Other Reasons to Get an Appraisal
- September 25th, 2020
- Matt Frentheway
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An essential aspect of selling or buying a home is the appraisal. An appraisal on a home is an unbiased evaluation of what the property is worth. This is done by a certified or licensed professional. The appraisal includes an in-person inspection of the home and its condition along with comparable home sales in the market and within the neighborhood.
This is a necessary part of the selling and buying process because a bank isn’t going to lend money for a home if the home has been appraised for less than what the loan amount is for.
It is a common understanding that an appraisal is necessary for the buying and selling of a home, but there are other situations where an appraisal can save you money or might even be required. Here are some of those situations…
When it comes to refinancing your home, you’re basically swapping out your previous mortgage for a new one. This often happens when the value of the home as changed over the time of your ownership. Because of this, lenders will request an appraisal to verify the amount of the new mortgage is justifiable due to the most current worth of the home. If the value of the home has declined it may be difficult to obtain a new loan. However, if the home has gone up in value, it may be possible to pull some money out as part of the refinance.
Before putting your home on the market
If you’re unsure of what you want to list your home for, you can hire the services of an appraiser to conduct a pre-listing appraisal. This will give you a better idea of the home’s market value. By doing a pre-listing appraisal you can decide on an asking price that is realistic, therefore making a quick sale more likely.
Home Equity Loan
A home equity loan is different from refinancing. They are an additional loan to the mortgage that already exists. The amount you’ll be allowed to borrow in a home equity loan is largely based on the equity your home has after the value of the remaining mortgage is deducted from your home’s current value. You might not be eligible for a home equity loan if the value of your home has decreased.
If you’re looking to get another type of loan such as a business or cash loan, your home might be needed as collateral. Similar to home equity loans, the bank will want to ensure the money it would be lending is supported by whatever the most up to date value of your home might be.
Tax Assessment Appeal
Property taxes are determined by your home’s fair market value. If your home’s value that is on your property tax bill seems high, or if the cost of homes in your city or neighborhood has gone down, you might be able to appeal.
Having an appraisal done could give you a strong case, which would hopefully lower your property tax. This process varies depending on the state so before you go through the whole ordeal make sure you find out if your state will allow a homeowner to submit an appraisal on this type of appeal.