When you go to purchase or refinance a home you need to get an appraisal. More often than not you usually will be based on the type of transaction that you’re doing. Here is the reality of today’s world with regards to appraisals and what you should expect when you’re buying or refinancing a home.
In most markets, throughout the United States, most appraisers are impacted. Interest rates are still remarkably low continuing to fuel demand for housing both on the refinancing side and on the home buying side. Appraisers are inundated with new requests for orders. This increased demand with a relatively short supply of resources has created a situation where appraisers are full, and the cost of appraisals and the turn-times are rising. Gone are the days where you can get an appraisal for $450 and write a check directly to the appraiser. Here’s how the process works not with all, but with most mortgage companies in conjunction with getting a home loan for use in a mortgage transaction. Generally speaking, you have to sign some sort of electronic disclosure with the lender of your choice. Some lenders charge an application fee, some charge a lock deposit fee, which will vary from lender by lender.
A good lender will not charge such a fee. It’s very possible when the lender orders the appraisal, it is bid on the market with the appraisal management company, the appraisal cost could come back at $700 or $800. If you dig your heels in that’s going to come at the expense of time. If you have its rate lock on your mortgage, you need to be aware that you may pay more for the same locked rate or more for the appraisal.
So as a result some families are discovering that appraisal costs are more than expected which seems like a bait and switch, but it’s not because most mortgage companies have a third party appraisal companies they use. As a result, the appraisal management company may charge a rush fee to be supportive of meeting a loan contingency date and an appraisal contingency date for a purchased contract. This is something you need to be mindful of.
The average cost for the appraisal depending on the type of property and the occupancy of the property can range anywhere these days between $500- $1000 for an appraisal. Obviously, that means looking at the mortgage numbers with a finer tooth comb. It’s a culmination of things transpiring right now in this market. This is why it’s critical to work with a lender that can accurately articulate this and to help you navigate through the process that knows what they’re doing, has their finger on the pulse of the market and what’s transpiring and can best advise you for your transaction appropriately.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.