Home Equity Loans & Appraisals

home-equity-loansRefinancing your property’s current mortgage can be a great way to save money.  When a property’s mortgage is refinanced, the terms of the original loan will change. In most cases, the interest rate will be lowered. The length (term) of the loan can be shortened or extended. Most property owners will refinance their mortgage in an effort to reduce the monthly payments. This is typically achieved when the interest rate being offered is lower than the interest rate on existing loan. In order for a lender to refinance a property’s mortgage, they will need to know the value of your property.

How Real Estate Appraisals Can Help

The lender will obtain a commercial or residential real estate appraisal to determine if the mortgage can be refinanced. This will usually depend on the amount of equity available in the property. The equity available in the property is difference between the amount owed on the mortgage and the property’s value. If a mortgage of $100,000 was obtained to purchase a property that is worth $150,000, then there is $50,000 in equity present. As payments to your mortgage are made, the equity in your property increases. The lender will look at the equity within your property, as well as your debt to income ratio and credit history. These are the main factors that will be reviewed in determining if the lender will offer to refinance your current mortgage.

How Home Equity Loans Can Help

Home equity loans are another option offered by lenders, which allows a property owner to obtain an additional loan (2nd mortgage) using your property as collateral. Very similar to a refinance, the lender will obtain a property appraisal to analyze the amount of equity existing in the home. Home equity loans typically have lower closing costs when compared to refinancing your property’s mortgage. The interest rates on a home equity loan are normally higher than the rates on a 30 year fixed mortgage. These loans are usually a short term option for owners with equity available in their property.  Home equity loans will typically have a fixed interest rate. A home equity line of credit (HELOC) is different from a home equity loan. A HELOC is a revolving line of credit which usually has an adjustable interest rate, where a home equity loan is a lump sum loan.

Whether you opt to refinance your current mortgage or obtain a home equity loan/ line of credit, the value of your property plays an essential role in the process. The lender will need to know what the property is worth. When going through a refinance, the property owner will not have any input on the appraiser that is selected to value the property. The lending institution will assign an appraiser for a real estate appraisal. This may also be the case when obtaining a home equity loan or home equity line of credit. It is in the property owner’s best interests to provide the appraiser with any and all information that may be relevant to the property’s market value. This may include any renovations or improvements made to the property, as well as any comparable sales or listings that may give an indication of the property’s value.

Need a Home Equity Appraisal? Call Domus!

Domus Appraisals has been providing refinance and home equity appraisals since 1971.  We have worked with all the major lenders in the US and performed appraisals for many of the smaller lending institutions. Our level of experience and knowledge of the local areas enable us to provide high quality appraisals within the time frames expected. When Domus Appraisals is completing the appraisal of your property, you can be confident that an accurate valuation will be made. Call us today at 1-866-939-5979 or fill out a contact form.