an appraisal is part of the home refinance process. If your housing market has taking some hard knocks, your appraisal could come in lower than you expect. Consider some of the following things going on in your neighborhood that could affect the value of your home when refinancing.
- Foreclosures. A single foreclosure in your community isn't likely to significantly impact your home's value. But if your neighborhood has foreclosures in every direction you turn, that won't bode so well for an appraisal. Lots of foreclosure can depress the average value of homes similar to yours in the area.
- Short sales. Some homeowners are able to escape foreclosure by working out a deal with their bank to sell for less than what they owe on a mortgage. Homes in this category may go for way below the market value, which pulls down home prices in the area.
- Run down appearance. Neighborhoods where weeds have overtaken lawns, homes haven't been repaired, or that seem neglected in general could depress your home's value. If your neighborhood has gone downhill since you purchased your property, you might be surprised by a lower-than-expected home appraisal.
Your Home's Condition
Obviously the condition of your home is very important when getting it appraised for a home refinance. Among the things that are considered during the process are the square footage of your home and functional layout. The appraiser also considers the number of bedrooms and full and half bathrooms.
Don't confuse the home appraisal process with getting an inspection. The home inspection is done to provide you with a report that can help you determine what types of flaws a home may have, such as problems with the foundation, plumbing, or a leaky roof. A home inspection is a must when buying a new home, but isn't required when refinancing.