Options: appraisal too low for refi

[noodleoo]

Please don't quote, I will DD the details.

We are in the process of refinancing, which would save us about $180 a month on our mortgage. We refi-ed last year and our house value came in at $520K, which gave us 20% equity. We are using a new agent with a different appraiser and it just came in at $485K. This is too low, so our option is to either forget it or pay $18K to bring our equity to 20%.

I'm surprised the appraisal is so low, we need to read through it see why. I already noticed a mistake, we are listed as 2.1 baths when we have 2 full and 2 half. I don't know what 2.1 means.

My question: do we have any options to refute the appraisal? Or is our only option to either forget it or pay the $18K to do it? We have the money, so it isn't a big deal. But, my job is feeling a bit less secure and it makes me nervous. We have 1 year e-fund and paying down the equity will drop our payment even further (another $75), but it makes my H nervous. What do you think?

[ijack]

Do you have the option to do PMI? We ran into a similar scenario (though it was only like $5k) and going through with the refi and paying PMI was still cheaper.
You could probably get another appraisal if you want to shell out the money for it.

[noodleoo]

Nov 27, 2012 12:15:54 GMT -5 ijack said:

Do you have the option to do PMI? We ran into a similar scenario (though it was only like $5k) and going through with the refi and paying PMI was still cheaper.
You could probably get another appraisal if you want to shell out the money for it.

I'll have to ask. If we end up paying PMI, it will probably negate the savings on the refi. I guess we could just keep our current loan. We're only refi-ing from 4% to 3.375%. We thought the equity would be there, and it is a no cost refi. At this point we'll only lose the $350 we paid for the appraisal if we don't do it.

[ssmjlm]

I would try to question the appraisal and why your house is listed incorrectly, but in my experience with a bad appraisal, there wasn't much we could do.

[jenjen]

We recently appealed an appraisal because we thought it was too low (obviously everyone thinks highly of their house but we did a lot of nice improvements at a low to us cost and did the work ourselves). We had a realtor friend help us pull some comps and wrote to our mortgage guy about what comps we are including and why the appraisal comps were bad (one house was 112 years old and 8 miles away.). Long story short, I think we got a general response that the comps we sent were "superior" to our house and tough shit . So you can fight it but don't expect it to succeed.

[noodleoo]

Thanks for the feedback guys. I looked at the appraisal more closely and they used a short sale being sold AS IS as a comp! There are a few other issues as well. I talked to the agent and he said we can make a list of issues and present them to the underwriters. We'll see if that works, but I doubt it based on your stories!

[imojoebunny]

We had this problem with an appraisal on one of our rentals. We waited 6 months and tried again with our current lender who had a different program and more incentive for the house to appraise.

The first appraiser was from a totally different area and had done little work, if any in this part of town. She used comps that are close by, but literally and figuratively on the other side of the tracks and in a school district that is horrible, where as, the house we have is in a great school district in a beautiful neighborhood. Even if he had done the appraisal based on the rent we get, she would have had a significantly higher value. Her logic was bazaar and her comps were more single family homes with crappy basement apartments added in the 1970's vs. ours was built in 1905 as a duplex for families and has been well maintained and updated.

The rate we got wasn't as good as the first lender was offering, but still shaved 1.7% off our rate. As a bonus, it builds the closing cost into the rate, so we pay nothing if it doesn't appraise.