If you follow the news, you’ve probably heard talk about refinancing. You might have heard that you should refinance now to take advantage of low interest rates. If you’ve been thinking about getting a cash-out refinance to pay off high-interest debt or tackle home improvements, winter 2022 might be your time.
Before you get excited about a cash-out refinance, you’ll need to overcome a pretty big hurdle: a home appraisal.
What happens if your home appraisal comes in low? Do you need to put your plans on the back burner? At MortgageDepot, we help our clients get out of these sticky situations. If your home appraisal is too low to qualify for a refinance, we might have a solution that addresses your needs.
Refinance Appraisals: What’s the Worst-Case Scenario?
Home appraisals are a stressful process for homeowners who are trying to get a cash-out refinance. If the appraisal value comes back too low, this could impact the amount of cash you receive or put an end to the transaction altogether.
If this happens, there are a few options out there. You can:
- Appeal the appraisal.
- Get a second opinion from another lender.
- Put off refinancing until a later date.
We never said that these options were attractive! We have a “toolbox” filled with creative ways to help you reach your real estate goals. A stand-alone second mortgage is one of those tools.
Using a Stand-alone Second Mortgage To Reach Your Goals
If you’re looking for an outside-the-box way to get the cash you need when your refinance appraisal is low, you’ve come to the right place. Instead of taking one of the time-consuming and potentially costly options above, you might qualify for a stand-alone second mortgage.
When we’re discussing stand-alone second mortgages, we have two choices:
- Home Equity Loan: A home equity loan allows you to borrow money against the equity in your home, giving you an upfront amount of cash that you can put toward renovations or high-interest debt.
- Home Equity Line of Credit (HELOC): A HELOC is similar to a home equity loan, except you won’t receive a lump sum of money. Instead, you’ll be able to borrow up to a certain amount for a specified time.
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