Refinance Mortgage Rates and Appraisal Values
April 26th, 2009
For all the bad press that mortgage refinance lenders get, there is one area where they catch a bad rap, through no fault of their own. It is in the case where a refinancing homeowner locks their rate based upon a reasonable estimation of the value of their home. The actual home appraisal is performed and the value is less than the estimate used to lock the rate. At this point, the home loan may have to be relocked at the current interest rates available, if the loan-to-value ratio has increased into a higher percentage bracket range. The relocked rate will most likely increase, and in many cases, the blame is attributed to the lender.
This is not a fair assessment of the lender, as they have no control over what the appraised value will come in at. In times such as now, when home prices are plummeting at a rapid pace, it is tricky business to get a solid estimation of home value before the appraisal. In fact, many homeowners are locking refinance mortgage rates after their appraisal is complete, to avoid any shift in rates after the fact.
Entry Filed under: Business