How could a house appraise for less than what you paid for it?

Jen
I wanted to refinance my property and apparently the appraisal came in at more than 30, 000 less than what we actually paid for the house. The house is in a private community and is not even 3 yrs old yet. Can our mortgage be adjusted to reflect this "supposed" new value or are we stuck paying the bank more than what the house is worth?

Ema
Property values have dropped significantly in the last three years, and appraisers are very careful about what they say a property is worth. Remember, the appraisal is ordered by your lender. He wants to know that, if you default, there will be enough value in the property for him to recoup his investment.However, appraisals are nothing more than one appraisers opinion of the value of the house, and can vary greatly depending on what sales the appraiser used to justify his evaluation. I recently had two different appraisals done by two different lenders for one of my clients on the same house, which was under contract for $240, 000. One appraisal came in at $230, 000, while the other came in at $255, 000. Granted, that isn't a huge difference, but it does reflect the fact that appraisals are as much an art form as science, and therefore open to individual interpretation.However, you should be pleased if your home only lost $30K in value over the last three years. That is, of course, unless your home cost less than $100K. Good luck.

Lisabeth
Did you have some ungodly notion that real estate values were guaranteed to only go UP ? Would you be asking the lender to increase your payments had the value of the property gone up instead of down ? Of course you wouldn't. The concept works in both directions. You borrowed more than the property is apparently now worth. That you borrowed that amount has no bearing on your responsibility to repay what you borrowed. Welcome to the world of realistic finances.

Clarice
One of the most common misunderstandings is that your homes appraised value can't go down. Of course it can. Appraised value is not based on what it cost to build your home, it is based on what buyers will pay for your home.And, yes you are stuck with the higher price. Why shouldn't you be? I know it sucks, but that is the amount of money the bank gave you so that is the amount of the loan.

Fleta
You have already paid for the house. Now, you are paying for the loan you took out. You borrowed $X, you owe $X. That's the risk in real estate, or anything else, for that matter. The things you bought with your credit card are worth less than when you bought them. Your car is worth less than when you bought it. No offense, but, suck it up. That's how it works.

Elease
Welcome to the recession. This is what most people who bought a house in the past 5 years are facing - including me.If you can hold out, wait on refinancing after the market bounces back: probably another couple years. You could also get a refi on the lower amount and then make up the difference with a home equity loan.

Lashon
You're stuck. You and about a million other homeowners. That's why so many people are handing back the keys and walking away.Owning real estate has always been an investment, not a guarantee. Even in a normal economy, the value can go down if you gamble on the neighborhood improving and instead it gets worse... if you get stuck next to a new commercial zone... or if you simply don't have good neighbors next door. It's all a crap-shoot.

Elbert
This is unfortunately becoming quite common.I know someone that was unable to get financing on a house because it was appraised at lower that it was going to cost to have it built! It was never even started!!

Del
You borrowed a fixed amount. That's what you pay back. If the house was worth zero now you still owe the full loan.