You may need to find an appraiser to give your mortgage lender an unbiased opinion of the value of your home. The purpose of an appraisal is to verify that your home has sufficient value to justify the amount of the loan.
When you refinance your mortgage, you do not always need to find an appraiser and complete the formal appraisal process. Whether or not you need an appraisal before a refinance depends on your loan-to-value (LTV) ratio. This is calculated by taking your home’s value and dividing it by the outstanding balance on your loan. Another factor that impacts whether you need an appraisal is what kind of mortgage you are applying for.
Even if you qualify for a mortgage refinance program that does not require an appraisal or you are eligible for an appraisal waiver, there are still benefits of completing the appraisal process. When you have an appraisal done, you can confirm your home’s current value and prevent overpaying for your new mortgage. And if you do not have an appraisal done, you might still have to pay mortgage insurance if the existing data shows you don’t have enough equity to avoid it.
Your lender can give you the final word of if you need to find an appraiser before you finance your mortgage. But if you decide to go through with this process, count on us at Simpson Real Estate Appraisals to provide a fair estimate of your home’s market value.