Appraisal Appeal Unsuccessful
Not much of a surprise, the appraiser dug in and didn't budge after we submitted our appraisal appeal:
- Our more favorable comparables were based on county property records. Interestingly the appraiser indicated the MLS data is generally considered more accurate than the county data and indicated the MLS data was inline with his appraisal without providing the specific details.
- The appraiser indicated there appeared to be no difference in transactions based on lot size so he was unwilling to associate an increased value for a larger lot size. I find that a bit frustrating - certainly a bigger piece of land is worth more and the appraisal failed to account for that.
As a result our appraisal value was left at $270,000. That leaves us with a pretty sizable shortfall of ~$30,000 shy of the 80% LTV needed for the straight refinance.
At this point the options we can consider are:
1) Do nothing and leave in place our current mortgage @ 4.375%. We'd have a ~$400 appraisal fee we'd have to eat.
2) Finance entire balance with a ~90% LTV loan and pay Mortgage Insurance. Knowing a bit about the industry I recognize this is most likely a very unattractive option these days. Our mortgage broker indicated the insurance would be over $100/mo, but I didn't get an detailed estimates.
3) Finance 80%LTV and get a 2nd mortgage for the remainder. Our mortgage broker checked into this for us and utilizing a second mortgage would reduce our closing credit from .899% to .149% which eliminate ~$1,600 in closing costs benefits.
4) Bring enough cash to adjust the loan amount to 80% LTV of the lower appraised amount. That would mean tapping our emergency fund to pay down our mortgage by ~$30,000.
We are moving forward with tapping our emergency fund to pay down our mortgage balance. Its a bit frustrating to have to tap our emergency fund (yet again), but we think we could rebuild the bulk of the fund in the next 18-24 months from our cash flow including the $300+/mo we would save on our mortgage.
We also have a 4.25% equity line on one of our rental properties that would could tap into as well to cover emergencies or even finance some of the $30k if we ultimately feel the cash is critical.
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