Getting a cash-out refinance could provide the money that you need to upgrade your home. Whether your goal is to renovate your existing kitchen or to have an in-ground pool built in your backyard, a home mortgage loan may be used to secure financing for your project. Prepping your house for a favorable appraisal could increase the amount of money that you can borrow.
A residential appraisal report is needed to determine the value of your home. Therefore, a state-licensed appraiser will need to compare your home against properties that are nearby.
An appraiser should not compare your single-family residence against multi-family properties or commercial dwellings. However, an evaluation of homes that are similar in size and style will give an appraiser the most comparable homes to evaluate.
Generally, an appraiser is looking for properties that are closest in square footage, proximity, design, age and condition to the subject property (your home).
If a recently sold residential property has more amenities than an appraiser would find in your home, certain adjustments are made to balance the value. For instance, a home that is similar in size with an additional bedroom might be more desirable to buyers in your market area.
Based on recent sales with a similar bedroom count, an appraiser can determine whether your home is inferior to a home with more bedrooms and enter monetary adjustments accordingly. For instance, your home might lose $5,000 in value because a nearby five-bedroom property is more valuable than your four-bedroom home.
While it would not be practical for most borrowers to add a bedroom or to remodel a bathroom prior to an appraiser’s visit, you may be able to make your home more aesthetically appealing.
Declutter - Remove any items that are unsightly or that are out of place in your home. Having several large boxes in your kitchen might be ideal for storage, but if it reduces the natural beauty of your home, you should move the items into your garage or into your attic prior to an appraiser’s arrival.
Clean - Take a few days to thoroughly clean your home. Instead of a typical cleaning for the holidays or for a special occasion, you should clean your home as if you were putting it on the market to sell. While your friends and family members are likely to overlook mild carpet stains and blemishes on your hardwood floors, an appraiser is trained to assess the condition and the estimated lifetime usage of certain materials.
The same is true for your appliances. An old stove or refrigerator might look like an immediate replacement is warranted. However, with some extra attention and polishing, an appliance might resemble a solid antique that could last for years.
Sprucing up exterior areas of your home can enhance its curb appeal, too.
Repair - Fixing several items could go a long way toward increasing the appraised value of your home. For instance, peeling paint and other defects could signal to an appraiser that your home has some deferred maintenance issues that detracts from its original luster.
Applying some paint to a wall or room, gluing loose wallpaper or adding some cement to a loose brick that is on your porch or front steps could enable an appraiser to look at the overall ambiance of your home versus taking notes of needed repairs.
An appraisal is an assessment from a licensed professional that reflects an opinion about a property and nearby comparables within a uniformed report.
As a homeowner who is seeking to refinance, an appraisal that is significantly higher than your current mortgage balance could enable you to borrow more money.
Additionally, an appraisal that is much higher than the amount that you want to borrow might lower your loan-to-value enough to secure a more attractive mortgage interest rate, which could also lower your monthly payment on a 30-year fixed-rate mortgage loan.
Prospect Financial Group is here to assist you with any questions about refinancing or the home appraisal process.
Contact us today to speak with one of our licensed mortgage experts.
Prospect Financial Group
948 Garnet Avenue
San Diego, CA 92109
NMLS: 349089 | BRE: 01837707
Jason Vondrak has been in the mortgage industry since 2004 and co-founded the mortgage brokerage Prospect Financial Group in 2006 in San Diego, California. Today he serves as President and CEO of Prospect Financial Group and the president and founder of Prospect Property Group, a real estate development company, established in 2012.
“I’ve had the privilege to serve in an industry that exists to ensure homeownership remains among the top priorities of government and citizens alike. Over the years, it has been a pleasure working alongside homeowners, real estate professionals, and business associates combining efforts and teaming up to help homeowners realize the dream of home ownership.”
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 365482
948 Garnet Ave
San Diego, California 92109
Phone: (858) 605-0952