I had my home appraised two years ago at $330,000 when I refinanced.?

Question

Now I am refinancing again & it appraised at $265,000. Does anyone know why such a huge difference? I was told there should only be a 6% drop in difference.

Answer 1

Who told you that? The loan officer who isn't a licensed appraiser but trying to make a commission off you doing business with him again?

Obviously, your "equity" went south instead of north and you are most likely upside down in your mortgage.

Remember, a house is not an ATM machine, if you keep equity stripping your home it's just a matter of time before it comes back to bite you.

Now you know why.

PS:  Houses two years ago were NOT overpriced or over-appraised...the value of a home on an appraisal reflects CURRENT MARKET CONDITIONS...and those conditions, are subject to change.  You are just experiencing a change.

Answer 2

Depends on your area, the appraiser, etc.

Can request second appraisal, at your expense, and it may be worth it

Repeated refinancing usually costs you money and it takes 2 points and 5 years to recoup costs

And there are predatory lenders out there waiting to hook people and hit them with hidden fees and costs and adjustable rate loans

Answer 3

It depends where you are - given the current status of the housing/credit crisis, some areas are suffering more than others.  You might be located in a hard-hit area.

Answer 4

Perhaps they estimated a 6% drop. But the appraisal is based on the reality of your local comps, not some theory.

Answer 5

A lot of people are running into exactly the same thing you are.  Back then the houses were over priced and appaised.  Now the market is making corrections for that.  I've seen a housing development that was selling new homes at 400k 2 yrs ago.  Now they're selling the same homes on the same lots for 290k.  I imagine those owners are very upset too since they've lost money and joe up the street is buying the same house for 1/3 what they're paying for it.

Answer 6

the housing market dropped about 22% nationwide this year alone.  

Answer 7

An appraisal is always based on what other similar homes around yours have recently sold for.  Sales prices are determined by what buyers are willing and able to pay.  Because of that, these numbers fluctuate.

Two years ago, you may have been in a seller’s market where there were more buyers who wanted homes than homes for sale. In those situations, prices are driven up do to competition from buyers.

Eventually the market peaks when there are no longer more buyers than homes. Normally this isn’t such a big deal and your price might not have dropped much, if any.

But we haven’t exactly been working with normal conditions. Real estate became so scarce in some markets that instead of the normal 2% annual appreciation, some areas had 10, 15 or even 20% increases from year to year. Those increases cannot be sustained and must eventually be offset by a price correction. Wages simply don’t rise fast enough to keep up with that.

Additionally, home loans used to be easier to obtain. I’ll spare you a lengthy discussion on the subject, but some people were able to borrow money that shouldn’t have and there were way too many equity cash-out refinances at the peak of the market. Now people who took out those loans often can’t pay them and are losing their homes to foreclosure.

Instead of the simple swing to a buyer’s market (more homes than buyers), which wouldn’t have hit you so hard, we’ve had an onslaught of homes for sale because of the foreclosures. This has put the market way out of balance and the only way for this to be corrected is for prices to fall.