Dealing With A Low Appraisal On A Sonoma County Refinance Loan Part 2

A Sonoma County Refinance Loan will require an appraisal in order to determine the value of the property the mortgage lender will lend against. Unlike the purchase transaction, the refinance deals solely you as the borrower, the mortgage lender and the real estate appraiser who has been hired to do a valuation of your property.

Here’s how to deal with a low appraisal on a Sonoma County Refinance Loan.

Let’s say you believe your value of your home is $300,000. You only owe $200,000 on your property and you are trying to reduce your monthly payment with today’s low mortgage rates. After the appraisal is ordered, the valuation comes in at 220,000 changing your loan to value to 90% from 66%.

Obviously, you’d be upset if your appraisal came in lower because that signifies less equity in your property.

What to do?

  • Assess the situation-look at the comparables of the properties used in your appraisal. How close are the properties? Are they within a 1 mile radius of your home? Did these comps take into consideration the square footage and the bedrooms and adjust for differences? All of these things can affect the value.
  • Have any properties sold on the market since your appraisal has been completed? Believe it or not this actually happens more often than not, because properties are being bought and sold everyday. If other properties have sold which are considered to be comps for your home, talk to your mortgage lender and ask them to send those into the appraisal company for reconsideration of value.

What happens if the needed appraised value comes in however, the underwriter feels the comps don’t work?

This happens very frequently. Lenders trying to make sure they are doing integrity mortgage lending. They have a fiduciary responsibility to their investors and are only trying to make sure risk is minimized. It’s a byproduct of the current lending environment Be prepared for it.

How was your mortgage loan originally structured?

Was your loan structured as a conventional loan when it should’ve been an FHA loan? Maybe your loan could’ve been structured as part of the HARP program (making homes affordable).

For example if your loan is owned by Fannie Mae or Freddie Mac you may not even need an appraisal, omitting the loan to value restriction anyway. An internal valuation would be given by the computer system that mortgage lenders use provided by Fannie Mae and Freddie Mac.

What is your time frame like for living in the property or holding the property?

If you plan to keep the property for the foreseeable future, it might make sense to simply pay the difference in mortgage debt in order to get an interest rate with today’s rates. Presently 30 year fixed-rate money is near 4% for little or no points. If you have the ability to pay down your principal balance, and you know you’re going to keep the property for a very long time and mathematically the interest savings and/or cash flow make sense, then consider paying down your balance to complete your Sonoma County refinance loan.

Dealing with the low appraisal on a Sonoma County refinance loan can be manageable.

If your home appraisal comes in lower on your refinance loan, you have options. Conduct the research, have a conversation with your mortgage lender and determine what makes the most sense to you financially. Low appraisals don’t always happen, but they do happen from time to time.

Get a complementary mortgage rate quote our refinance loan today. Learn about to deal with a low appraisal on a Sonoma County refinance loan.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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  1. […] an appraisal is the only way to determine what your home is worth if your loan is not owned by Fannie Mae or […]



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