Appraisal Questions
Question: Now it is in very good condition minus a water leak by the chimney that has caused some water damage. By estimates it will take about $5000 to get everything back into shape. When the bank does the appraisal for the loan should it come in at $44,000 (since HUD came in at this price) or $69,000. I want to take a second out on this property and need the appraisal to come out as high as possible. Any help on how this works would be greatly apprciated!
Answer: When you get an official appraisal done, they will do it by 3 different methods, including replacement cost and neighborhood comparables. But when these 3 numbers are combined to be a single market value, the appraiser will almost always set the final price to be the same as the purchase price. The bank isn’t really looking for the actual value, they just want to make sure that it is worth at least what the loan is going to be. The appraiser is safe since the ultimate value of a property is what a buyer is willing to pay, and a seller is willing to accept.
Once you are in the house, you normally have to wait a year to get a new higher appraisal for a home equity loan. If you don’t need the higher value, you can simply use your purchase appraisal (most lenders will accept that for 3, 6, or 9 months). You may find exceptions to this. One exception is if you make a lot of improments, or for a rental, you raise the rent.
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Filed under: Home Equity Loan
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