Waiting on one or even two potential houses in your neighborhood to sell just for the sole benefit of trying to get a higher appraised value to complete a refinance is a losing proposition. This is because of the fact appraisals are not based on just the house next door or down the street, selling, as most would otherwise think. Appraisals are based upon several comparables within a half mile to one full mile radius of the subject property being financed. The appraiser takes into consideration the following components when doing appraisal for the purposes of getting a mortgage:
- lot size
- bedroom and baths
- square footage
Based upon what’s listed and sold, with the most weight given to solds, appraisers will adjust these four components and then derive an appraised valuation on that model. While it makes sense waiting for the house down the street to sell, so it becomes a comp is reasonable, it’s actually not, because that one comparable is not going to swing the value substantially higher or lower in any one direction. Appraisals are more of a blanket evaluation covering a larger area and multiple houses in and around a specific radius of a property rather than the probability of one or two houses selling or not selling down the street to have any heavy influence on the valuation.
If you can refinance your mortgage, or at least thinking about refinancing your mortgage, pull the trigger and order an appraisal with the mortgage lender of your choice, doing so will give the mortgage lender the best possible scenario for financing as overall values nationwide are presently higher. If you’d like to get a complementary mortgage rate quote on a refinance, start the refinance process online with us.
RELATED MORTGAGE ADVICE FROM SCOTT SHELDON
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