Four ways to strengthen home's refinance appraisal value
Refinancing your home involves several important steps, but the property appraisal may be the most crucial.
When a real estate appraiser hands down an opinion on the value of your house, it can聽make 鈥� or break 鈥� your ability to qualify for the new loan you want. 聽Naturally, you want that value to match your refinancing goals.
Simply put, a聽聽is an assessment of your home鈥檚 market value based on several factors, including its size, age, condition, location, amenities and previous sales prices, according to the Appraisal Institute, a global professional association for appraisers. Professional appraisers have specialized training and experience in property valuation, and their opinion carries a lot of weight with lenders.
Because market conditions change rapidly and property values in your neighborhood might be much higher (or lower) than when you bought your home, you need to have your聽property鈥檚 value appraised when聽. Any upgrades or improvements you鈥檝e made won鈥檛 be reflected in your original聽valuation; it benefits you to have an appraiser see those in person. If you鈥檝e let your home fall into disrepair, though, an appraiser will take note of that, too.
How to increase your property鈥檚 value
To learn simple, cost-effective ways you can聽, NerdWallet聽talked to two real estate experts. Tom Salomone聽is聽president of the National Association of Realtors and broker/owner of Real Estate II in Margate, Florida. Cody Gale聽is president of Colorado Appraisal Consultants in Denver.
While their suggestions might take some time and elbow grease on your part, the results (and value added to your home) will likely pay off in the end. Here are four suggested projects that will give the best bang for your buck:
- Refresh聽paint, remove clutter.聽The quickest, easiest way to increase your chances of a higher appraisal is to paint, which can take years off an outdated home. If there are crayon marks on your walls and clutter on the floors, a fresh coat of paint and some simple organizing will make a good impression when an appraiser comes to call, Salomone says. (And at about $15 to $30 per gallon, paint is also inexpensive.)
- Replace worn carpet and flooring.聽This聽is another upgrade that will stand out to property appraisers. New carpet or flooring that mimics the look of hardwood can add several thousand dollars in value to your home. If you don鈥檛 have the money to replace all of your flooring, focus on fixing damaged sections and getting carpets professionally cleaned before an appraisal, Gale says.
- Update elements of聽the聽kitchen and bathrooms.聽Touching up these rooms remains the gold standard for聽netting you the best return on your home-improvement dollars. Keeping them clean certainly goes a long way, but you can do low-cost upgrades that add value, too, such as removing wallpaper, refinishing laminate countertops, painting cabinets and hanging new light fixtures, Gale says. You don鈥檛 have to do a complete renovation or spend a lot of聽money to gain value in these rooms for a refi appraisal, but making a few updates will earn聽value adjustments in your favor.
- Create curb appeal.聽A property appraiser isn鈥檛 going to spend much time judging your home鈥檚 exterior, but a good first impression doesn鈥檛 hurt. Cleaning up flower beds and redoing the mulch are inexpensive, low-effort聽ways to make your home easy on the eyes, Salomone says.
These options will聽give you the best chance of scoring a higher appraisal value that will, in turn, help you get the聽聽that meets your real estate goals.
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