When you take out a mortgage the appraisal is part of the package sent to underwriting at your lender.
It doesn’t matter if the mortgage is to purchase your home or to refinance, you must have a recent appraisal in order for the lender to approve your home loan.
Mortgage appraisals use a market comparison to determine the value of your home. The appraiser will compare the recent sale price of three similar properties in your area to determine your home’s value. A “similar” property is one with the same amount of square feet, bed and bathrooms, features, property age, and geographic area. The similar properties also need to have sold within the past six months.
If you’re refinancing your mortgage will you always have to get a new appraisal? Not necessarily; if your appraisal is fairly current, usually within the past two years, your broker may be able to work around you paying for a new appraisal.
Declining Property Values
After the real estate bubble burst many homeowners across the country found their property values declining. In many areas of the country homeowners found they did not have enough equity in their homes to qualify for refinancing after the lender ordered a new appraisal. If this is your situation and you have an adjustable rate mortgage that is scheduled to reset soon and you will no longer be able to afford the payments the FHASecure program may be able to help you qualify if your payments are current.