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View Full Version : PSA: Historic Low Rates. If you are not re-fi'ing b/c you think it won't appraise...



hey101
Jul. 9, 2010, 12:29 PM
We looked into refinancing our farm last year when rates were really low, but decided not to move forward because we didn't think it would appraise for what we needed to make the refi work.

With the recent rates at historical lows (and now we are REALLY happy we didn't get this to work last year! :D), we decided to go for it- after all we only needed it to appraise for ~$150K LESS than we paid for it 6 years ago. :rolleyes:

Well, it appraised for MORE than we bought it for! We have recovered all of our equity (of course, this is minus the $$$ we have sunk into capital improvements.... but we'll take it!) And we are lowering our interest rate by 1.25% and are going to save $1000/ mo on interest alone. This is in spite of the fact we currently rent it and had to add ~0.5% to the rate for an investment property. Otherwise the rate could have been almost 2% points lower. We are beyond thrilled.

So the PSA is... your farm may not have lost as much value as you think. Zillow and websites like that just cannot account for the uniqueness of certain properties; they pull data from every McMansion around on 5000 sq ft lots.

MistyBlue
Jul. 9, 2010, 12:55 PM
We just refinanced too, about 2 months ago. To lower our mortgage from a 30 year to a 15 year. With the new rate, wrapping the credit card balance into the new mortgage and dropping 9 years off the mortgage (we were 6 years into a 30 year) we still dropped our payments by $400 per month. Would have been a lot more per month had we refinanced a 30 year again, but we hate having a mortgage for long. :winkgrin: (who really doesn't, LOL)
And our farmette appraised $20k higher than I thought it would...it appraised $90k over our purchase price 6 years ago. And was compared against other same size, same acreage homes in the town with horse facilities. But then we've got a lot of those.
Sad thing is...the comparables on the market and recently sold were lower because of the crappy condition they were in. Original rotting wood siding badly in need of painting (and in lovely colors like mustard) and falling down fences and peeling barns and original kitchens with Harvest Gold or Avacado Green appliances, etc. And by the photos and drive by viewings, nobody owns a mower or weedwacker. :no:

Folks, if anyone is going for a refi, there will be an appraisal. Spruce up the house and grounds a bit...that counts as much as it does if you were to sell.

Congrats Hey101..isn't it nice to knock down payments? Imagine what you'll save over the life of the loan. :D Hmm...the cost of an indoor! :winkgrin:

We're thrilled with our refi...came at a good time right after we just finished paying off the tractor and the truck...and with paying off the CC we have no other debt than the mortgage. Just in time too...youngest starts her senior year in HS and college tuition looms. :eek: Again. Have you seen tuitions lately????? :eek: :mad: :eek: She's been looking at Hofstra. $50k!!!!!!!!!!! Uh...ouch and :no: .

cyndi
Jul. 9, 2010, 01:15 PM
.


Zillow and websites like that just cannot account for the uniqueness of certain properties; they pull data from every McMansion around on 5000 sq ft lots.

I have several properties and Zillow is wildly inaccurate on all of them IME. On one of my properties, they have it at less than I paid for it 15 years ago, and less than what the land ALONE is worth. I refinanced that property last year and had an appraiser who had no idea about land values and it still came in $50K MORE than what Zillow says it is worth. Their value is about half of what it is really worth, in today's market. They are also way undervalued on the farm we live on.

TrotTrotPumpkn
Jul. 9, 2010, 01:50 PM
Zillow is wildly inaccurate about my 1949 house in town as well. Using assessed value. Which hasn't been updated in a really, REALLY, long time (ssshhh--they haven't even caught what we paid for it).

In this case I'm not complaining!

jetsmom
Jul. 10, 2010, 01:09 PM
Zillow is a joke.

