Phone 603-393-6283
Loudon, NH 03307
Email: chrisr@appraise-nh.com
I'm happy to answer your questions by Email.
There is no charge for consultations or for general questions about real estate or appraisal services.
INTEREST RATES CHANGE
Interest rates have been held at historic lows for several yeats during
the pandemic. However, inflation is becoming a problem and that will
lead to rising interest rates. Higher mortgage interest will make homr
purchases more expensive, possibly forcing prices down. Not a problem
if you have recently purchases with no plans to resell, but a problem
if you want to refinance as the property may appraise for a lower value
in a down market.
REFINANCING
I have often advised that a house may be an investment, but a home is not.
What I have tried to convey with that statement is that a home should be
a place of security and comfort, the place where we raise our children,
families gather for holidays, where we keep our memories of childhood.
When we refinance fror a "cash out" we are using the property as an
investment, and that can bring a feeling of insecurity because it means
a loss ofr equity.
Think of the question this waqy; can you retire if you have a mortgage?
For most of us the answer is no.
Lastly, appraisals may or may not be reliable indicators of value.
Every appraiser has an idea of the expected (or needed) value or a
property from the start of the assignment. There is a purchase agreement,
a comment by the homeowner, something from the bank or mortgage
company. Every appraiser will tell you, if they are homest and open, that
missing the target value will eventually cost them the loss of a client.
Appraisers are sensitive to client's needs. Lenders require aqn appraiser
to carry E&O (Errors and Omissions) insurance to cover losses from
repurchases due to an inadequately supported value. Lenders expect
that some properties will be overvalued, will blame the appraiser and
through E&O insurance have devised a way to collect damages.
Every appraisal that I have reviewed for a client, without exception,has
contained errors that affected the value, often by tens of thousands of
dollars. Recognizing these errors is easy because they are always the
same ones. It usually takes only a couple of minutes to pick out the
major errors. The effect of overvaluations, in the short term, is
extra money for the borrower and extra profit for the lender. In the
ong term, possible foreclosure, repurchase costs to the lender, and
several times during my career a crashed economy and recession.