Recently, we’ve seen a trend in home refinancing as current homeowners seek to take advantage of lower interest rates. What homeowners may not know is that refinancing a house often requires an entirely new appraisal. An appraisal is typical during any home sale in which the buyer requests loan approval. The appraisal works to determine the market value of the home as set forth by the property’s location, features, age, and other factors. When applying to refinance your home, the bank will send an appraiser out to assess your property in its current state. Here’s what you need to know about a refinancing appraisal.
Revamp the curb appeal
Appraisers care about the exterior appearance of your home and consider it when calculating the market value. Ensure your home’s lawn, walkway, front door, and windows are clean and clear of debris. You may consider repainting your home as this is a huge value booster but doesn’t require much money or time. Replace cracked address numbers or even get a new mailbox. Fix and fence latches, sprinkler heads, doorbells, or porch lights. Make a positive first impression on the appraiser by performing small fixes on your home’s exterior.
Repaint and declutter
The appraiser will take note of chipped paint, drywall damage, cracks in concrete, or other small defects. They may require that repairs be done prior to closing on the refinancing, so we recommend fixing these issues ahead of time to urge the process along. Be sure to remove unnecessary clutter from the interior of your home; this will better showcase the rooms, closets, and other features.
Make sure household items work
Over time, small items in the house, like light switches, faucets, outlets, and overhead lighting may develop small issues. A leaky faucet, cracked or missing outlet cover, flickering light, etc. can communicate to the appraiser that you don’t perform routine maintenance on the home. Perform these repairs to ensure your home is in good working order.
Spend money on repairs that boost value
Upgrading the kitchen and bathroom appliances and fixtures can greatly increase the value of your home. These rooms see the most use and are easily dated based on their design. If an appraisal is required with your refinance, it’s important to let your lender know that you’re doing repairs or renovations on your home. If you’re in the middle of renovations, the appraiser will usually mark the appraisal as “subject to completion” and you’ll need to finish the renovations prior to closing on the refinance.
Most refinancing situations require a home appraisal before the bank will approve. Set yourself up for success prior to the appraisal by performing routine maintenance, replacing broken fixtures, and cleaning your entire home, inside and out. Advise the appraiser of any ongoing renovations prior to their visit so you are both aware of how they’d like to proceed.
Refinancing a mortgage is a great way to gain additional funds for a renovation, purchase, or savings.
By Michaela Phillips. Michaela is the Vice President of Mortgage Lending at Guaranteed Rate, Inc. Contact Michaela at 303.579.5517, e-mail [email protected] or visit michaelaphillips.com. NMLS: 312874.