2DogsFarm
Jul. 12, 2010, 05:49 PM
OK, I admit to considering a refi to do several things:

1- repair the foundation leak that is certainly not going to fix itself anytime soon. This is a repair that is needed eventually if not sooner - leak is not critical, more of a nuisance right now.
When it rains me & shopvac are BFFs for about an hour. No damage has resulted aside from marks on the cement flooring and cinderblock walls where the water comes in.
I've already gotten 2 estimates - each around $5K to fix the leaks.

2- replace the roof with metal roofing to match the barn. Existing asphalt shingle roof is in decent shape, so this replacment is purely cosmetic.

3 - pay off credit card - this is an Equity LOC so interest is low - 8% - but I fully expect terms of any refi will demand I pay it off

4 - pay off small balance car loan

Will the pre-refi appraisal mark down value due to the foundation leak since I am using refi money to fix that as #1 priority?
If so, should I do a cleanup - paint basement floor/wall to cover up the evidence or will a bank appraiser see through that?
Last time I refinanced - about 3 years ago - I don't recall an appraiser needing to see inside the house.
Outside should pass an inspection - looks livable if not BH&G front page material.

cyndi
Jul. 12, 2010, 08:21 PM
I have refinanced several properties and never had an appraiser to see the inside before -- but I refinanced last fall and appraiser did, indeed, need to see inside the house. I think this is a new policy due to the abuse in the mortgage industry recently. As far as they will notice the leak, have no idea. My appraiser did not 'notice' the house was on well/septic and not city water/sewer.

ReSomething
Jul. 13, 2010, 12:03 PM
Insofar as the basement issue - we refi'd our old house in I think 2002, second time we'd done it and this time we were taking cash out, so that time we had to have an appraiser come to the house. At the time we had numerous unfinished "fixes" and the appraiser was quite glum about the house - but the refi total was well below 80% of the market value at the time so the loan went through.
Appraisers were quite good at glossing over issues then but in the current market they will be much tougher, fresh paint in the basement would be a dead giveaway that there is an issue - despite that you'll use the money to fix that they are well aware that people mean well and don't always follow through. If you were to make the repair using the HELOC and then say you wanted to pay it all off with a new loan they'd probably like that better, it's just up to you what gamble as far as rate changes etc you want to take.

tle
Jul. 13, 2010, 12:16 PM
Major congrats!! I would only worry because being in the midst of the purchase process, appraisals can be frightening... but honestly, if the bank is offering decent terms and it makes sense, what's the worst that can happen? You have to pay for an appraisal and it doesn't work out?? I'm still flabbergasted that I got an appraisal on our new farm for only $126K... the 2nd one came in at $160k with *6* comps to back it up. The whole process is screwy if that can happen (especially when the appraisals used 1 comp in common and were still $26K apart on that one!)

hey101
Jul. 13, 2010, 12:58 PM
Our appraiser did come into the house and in fact took detailed photographs of every room. I was very impressed with this appraisal- like I said, we held off for so long because we just didn't think appraisers would consider the uniqueness of the property (200yr old stone farm house on 9 acres) against comparables in the immediate area (same sq ft houses, but new McMansions on tiny lots). However this guy opened up the parameters quite a lot- 5-10 miles- and found some excellent comparables that had all sold very recently. Some of it is luck in the appraiser you get since the lender you use has no control over that anymore. I guess we got lucky twice, in locking in at the day the rates were at the absolute lowest, and in the appraiser that got sent out to our place actually doing a great job! :)

pwynnnorman
Jul. 14, 2010, 12:34 PM
Ah gather none o' y'all are in Florida...

But, heck, if you ARE, please give a shout out!

deltawave
Jul. 14, 2010, 01:35 PM
We tried. Our place appraises at slightly more than HALF of what it cost to build four years ago. :sigh: And because we're out in the sticks, not on the water, there are NO comps, NONE.

