BRRRR - Low Appraisals
Hi BP Community,
I recently encountered a situation with my primary residence that got me thinking about how it might impact my use of the BRRRR strategy.
I recently refinanced my personal residence with about 60%LTV. With (30 day old, same tract) comps in the area well north of 1.1M we were pretty confident we would get the most advantageous pricing pricing and rate on our refi.
My wife (a local RE Agent) and I were both shocked at how low the valuation came in at. The appraiser priced our home below our purchase price 2 years ago and despite our putting nearly $40K into the kitchen and flooring when we first moved in. We also toured some of the homes that recently closed for 1.1M and their interiors were dated by about 15-20 years.
This cost us 1/4 point on the refi fees (not rate) as our LTV was 61% and not below the 60% cutoff for the better pricing on the loan.
My concern is that the BRRRR strategy hinges on being able to get the valuation necessary to refi the property. What happens if the person appraising your house is just in a bad mood or is super off.
Has this ever happened to anyone of you out there in the BP community and how have you overcome this for your rentals. Also, to any lenders out there, is this standard nowadays for conventional financing with the super strict TRID laws?
Big time Mahalo in advance!
Matt