The last couple of months have seen interest rates drop to at one point 4.65% which many people are taking advantage of by refinancing and reducing their monthly mortgage payment. However I have found a couple of trends that I thought worth mentioning.
1) While the headlines have been about the loss of home values most people think it is happening elsewhere and their home values have still increased.... well not necessarily. You may live in a great neighborhood that doesn't seem to have many foreclosures or bank-owned properties but the longer houses sit on the market the lower the price goes. So if you just bought your house less than 6 months ago I can pretty much guarantee that the value didn't increase by 50%. If it stayed the same you are doing great. This is a time where people who didn't use their house as an ATM and decided that equity is a good thing are benefiting -their house may not be worth as much as it was 2 years ago but it is still worth more than they paid and they can refinance. Rates fluctuate - now is a good time to speak with your mortgage person about what the rate needs to be in order to make it cost effective to refinace. The more you know now the faster you can proceed if the rate goes where you want it to be.
2) Appraisers - our profession states that an appraisal is our opinion of value based on what the typical buyer would pay for the subject property. This is pretty easy to do on a purchase because in most cases the buyer is "typical" and you know what they are paying. On refinances that isn't the case and appraisers that are "form-fillers" are having a tough time.
Your appraisal should be unique with each report - every property is different so I find it irritating when I read an appraisal report and the only change that was made was the address. This is a time when as professionals we need to step up and do our research to figure out within +/- 3% what is a realistic value for the home that we are appraising.
I would say that it is just as bad to UNDER appraise the value of a home as it is to OVER appraise. Obvioulsy the bank doesn't mind if someone comes in too low because it protects their interests but as a professional that isn't what our job is to do.
A neighbor recently showed me their appraisal and it had more legalese addendums protecting the appraiser then it had about their home, their neighborhood and what was happening with values in the area. If you are an appraiser and feel that you need 5 pages of protections than maybe you should spend more time on the work you are doing.
Another neighbor stated that their appraiser was only in their house for 5 minutes. Well I typically stay longer than that but really being in the home is the shortest amount of time that I spend in the process - the research before I go out and then the analysis once I return takes me the longest when putting together a report. I also pride myself in writing detailed information about the property so that the bank and underwriter feel like they have walked through the house themselves.
As a homeowner that is refinancing or buying a home you have a right to a copy of the appraisal. Take the time to review it - you may or may not agree with the value that is stated but I think it is important to understand how the value was deteremined.
Thank you, we'll be in touch!