Refi/WWYD poll: Should we get a 2nd appraisal, or no?

In My Humble Opinion
1

Frickin’ mortgage mess. Thankfully, we missed the worst of the storm, but we are certainly getting caught up in the storm’s waves. UGH.

Okay, so here’s the situation: Back in April, a new program went in place that allowed homeowners with Fannie Mae/Freddie Mac loans to refinance their homes up to 105% of its value at the current morgage rates. This was music to the ears of homeowners like us–people who bought in 2007 and had 20% down, watched their down payment and equity disappear as the housing market deflated, and are now stuck with the higher rates on a loan that is either about what the home is worth, or slightly more. We have never missed a payment or been late, are well within the limits, and have outstanding credit (I learned mine is over 800 now, suh-weet).

We started the refi process practically as soon as the program went in place, and paid $400 to have the house appraised by our refi guy’s preferred appraiser. (Some agencies do not charge for the appraisal, but you wind up paying a higher rate.) Our home appraised at the magic number (though it’s at about 103% of what we owe, so it’s tight), and our loan rep spent MONTHS chasing people to fund the loan. Several investors initially were willing to participate in the program, but one by one, week by week, we watched them back out. We even got as far as rate quotes with some before they got cold feet.

Finally, finally we got approval and an investor who will fund the loan. BUT–the home needs to be re-appraised. New requirements (passed since we started the process) state the appraiser must have absolutely no connection or contact with the loan/mortgage rep. I understand, since I’m sure it was the appraisers working with the mortgage reps that played a part in sending prices up.

We have to pay for this appraisal as well–another $300-ish. This time it’s an appraiser an intermediary selects at random. If the house appraises for a similar acceptable number and the refi goes through, the mortgage guy will reimburse us for this second appraisal in the closing costs. He cannot reimburse us otherwise.

So, here’s the thing. We run the risk of paying the $300, having our house appraise below where it should, and be out a total of $700ish and still be stuck with the higher rates.

BUT, if it does go through, we will save about $400/mo on our mortgage, as well as go a month without a mortgage payment ($$!!). With baby #2 on the way, that is some pretty darn helpful money. After chasing this stupid refi for months, I’m tired, frustrated, and a bit defeated, but I want this damn thing.

FWIW: Our home is in a very stable neighborhood. There are no bank-owned properties in sight, and in fact, only one has even been up for sale in the two years we’ve been here, and it sold fairly easily. We are just finishing a MAJOR kitchen remodel…when we had the house appraised in April, we still had the 1950s-meet-1970s hideous, outdated, space-sucking going on. Now, we have brand new everything. That’s gotta help a little, right?

Our refi guy called his appraiser to get his input; according to the appraiser, our home should still be holding its value in the range he had previously assessed.

So…what would you do? Fish, or cut bait?

2

As far as I can see, you are mostly just worried about the risk of losing $300 for nothing. (The $400 you have already paid is gone either way.)

So as far as I can see, you estimate you have a less than 50% chance of losing $300, and a greater than 50% chance of gaining more than $400/month. The choice seems clear.

(Though I understand your frustration – sounds like a long runaround, and I don’t blame you for being tired of it! Hope it works out!)

3

A couple of questions, and you may not be able to answer them - the appraiser will only have one comparable in your neighborhood (maybe not even that - you mentioned the sale was in the past two years, but if it’s more that one year old the appraiser likely won’t be able to use it). Is there a similar neighborhood near yours, from which the new appraiser is likely to select 2-3 comparables? How are values in that area compared to yours? Where did the first appraiser select comparables?

The kitchen remodel should boost your value for sure. Make sure you request the appraiser send you a copy of the appraisal to see if that was done. It should be an adjustment on the grid on Page 2 of the Fannie Mae Form 1004.

4

I’d go for it. The one done in April is less than 6 months ago, plus you’ve finished your kitchen re-mod.

And I’d also request a copy of the appraisal. They are not required to give it to you, but your loan officer will usually provide a copy if you ask for it.

5

I think that if you pay for the appraisal, you have the right to a copy of it. It’s when you don’t pay for the appraisal (for example, if you do a refi with no closing costs) that they don’t have to let you see the appraisal because they paid for it.

6

The appraiser’s client is the entity making the loan. They don’t have to give a copy of it. The entity making the loan doesn’t either. Most of them will, but no, they don’t have to. You would think that since you paid for it, you’d automatically get a copy, but that’s not the case.

ETA: Unless rules have changed in the last two years.

7

That house sold well over a year ago, so it apparently won’t be of any use. Bummer.

I’m sure there is, but I don’t know where. The appraiser had to use a comparable neighborhood–which one, I don’t know. Something to definitely call and find out.

Looks like we’ll likely be going ahead and getting the second appraisal. My knee-jerk reaction was "Are you fucking KIDDING ME?"as seriously this whole process has been one delay after another after another, and I’ve had my hopes raised only to crash down a half dozen times. It’s been, You can have this if you find THIS paper. Okay, now THAT paper. Okay, now file THIS. Now fill out that. We’re almost there! Oops, no, they want this now. Oh, now they want that. AUGH!

This was just another major setback, and one that spooked me. That, and we’re sitting here staring bug-eyed at another $350ish expense, with our first payday in two months a few days away and our summer savings nearly sucked dry (not one of the perks of teaching, though the summer off sure is). And, a, erm, expensive red light ticket to boot. Boo.

But, we shall see. Ay yi yi.

Thanks for the objective responses–hubby and I are too close to this, and our initial reactions were both quite emotional. Ugh.

8

No, they haven’t. But it never hurts to ask for a copy.

9

We just got a flyer in the mail from the realtor who represented the sellers of this home, saying a house about 2 blocks over sold for $8,000 under what ours appraised for. Theirs, though, has an additional bathroom.

FTR–how accurate is www.zillow.com? I’m looking up estimated home values in our neighborhood, and some of them make no sense to me. Like–our home appraised (on zillow) for significantly higher than our neighbor’s next door (like, $100k higher), despite the home having slightly more square footage maybe 100sf), a slightly larger lot (maybe 1000sf), one more and one more bathroom than we have. WTH? I know they don’t have a/c, but that can’t account for $100k in difference and negate a bathroom, can it?

Also a thought–our home had an addition built in 1981. It is permitted, and we found papers showing it was inspected and approved as meeting permitted requirements from something like 1993 or so. However, all these docs online (zillow, as well as the official ones my refi guy uses) list the home with its old square footage. What gives there?