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Part of the mortgage refinance process is a property appraisal. Your lender hires an independent real estate appraiser to calculate your home’s market value based on several criteria, such as its size, age and condition.
The professional appraiser takes note of any home improvements you’ve made or any areas of disrepair. The entire visit generally takes between 30 to 45 minutes, but may be longer depending on the size and features of your home. Then, based on that visit and the home values of properties similar to yours, the appraiser determines how much your property is worth.
Preparing for your appraisal can help boost your home’s market value. While you don’t need to do an expensive remodel, you can tackle a few projects to improve the condition of your home’s interior and exterior.
Here are six tips for how to increase the appraised value of your home for refinancing:
Think of an appraiser as a guest in your home that you’re trying to impress. Tidying up and organizing your home helps make a good first impression.
Peeling, chipped or faded paint can give the impression that the home isn’t in good shape. And dirty, marked-up walls can date a home. A coat of fresh paint or touching up critical areas can show that your property is well-maintained.
While you might not replace all of your carpet or flooring, as you may if you were selling a house, you might want to address the obvious, damaged sections. And a thorough, professional carpet cleaning couldn’t hurt, either.
Appraisers actively look for home improvements. The kitchen and bathroom are big selling points that can affect your home’s value. Consider low-cost upgrades that are aesthetically pleasing and can add real value to your home. For example, you can replace light and sink fixtures, repaint cabinets, change cabinet hardware and refinish countertops.
The exterior of your home can be just as important as the interior. According to Alex X. Niemiera, a professor at the School of Plant and Environmental Sciences at Virginia Tech, an attractive landscape can increase the perceived value of a home by 5.5% to 11.4%. That means a $200,000 property could seem $11,000 to $22,800 more expensive.
Point out upgrades or features to the appraiser that may not be readily obvious. You may also want to mention if your tax records are incorrect. The appraiser must have all the necessary information about your home before they issue a report.
A proper appraisal can make or break your refinance. A low assessment can negatively affect what interest rates you qualify for and jeopardize your refinance approval altogether. Your eligibility to refinance may be at risk if your appraisal comes back lower than you expected.
Qualified borrowers of specific loan programs — like the FHA Streamline refinance — may have the option of skipping a refinance appraisal. But if the homeowner feels that their home value has increased, a full appraisal may be beneficial.
Here are some advantages and disadvantages of a refinance appraisal.
An appraisal is critical to your mortgage refinance. Proper preparation can help increase the appraised value of your house. A high appraisal can make you a more attractive borrower and give you an edge when refinancing, while a low appraisal can negatively affect your refinance application.
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