Refinance Mortgage Loans
Property value is important when securing refinance mortgage loans. A refinance loan, like a regular mortgage loan, is secured by real property. As such, the value of the property is critical in determining eligibility for a loan and the amount of money a lender can offer to a borrower.
For mortgage refinance loans, property value can be assessed in a variety of ways. One way is according to market value. Market value is the amount a buyer could be expected to pay for the home, in conjunction with the selling prices of comparable properties in the area. By contrast, the appraised value of a home is the amount that a trained, licensed appraisal professional deems the property to be worth. In appraising a home, such things as a home inspection, analysis of the home and the surrounding area, and comparable property prices are all considered.
More on Property Values and Refinance Mortgage Loans
The replacement value of a property is somewhat different. It is the estimated amount an appraiser believes it would cost to build a similarly sized and constructed house on a vacant lot. This cost is reduced, by an appraiser, to account for factors such as depreciation and the gradual decline of the property's physical condition.
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