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How the Appraised Value Impacts a Refinance

My appraiser lied and over-valued my home. Should I refinance and try to re-appraise the value of my home?

I re-financed in June/July, and received my appraisal after I signed my loan. In it, the appraiser lied and gave me a patio that I don't have, and with a new roof, new French doors, new attic stairs, and up-grades on my bathroom, but still only gave me $3,000 more than the appraisal that I had the previous August. Someone said to get the patio done, re-appraise the house and then if it is more, I could get my interest rate dropped if I took the new appraisal to the broker that I went to. Is this true?

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Bill's Answer
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Bills.com | Find Learn Save

Thanks for your question on your appraisal and your refi options. You've raised several issues, so I'll try to address them all and still answer your fundamental question as to if you can refinance your mortgage for a better rate.

Before going into detail, I can advise you to try and get a better loan quote from one of Bills.com's pre-approved lenders and see if you can get the right loan for you. Visit the Bills.com Free Mortgage Refinance Quote page and apply for a quote if that is something that can help you.

Now, to your questions:

First, many brokers will ask appraisers to do sneaky things when getting a home appraised. Since your loan-to-value (LTV) is a critical variable in an underwriting decision, the higher your home's value can be appraised for, the lower the loan-to-value and consequently the lower risk for the lender, which means a better chance of getting approved with a low rate and winning your business.

It is important for you to be aware, however, that your broker is not the one who creates the appraisal. The ultimate lender (typically a bank or wholesale mortgage company) will hire a third party appraisal firm to either pull comps (comparing your home with the value of the homes in the surrounding area) or doing a drive-by and having a professional guess at the value of the home. If your broker or appraiser lied when your home was appraised, there is a good chance a subsequent, more careful or accurate appraisal could value your home for less. You can try to do home improvements, but before sinking money into home improvements, I suggest having a new lender or mortgage broker do an appraisal for you.

In terms of getting approved for a new loan and a new rate, your home's appraised value (and, consequently, its loan to value) is only one part of the equation. The market has changed quite a bit, and if interest rates have fallen or if your credit score has improved or if your income has risen (which determines your debt to income or DTI ratio), then maybe you are a better candidate for your loan anyway.

Net-net: I'd highly recommend getting several competing quotes from lenders and then see which one is best for you!

To lean more about home refinance loans, I encourage you to visit the Bills.com Home Refinance Resources page at Home Refinance page where you will find a wealth of information about home refinance loans and the options available to consumers. Also, if you submit your contact information to the Bills.com Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the loan options available to you.

I wish you the best of luck in finding a refinance loan that meets your needs. I hope that the information I have provided will help you Find. Learn. Save.

I hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

Bills.com

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