Last time I wrote about my refinance plans, I failed to follow up on what happened, partially because I was so dissappointed in the results. To make a long story short, at the end of last year, our appraisal came in far too low for us to afford to proceed with the transaction. We threw the towel in and decided that we would try again when the market looked better for us, despite the fact that we had already paid for a pricey appraisal.
Fast forward 6 months, and we have just locked in our rate at 4.75% for a 30 year fixed loan. We are thrilled! Our house appraised for $45k higher than it did just 6 months ago. This is due to a couple factors: the market has improved, but also, we have had more similar sales in our neighborhood. I remember when our first appraisal came in I thought it was rediculous! I knew that if I put our house on the market to sell that we would do far better than what this appraiser was telling us. However an appraiser doesn’t look at what COULD be. They look for hard facts – closed sales within the last 3 months within one mile of the subject property.
Lesson learned: before you spend money on an expensive appraisal, take a good look at your possible value and see if you can afford to do it. Talk to your mortgage broker and ask, “If my house appraised at X dollars, how much cash would I need to close the transaction?” Be very conservative in your estimate so that you aren’t dissappointed later.
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