Why Accurate Valuation Matters When Refinancing
by Aaron Campbell on Nov 26, 2019
As a home homeowner, you may wish to secure a refinance. You may purpose to lower your overall interest costs or monthly payment. As well, your aim may be to tap the home equity for another project or home improvement.
However, before the lender approves your loan, they will request for a professional appraisal. Thus, the refinancing hinges on the valuation of your property.
Valuation is the appraisal or assessment of the value of your property. It is a common feature during the refinance process. The lender may provide you with a list of third-party partners that can help you in the valuation process.
Reasons for Obtaining an Accurate Valuation during Refinancing
- Better chances of approval- A valuation with an acceptable loan-to-value ratio will enable you to get approval. Therefore, ensure that you have an accurate valuation and seek a second opinion whenever you doubt the initial assessment.
- To avoid private mortgage insurance (PMI). Were you required to pay for private mortgage insurance in your existing? A high chance is that you will have to pay after refinancing too.
However, when the current property valuation is higher than the refinancing, then you will not have to pay PMI. To take advantage of this provision, the borrower must submit an accurate valuation from a professional valuer or appraiser.
They will establish the loan-to-value ratio to determine whether you qualify for a PMI waiver.
- To obtain a lower interest rate. The value of your home will determine the rate of refinancing. Therefore, an accurate valuation of your property will help you secure a lower refinance rate.
For instance, the value of your property may be lower than the anticipated loan. Thus, the loan-to-value ratio will become higher. The lender will, therefore, charge you a higher mortgage rate since you’re a risky borrower.
However, when the value of your home is higher, and the loan is a lower percentage of this value, then the lender will charge you a lower interest rate. It translates to lower monthly payments.
- To tap home equity- A higher and more accurate valuation of your home may help you make a mortgage move that you were not eligible for before. With an appreciation in your property, you may be able to tap on the value of your home in cash-out-refinance.
The extra funds will allow you to make some improvements to your property, which is a long-term benefit.
Ways to Improve the Value of Your Property
You now know the advantages of having an accurate valuation of your home. However, you may be wondering, what are the factors that the valuer considers when appraising your property?
First, the value that the appraiser gives your asset is pegged on the market price of comparable properties. However, the condition of your home may increase or reduce its value.
Your property should be clean and neat. It should also be uncluttered to make inspection easier. When your home looks dirty and unkempt, the appearance increases its wear and tear more than normal. That condition will affect its value.
Thus, present your house to the appraiser, in the same manner, you do to a potential buyer.
Conclusion
Refinancing is a valuable exercise. It helps the borrower to access another loan with the existing property. A home with a higher value will enable the lender to approve your application.
Therefore, always ensure that you have an accurate valuation of your asset. Having a higher value will help you avoid paying private mortgage insurance. It will help you to negotiate for a lower interest rate since you're not a risky borrower.
More so, you will be able to get home equity for your home improvement or a second project.
Popular Articles
Three Places to Spend Money on the Exterior of Your Home
When you have the exterior of your home remodeled, you are investing, time, energy and convenience into the project and you want to make sure that...
85279 Views
When to Use a Brush, Roller or Sponge Brush
Brushes are a good choice for painting trim and woodwork. They are also useful for cutting in the edges around the top and bottom edges and corners...
69081 Views
Homemade Headboards-Make an Upholstered or Wooden Headboard
Homemade headboards can add a lot of personality to any bedroom. They can be coordinated with existing furniture and room decor or they can be the...
67294 Views
Creating a Cottage Kitchen with Bead Board
Kitchen decor can range from modern and bold to elegant and elaborate by using strategic kitchen pieces. One of the most popular decorating trends...
46273 Views
Gas Fireplace Diagnostics and Troubleshooting
Follow these steps for diagnosing and troubleshooting Gas Fireplaces repairs. For the average DIYer, this may seem intimidating, depending on the...
28283 Views
Latest Articles
Grooved Composite Decking: Benefits and Best Practices
Composite decking has become increasingly popular over the last decade thanks to its durability, low-maintenance, and natural wood-like appearance....
on Nov 23, 2023
Innovative Materials in Modern Rainscreen Systems
In today's world of architectural advancements, the materials we use to protect and adorn our structures have evolved dramatically. Within this...
on Aug 25, 2023
Benefits of Aluminum Windows for Homeowners
Aluminum windows have emerged as a popular choice among Australian homeowners, offering a compelling combination of energy efficiency and modern...
on Aug 10, 2023
Investment Tactics for Premium Condominiums
Singapore continues to be a magnet for property investments, with its robust economy, political stability, and appealing real estate market acting...
on Aug 3, 2023
10 Essential Questions to Ask During a Sunroom and Lanai Consultation
When considering the addition of a sunroom or lanai to your home, a consultation with a professional lanai contractor is crucial. This initial...
on Jul 24, 2023
Featured Articles
What Type of Licensed Contractor Should You Hire?
on Feb 28, 2017
Hire Contractors / Estimates

Looking for a specialty project? There are many types of contractors available for your home improvement needs. Finding the right type of...
Sponsored Articles
Grooved Composite Decking: Benefits and Best Practices
on Nov 23, 2023
Garden / Landscaping / Patio
Composite decking has become increasingly popular over the last decade thanks to its durability, low-maintenance, and natural wood-like appearance....
Innovative Materials in Modern Rainscreen Systems
on Aug 25, 2023
Windows / Siding

In today's world of architectural advancements, the materials we use to protect and adorn our structures have evolved dramatically. Within this...
Actions
Top Categories
- Garden / Landscaping / Patio — 262
- Kitchen / Bathrooms — 239
- Real Estate / Finance — 196
- Appliance / Repair — 186
- Interior Design / Decor — 184
- HVAC / Air Conditioning — 147
- Cleaning / Maintenance — 144
- Improvements / Remodeling — 131
- Plumbing / Basements — 118
- Floors / Tile / Hardwood — 115
- Doors / Garages — 113
- Safety / Security — 112
Articles Archive
More DIY Articles
Decorating for Your Kids
Decorating a child’s room can be a fun and learning experience for both you and your kids. There are so many bedrooms decorating ideas for children...
6 Ways to Save Money on Your Home Heating System for This Winter
With winters approaching, the burden on your bills is going to increase manifold. But does it actually have to be this way? Not this year. Because...
7 Reasons Why Garage Doors Will Not Open
Garage doors can play all sorts of tricks on us. They might open with some difficulty or fail to open all the way. Other times, they might go up...
My Top Techniques to Get Organised in the Kitchen
When I graduated from university, I decided to become a better cook. I know that one day I will have a family of my own to feed, and I’d prefer my...
Redo Your Dining Room to Entertain Guests
The dining room is an important space in the house, particularly as your family and friends are likely to spend plenty of time sitting around the...