Interest rates are at extreme lows, enabling people to either refinance their mortgage or get qualified to purchase a new home.
The problem is, however, that appraisal values are consistently coming in lower – a clear indication that real estate values have not hit rock bottom just yet.
Homeowners and homebuyers alike are getting a taste of just how difficult it is to have their home appraised… at the necessary value.
For example, if you’re a homeowner and looking to refinance your existing mortgage, the value of your home is one of the most important factors in getting your loan approved. Time after time, these people submit their loan application, get their credit run, provide all the necessary income & asset documentation, pay for an appraisal…. just to find out that the value of the home isn’t high enough for the loan to be approved. This is an ongoing difficulty that many homeowners are finding out the hard way.
Homebuyers have it worse. They have to go through everything a homeowner does.. and more. Since there is always an agreed-upon escrow period (30-45 days on average), the home buyer is under pressure to perform… and quickly. Not only do they have to provide all the necessary documentation to the lender for approval, a lot of times they begin packing up their belongings in preparation for the move; they get emotionally attached to the home they’re about to purchase, etc. And when the appraisal value comes in lower than the purchase price (which is quite often in this market), they have to make the difficult decision of either coming up with the difference or having the seller lower the price – a very difficult & stressful decision any way you cut it.
With appraisal values killing deals left & right, homeowners & buyers must be as cautious as possible before deciding to refinance or purchase. The more due diligence one can perform prior to investing all that time & money, the better off you’ll be.
