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Thursday, August 19, 2010

Stress Level Code Red: Low appraisals in Home refinance process

You know they always say bad news comes in threes, so I am hoping something else that has substantial "Bad News" qualifications comes along before my big doctors appointment tomorrow.

I still do not have the energy to fully address bad news number one, which was the under valued property appraisal that I mentioned a week or so ago, but here goes, and then later I will post number two bas news.

I am sure I am not alone in this, there are many hardworking homeowners that pay their mortgages on time that have recently tried to take advantage of the great rates supposedly available in today's home mortgage market. So I will say this much on the topic of home refinancing.

We thought we were getting a 4.5%, that would have combined our 1st & 2nd mtgs, as well as paid  off car note. Sounded great, worked out to a savings of over $600.00 a month. Everything was in order, credit score and income were considered good to go, and all we needed was the appraisal. At last appraisal home was valued at $197,500., we knew the market had taken a hit, but among numerous improvements we had purchased an adjoining 2 acre lot that gave us not only more land of course, and road frontage, but also made us a corner lot property. We figured, quite frankly, that it would end up a wash, and appraise out at about the same value as last appraisal from about 7 years ago. With the give and take of market loss vs. the improvements.

Well, don't ask me how, but number one the appraisal did not include the additional 2 acres, number two the 2 of the 3 comps used were foreclosure sales, number 4 distance from subject property given was not true, and number 5 none of the comps "comparable" amenities. No fenced/gated pastures, no barn, no outbuildings of any kind, never mind a green house, no pool, no fruit trees, no mention of the multiple herbal perennial beds, never mind my beautiful persimmon trees, or our recently launched herbal tea business, none what so ever. I could go on , it was just ridiculous... Appraisal came in $30,000 lower than last one. 

So even though exhausted, and not feeling well, and knowing that the way the system is... I mean lets face it you can't argue with a computer software program, which is how all these mortgage loans are written now. It is all up to how you fit in the boxes assigned now. The people actually do very little figuring out of anything anymore. If they can find a way to fit your concerns into a box, fine, if they can't, well then you are just SOL.

Their exact words were :"As Also noted this property is on only four acres and logically far too small to have signifigant commercial potential. The highest and best use of this property is clearly residential" .

So again, no correction to note it as six acres instead of four, and I guess 2 acres do not matter anyway, obviously I and many other herbal tea businesses and home crafters of value added products have no clue, as the experts in the mortgage and appraisal industry have spoken. There is  "logically" no potential for this property as a business, therefore no added value.

In regards to my concerns about using foreclosed properties as comps I was told " the appraiser demonstrated on form 1004MC that values are indeed stable". In other words, pay no mind to foreclosures in your area, even though they are affecting my value when used as comps. There is no mortgage crisis, all is well. He met his requirements because they say so I guess.
Well enough for now, Peace Out all. I will try to get on later and finish up with bad news number two.

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