Home loan refinancing can allow you to take advantage of lower mortgage rates, thereby reducing your monthly payment and your overall interest costs. Before approving a refinance loan, however, some lenders require a professional property appraisal.
But, that isn’t the case for mortgages through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Both offer streamline refinance programs, and neither require appraisals.
If you can skip the appraisal process, should you do so? Or is it better to go ahead and get your property appraised? Here’s a look at the pros and cons of each approach.
Advantages of Refinance Appraisals
For some homeowners, getting a property appraisal before home loan refinancing can be a smart move. Reasons you may want to consider this option include:
- If your home value has increased, you may qualify for a better mortgage rate
- A higher valuation can enable you to get more cash out when refinancing
- A new loan-to-value ratio may be sufficient to avoid private mortgage insurance (PMI)
Disadvantages of Refinance Appraisals
Not all homeowners can benefit from getting an appraisal. Skipping the process may be in your best interests if any of the following apply:
- Your home value has likely decreased due to a rash of foreclosures or short sales in the neighborhood
- You’re hoping to lower your monthly mortgage payments to free up the budget, and don’t have the hundreds (or more) you would need to your property appraised
- You don’t want to spend time and money staging your property, which may be necessary to secure higher home value
- You don’t want to risk a low valuation, which could result in restructuring of your refinance loan or even disqualify you for home loan refinancing
Research Before You Consider Refinancing
In order to avoid any unpleasant outcomes, do some online research. Several popular real estate websites offer general property appraisals – simply enter your address to see an estimate of your home value.
As an alternative, you could also ask a local realtor to complete a market analysis of your property. This should give you a good idea of what to realistically expect from a professional appraisal.
If your research leads you to believe your property has increased in value, getting an appraisal might be best – even if your home loan refinance program does not require you to do so. On the other hand, you may want to skip appraisals if you would rather not take the risk or spend any more funds than necessary.
Are you considering mortgage refinancing? If you live in South Jordan, Toole or the surrounding northern Utah area, turn to the home loan refinance experts at Integrity First Lending.
At Integrity First Lending, our experienced team can answer your questions and offer advice on refinance appraisals. To explore your home loan refinancing options, contact us today.