I have seen my share of issues over the last 11 years with the appraisal process. Recently we are seeing an abnormal amount of fallout from needed repairs on a property. Lenders will not refinance or extend money for the purchase of a property that needs work.

Currently 25% of all homeowners are under water on their mortgages. That number could increase as housing values are expected to slip another 5 to 10 percent this year. That means the lenders are underwriting the home as much as they are the borrower. When refinancing you should make sure any curled shingles, loose mortar, peeling paint or exposed wood should be repaired BEFORE the appraiser comes to the property.

When the appraiser comes out to the property and states there are potential problems, it puts the lender at high alert. They are now looking for any additional problems with the appraisal. What could have been a simple fix is now a complex issue. The underwriter will request experts to come out and inspect the property to make sure there is not a larger issue. Then they will make the same inspector come out and write a letter that says the work was completed. Something that could have been fixed before the appraiser showed up is now going to cost you the cost of the inspector and a rate lock in most cases.

Here are problems that can be avoided. I had a client and it had rained hard the night before and the sump pump crock flowed over the top. The appraiser came the next day to a wet basement. The lender wanted a basement specialist to check for foundation issues. The borrower should have canceled the appraisal and dried the basement floor. The was no foundation issue but rather the borrower should adjust the landscape around the home. This will put less pressure on the sump system.

You should always present the property in its best condition. This will allow you to avoid any delays and added expense. If you are refinancing to fix the problems let your loan officer know up front. Explain the magnitude of the problem so they can determine if the lender will have a problem with the financing. There is no perfect solution but at least this may alleviate potential problems.

www.mortgageserviceswi.con/resources