Many homeowners have not have an appraisal done in the last two months.  Most of you may be thinking that the value of your home cannot go down that much in two months: think again!  You home’s value could decrease over 20% in two months if there have been foreclosures or short sells in the neighborhood in which you reside.  If you truly believe that there have been no foreclosures or short sells than it is likely your home is close to its recent appraisal value, but you never know!

When applying for a mortgager refinance, you MUST get through the refinance appraisal step before being considered for a lower mortgage rate.  It is extremely difficult to get through this step if your home has greatly decreased in value and you have owned it for less than a year.  If your loan-to-value (LTV) ration is anywhere above 95% mortgage lenders are not willing to give you that refinance rate of 5% or below.  If you are able to obtain that rate with a high LTV you are likely to pay quite a large sum in closing costs.

I would encourage you to be honest with yourself and realize that your home may not be worth the value you think it is.  I would also suggest getting an accurate appraisal value before applying for a mortgage refinance.  In the end, you never know what mortgage refinance rate you will get until you try.