Arizona appraisals is explained here. In most cases, lenders need a professional, independent appraisal of the property you want to buy or refinance. The only exception to this rule is if you are borrowing a very small amount of money for a house that is worth much more or, sometimes, if you are refinancing with the same mortgage company. Again though, it is very rare that you will not need an appraisal any new mortgage loan.
Arizona appraisals are usually your only “up-front” out-of-pocket fee in a mortgage transaction.
“Can I use my own real estate appraisal? Unfortunately no. The banks do not allow this anymore.
What does the appraisal process entail?
A professional, independent appraiser will visit your home (or home-to-be) and inspect its interior and exterior. Photographs will be taken; rooms will be measured. The appraiser does not want to buy your home, so whatever you do, do not postpone the appraisal until you get a chance to “clean up.” A clean house does not mean that your home’s appraised value will be any higher! Please help us to help you- schedule your appraisal A.S.A.P so that your interest rate lock will be good at closing.
The appraiser will calculate the probable market value of the property considering sales of similar homes in the area, also known as “comps” or comparables. The bottom line is that the appraiser will find an average price “per square foot” of homes in your neighborhood and basically multiply your livable square footage by the average price per square foot. He or she can add value for things like swimming pools, but usually can not increase the home’s value for unnecessary extras. (For example, if two homes are identical in size, but one has granite countertops and one has formica– they will appraise for the same amount.)
The lender wants to be sure that the property is worth at least as much as the loan amount. In the unlikely event the lender would have to foreclose, they want to know that they should be able to recoup the loan amount. However, if your interest rate depends on your borrowing, for example, 90% of the property’s value and no more, the appraisal can impact your eligibility to qualify for the loan.
Can I drop my PMI with an appraisal?
In most cases, yes! Usually, you have to pay private mortgage insurance (PMI) until your home is paid down 20%. However, in today’s market, many homes have increased by 10% – 20% per year! Although PMI drops off automatically once your home is paid down 20% (about seven years), it would be foolish to wait that long. Even at a modest 6% per year increase in value, your home would qualify to drop PMI after only three years.
In other words, everybody who has PMI should have their home appraised after a couple of years to have the PMI dropped. Otherwise, the bank will treat your home as if it never appreciates and will only drop the PMI once the house is “paid down.” However, if you present the bank with an appraisal that shows your home has appreciated enough, they will be more than happy to drop the PMI requirement. After all, the bank is not profiting from the PMI– that insurance is taken out with a seperate company altogether.