Real Estate Appraisals for Refinancing Mortgages

Some tips taken from the New York Times this weekend for refinancing your mortgage.

Again and again, you hear about mortgage rates hitting historic lows; now you’re thinking it’s time to refinance. But one hitch may hold some homeowners back: declining property values.

Millions of homeowners nationwide have either no equity or negative equity in their homes, and they can usually refinance their mortgages only by paying extra at the closing, or what’s known as a cash-in mortgage.

Those considering refinancing will need to determine the current valuation, comparing it with the mortgage balance. If the balance is at least 15 to 20 percent higher than what you owe, you’re ready to refinance without what would amount to a second down payment.

One option before a homeowner approaches a lender is to check the “comps” — comparable homes in the neighborhood that have sold in the last three to six months. Look for recent sales on Web sites like Homegain, Trulia or Zillow, or check local sites produced by real estate companies or run by Multiple Listing Services. Many of these show homes for sale or rent; to gain access to data on sold properties, you can check with local agents.

You may also go to the county assessor’s office and looking up specific homes that have sold recently in your neighborhood. Share your findings with the bank’s appraiser to try to ascertain the amount you want to borrow.

Just before your home is scheduled for its official appraisal, spend a few hours touching up and making sure it looks well maintained. Hire a cleaning person. Repair any broken windows. Gather up any documentation on upgrades you have had done — for instance, changing out the furnace, adding skylights or replacing appliances. This can help show your home is in good condition, and may be reflected in the value.

Find out what comps the appraiser is using, and make sure that he or she excludes “distressed properties” or foreclosures, Then be sure to ask for your copy of the appraisal, so you can decide whether it fairly reflects your home and neighborhood. If you feel it’s inadequate, ask for a second appraisal, and even a third. Gather more information on your home and its value, and keep trying.