Refinance denied, again

By | July 27, 2009

Okay, I know what you’re thinking: why did we try to refinance a mere month after being denied? Well, after my original post I heard from friends who had been through the process before. They suggested hiring the appraiser directly. Apparently when a bank hires the appraiser there’s a good chance the estimate will come in low if the bank doesn’t really want to give you the loan. Case in point: our home appraised at $145k. A week later our neighbor’s home (same condo association, one less bedroom than ours) came in at $330k. She hired her own appraiser. We did not.

So, knowing that our neighbor’s place appraised at $330k, we decided to hire her appraiser and a new mortgage broker. But, alas. We weren’t fast enough, because the regulations changed the following month. We were already knee deep into refinance #2, when we discovered the new rules. The government, sensing perhaps the highly subjective nature of home appraisals, separated the appraisers from the mortgage brokers and potential refinancers (in other words, us). Now, neither the mortgage broker nor home owner can hire the appraiser. It’s supposed to guarantee that neither party overly influences the final figure.

Maybe this regulation benefited others in our position, but it did not benefit us. The appraisal process A) took longer, and B) only increased the estimated value of our home by $5k. This appraiser, like the first one, included foreclosed properties as “comparables” to our unit. We don’t think that’s fair. Neither does our mortgage broker, who is now in a dispute with the appraiser over the estimate. I mean, it’s kind of ridiculous. We live in Arlington County. Just try to buy a 3 bedroom townhouse within county lines for $150k and see what pops up (don’t take my word for it, RedFin’s got the evidence): nothing.

Despite two denied refi attempts, we are still being hounded by offers in the mail. Our mortgage broker wants us to try again. You know what I want? Our money back. The appraisal process isn’t cheap. We’ve already dropped $700 in appraisal fees. We’ll hold onto this place as long as we have to, and then either sell, rent or grow old together here. I heard a report on Planet Money that it’s extremely rare for a person to pay off a 30 year mortgage. Everyone’s either refinancing or selling before they reach true home-ownership. So, really, the “American Dream” died a long time ago, we just think we’re achieving it. In reality, most of us are lucky if we’re in our place long enough to pay less than the renters next door.

Am I bitter? Not really. Disappointed? Yes. At least by purchasing a home, we know the grass is just as weird here as it was on the other side of the fence. We’ve learned a lot. We continue to learn. And if we ever leave this place, it will look 110% better than when we first moved in. I feel a sense of pride in that. I look at pictures from our first month here and it’s like, “wow, little house, you’ve come a long way. It’s perplexing that you’re worth less now than you were as a roach infested, broken-windowed, velvet wallpapered unit with a foot print on the ceiling”… but I guess that’s life these days. I think we’re all looking forward to a time when we can look back and laugh.