Home Equity Questions!!! HELP!!

[Spatula 0]

I need some help all. I'm new to home owning thing and have some questions....anybody with some knowledge/experience please respond.

Bought a house a year ago, now want to take an equity loan. For discussion lets' say the house was bought for 150k and now is appraising for 180k. Went through the process, and the lender/underwriter requested a "field review" of the appraisal/property. Comes back and says it's not worth that much, but is worth say 155k. Now two house (similar in the same neighborhood) sold for 30-34k more than paid. If I put my house I could easily get 30-35k more than I paid.

Question...since this first lender said it's not worth that much, should I just try with another lender, or accept it and move on? I'm confused as shit! It appraised at what I thought it would, other homes are selling for the same, but the lender said it's not and won't do the loan? Go somewhere else and try again?

Help is appreciated. Thanks everyone! Oh, and some of the damn equity was going to get me through training and used gear..so it's a HUGE priority (along with landscaping/deck/etc..)hehe!!

[tigra 0]

What do you mean by appraisal? Did you have an outside appraisal done by a licensed appraiser or are you basing that on what similar homes in your area are selling for? The "appraisal" or appraised value a realtor will come up with is going to be very different from what a lender will use. Any lender is going to be far more conservative. When they look for an appraised value, what they are really thinking is how much can we get for this home if our borrower defaults and we need to foreclose and sell in a hurry?

I bought last year myself, and I can tell you there is a HUGE range in my area for what similar homes are being listed for and selling for, just as their was when I purchased as well. I think I paid a fair price for my home, and it actually appraised out (by my lender) for a little more than what I paid. The day I closed, we passed a similar house on the same block listed for 30K more. The biggest difference between the 2 homes is that MY deal closed- my seller had 3 offers to choose from within 3 days of listing the property- while this other house stayed on the market for several more months and did not sell.

Anyway, if you shop around, you *might* find a lender who will give you a loan based on a higher appraised value, BUT it might not be the most reputable lender or the most favorable terms, so be careful and make sure you read and fully understand the terms of your loan before you sign! (That holds true for any home equity loan. I do real estate closings for a living and some of the things I've seen over the years would shock you!)

[Spatula 0]

Thanks for the words! We had an official appraisal done (person came to the house, went through it etc.) My neighborhood is brand new. 100 homes being built. 2 have sold in the last month for 30k+ each.

I'm going to do more research and press on. Thanks again for your help!

[tigra 0]

Even if you provide an "official" appraisal, most lenders will use their own appraisers for a number of reasons. Also, with home equity loans, since the cost involved which is often absorbed by the lender, some lenders won't do a full appraisal. They might do something they call a "desktop" appraisal or recertify your old one. The main purpose is to make sure your home hasn't LOST value, and that won't help you since you are looking to pull more equity out.

It is possible to contest the appraised value, but you would have to provide comparable closed sales using their guideleines and prove to them that your comps are superior to the ones they used. That's not easy.

Good luck, keep shopping around and just be careful.

[Michele 1]

They also may be doing an 80% LTV ratio, rather than full 100% value. This protects them, because if you overextend, they, as a 2nd mortgage holder, will get screwed if you default. Check it out, and see if it's 80%, which would account for the additional 30%.

Additionally, sometimes refinancing the whole thing is the way to go because you're not adding a second mortgage/lien holder, but be careful you're not going to get screwed for 30 years with a higher interest rate.

Good luck!

Ciels-
Michele

~Do Angels keep the dreams we seek
While our hearts lie bleeding?~

[Malfunction 0]

Speaking from a mortgage background, and being in the mortgage industry, if you bought your house less than 12 months ago (or even a calander year ago, ie you purchased in 03 and getting a heloc (home equity line of credit) in 04) and the value has increased substantially (30k is substantial in a 150k market), then the lender has the right to ask why. That is to protect them from appraisers padding appraisals to get a higher value. The reason for this is default. I am not saying you will default, but the possibility of default is there. If your value says 180, but 150 was the most recent sales price and the price less than a year ago, then 150 is the likely amount any investor will get out of the house on a repo, and thus the heloc company will have lost money. You have every right to withdrawal from the current lender for your heloc and go somewhere else, but be prepared for it to happen again. I hope it will not, but worse case scenario you will have to have the appraiser explain the increase in value. That is no problem for an appriaser to do, and most instances, the lender will take the explaination.

My experience comes from Wells Fargo Home Mortgage, and if you want more in depth explainations or advise, feel free to ask. Good Luck!

I may disagree with what you have to say, but I shall defend to the death your right to say it.
- Voltaire

[tigra 0]

Yup, what he said........

Adding to what Michele said, it seems to me that most HELOCs will lend up to 90% combined LTV but the higher the combined LTV, the higher the rate. Some will lend up to 100% but its going to cost more. Mortgage rates are still decent but probably a full percentage point higher than they were last year, so think about that if you are considering a cash out refi of the entire mortgage instead of an equity loan.

[JGarcia 0]

Hi! If the lender is requesting a Field Review, your property is either in a "Rural" area, or they think something's not quite right with the original appraisal. Lenders reserve the right to do this on any property if your file raises questions through with the Underwriter or Quality Control Dept.

If your house was appraised, get a copy of the Appraisal Report. In it, you will see the sales value of 3 comparable homes within your immediate area...yours will likely fall into the average of these. If the house next to you sold for substantially more, your Broker can ask the Appraiser to look into using that home as a "Comp." This may help boost the value on the original appraisal if you decide to send it to a different lender. If the Lender you're with is requiring the Field Review, it's results are final.

Your best bet now is to wait a little longer to get your HELOC (build more equity), or get your Mortgage Broker to submit your HELOC to a different lender, but you'll have to pay for another appraisal if you do this and still end up without the Equity you thought you had. If your Broker hasn't already done this for you, then it's probably a good idea to get a better Mortgage Broker that can help find a lender/appraiser that give you the best value for what you're looking for.

Hope this helps!

--Jairo
(in real life, I'm a Mortgage Broker)

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