Financing in McHenry>Question Details

Alisa, Other/Just Looking in 60051

I live in a new home subdivision and my home is now three years old. I just tried to refinance the mortgage and when the appraisal came back grossly

Asked by Alisa, 60051 Thu Nov 19, 2009

low I asked why the new home sales in the neighborhood were not used and was told the appraisal company has to use resold homes as comps, not new home sales. Is this true?

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David - Appraiser’s answer
Yes that is true. For a refinance, the appropriate comps are existing properties (resales) active and sold. In the event of a foreclosure on a refinanced property, the lender would want to know what the resale market value is at time of refinance to assess the collateral risk of the loan.

When choosing comps, one chooses similar properties. Although you live in a new home subdivision, you home is not considered new anymore since it has already been purchased and occupied. Therefore if/when exposed to the open market, it is a resale, thus similar properties would also be resales, not new built or new construction.
0 votes Thank Flag Link Thu Nov 19, 2009
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