Refinancing Your Home - A Second Look at the Mortgage Industry

Rates are still low, you’ve got equity in your house, and you’re finally ready to turn that dingy basement of yours into an apartment; let’s talk.

First of all, make sure you don’t have any issues in your house that will likely kill the deal when the home is appraised. Let’s start outside. While you don’t have to have a landscaped yard, you don’t want it to look like a junkyard either. Maybe you like to tinker with cars in your spare time. That’s okay too but maybe you want to move some of those cars to somewhere else before the appraiser comes. You don’t want your lot to look like a used car lot, or a scrap pile either. Those kinds of things will bring the value down some, and it could make the appraiser wonder if there is a business being conducted on the property. If this is an income property, well that’s a whole other animal for another article.

Make sure there are no cracked windows in the primary residence. You may be able to get away with a cracked window in the stand alone garage, but you don’t want any in your home. Take a look at the roof. Do you have a lot of missing shingles? If you’re not careful you will have an appraiser snooping around for a leak and you may be required to fix the roof.

Let’s talk about the inside of the home. When I was refinancing homes I always asked about mold or mildew. I don’t know any lender that will refinance a home with mildew on the walls. I remember doing a refi for a gentleman in Texas who failed to mention a mildew problem, even after I asked him. Apparently he though the appraiser I sent out would be blind as well.

The deal got turned down as soon as the underwriters saw the appraisal. They got the appraisal first and forwarded me a couple pictures. The house had horrible mildew stains where the ceiling met the walls.

As it turns out the man had a huge leaky roof problem. So, if you have water marks, mold or mildew stains do yourself a favor and take care of the problem first.

Check the plumbing under the sink in the kitchen and the bathrooms. Lenders shy away from leaky pipes. Just get the pipes replaced and it will save you from the headache of the loan being turned down. Or having to pay the appraiser to come back and look at the house again after you fixed the leaky pipe problem.

Carpets can be an issue as well. Your carpet does not need to be new, but ones with holes worn through are going to be a problem. Right now you may be saying to yourself, why is this guy bringing this stuff up? It’s obvious. Yes, it is obvious, but I cannot tell you how many times I ran into borrowers that didn’t think this was obvious at all. My biggest pet peeve in the industry was loans that got turned down at the appraisal stage. Most of the problems could have been eliminated had the borrower told me first about the issues in the home.

Look at the tile flooring. Again, doesn’t have to be new, just no holes worn through the vinyl, or cracked tiles please. Make sure your toilets are in working order. I know of some appraisers who go through the houses they appraise, and turn on all the faucets and flush all the toilets. Not everyone does it but you never know if yours will.

Make sure your lights have working bulbs in them. No, it’s not a deal breaker but you don’t want the appraiser to decide to be nit- picky all of a sudden. The best kind of appraisers are the ones who spend ten minutes in the house, snap a few shots, measure a room and leave.

I think I will leave it at that, and the next installment we will get into comps and trying to figure out the value of your home; not always an easy thing to do.

Good Luck and Happy Refinancing.

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