We could have taken our 30 year mortgage and turned it into a 15 year jumbo for only a couple hundred extra a month. Sure would be nice to retire at 60-something instead of 70-something! :lol: Oh well, at least I like my job. :p

DiablosHalo
Jul. 14, 2010, 01:39 PM
Our farm was appraised in 2003 - before a few major (read: MAJOR) improvements were made. It was appraised again in late 2008 for 67% of what the earlier appraisal was. I'm talking to a lender now- but afraid to look at a new appraisal. :(

MistyBlue
Jul. 14, 2010, 03:06 PM
Ah gather none o' y'all are in Florida...


No, I'm in CT. Also in a well wanted town in a really good location equi-distant from 2 major cities (40-50 minutes to each) and 10 minutes from the shore. So we lucked out in our location. Some towns and cities in CT have taken a beating and some states have it worse in real estate too.

It's an expensive area to live (taxes are over $500 per month) but it holds value or even appreciates even in crappy economy. Although the market is slowed down here too...not saying a home would sell fast. But then the market was ridiculously inflated here too for quite some time.

Gayla
Jul. 15, 2010, 12:51 AM
No, I'm in CT. Also in a well wanted town in a really good location equi-distant from 2 major cities (40-50 minutes to each) and 10 minutes from the shore. So we lucked out in our location. Some towns and cities in CT have taken a beating and some states have it worse in real estate too.

It's an expensive area to live (taxes are over $500 per month)

OMG what do they do with all that revenue? Here in Florida people like me have virtually no tax. No income tax, no sales tax on food or meds, my property tax is 1200/yr and our car tags are ridiculous. both cars about 35$ a piece. I would be happy to pay much more to continue to have services that I enjoy from the state and local government. But I am alone here in that regard. I am sure I would love CT even with the high tax if i could afford it.

carolprudm
Jul. 15, 2010, 08:59 AM
We tried. Our place appraises at slightly more than HALF of what it cost to build four years ago. :sigh: And because we're out in the sticks, not on the water, there are NO comps, NONE.

We could have taken our 30 year mortgage and turned it into a 15 year jumbo for only a couple hundred extra a month. Sure would be nice to retire at 60-something instead of 70-something! :lol: Oh well, at least I like my job. :p
We bought our farm in 1991, added vinyl fencing, 2 6 stall barns, $30K in energy efficient heat pumps, tankless water heaters, new stainless steel kitchen, hot tub, greenhouse.

It appraised for less than we paid initially.
it's sickening

MistyBlue
Jul. 15, 2010, 10:04 AM
OMG what do they do with all that revenue? Here in Florida people like me have virtually no tax. No income tax, no sales tax on food or meds, my property tax is 1200/yr and our car tags are ridiculous. both cars about 35$ a piece. I would be happy to pay much more to continue to have services that I enjoy from the state and local government. But I am alone here in that regard. I am sure I would love CT even with the high tax if i could afford it.

That's the trick with property taxes, finding out how they're used from town to town.
In general, the higher the property taxes in each town the more it goes towards the public school system. In a few towns the higher taxes are due to no other source of tax income (no big businesses) In one small city Waterbury the ridiculously enormous taxes (which make my taxes seem cheap) is because the city officials suck out loud and bankrupted the entire city.
My town population is small for our state, just about 6000 people on 36 square miles. It requires a minimum of 2 acres to build anything so houses aren't jammed together. And keeps enormous amounts of open space. (lots of horse owners here) We're paying over $6k per year for an excellent school system mostly. And for the town buying up open land to keep it that way. And the small handful of state troopers we have as a police department. Who also hang out at the schools all the time guarding the kids and making sure no creepy folks, drug dealers, etc get anywhere near the schools. Also keep an eye on the kids to make sure they behave. :) Vehicle taxes (I think the last bill was $700 per annum for my truck?) cover road maintainance and snow clearing and sweeping up the sand in spring from the snow clearing over the winter.

Overall CT taxes (6% sales tax too) cover bridges, roads, highways, schools, you name it. Have to say that we do get our money's worth mostly. Tons of services that taxes pay for, including human services too.

But the cost does get a big painful when I read what other states pay.