So you got that home equity line of credit but it turned out it wasn't enough. The question now is “Do I need an appraisal first if I want that line of credit increased?â€
It would seem that a home equity loan and an appraisal of the value of a home are inseparable. An appraisal, along with a title search, is a common prerequisite when applying for a home equity loan. But is this always the case? Is an appraisal always a major prerequisite?
Is it possible to get a home equity loan increased without an appraisal? Yes. There is no hard or fast rule that states an appraisal is absolutely mandatory for being approved for a home equity loan. Therefore, there are a number of lending institutions that will provide a home equity loan without an appraisal.
Keep in mind, while some lenders will gladly offer a home equity loan (whether initial or an increase) without an appraisal, quite a number of lenders will make in an absolute requirement. That is just the nature of the lending business. Regardless of whether or not an appraisal is required, it is always in the best interest of the borrower to have an appraisal done.
The reason an appraisal is generally recommended, is because an appraisal will assess the fair market value of your home. This fair market value of the home is what the lender will use to compute the maximum amount of the home equity loan amount. As such, you can get an accurate loan and not be shortchanged on the loan amount.
Also, it is not surprise many institutions prefer to have the appraisal so they don't over estimate the value and approve a loan that the house is not valuable enough to secure. If the banks got into this habit, they would probably find themselves out of business in a short period of time. And that situation has happened in the past when bad and risky loans were approved and backfired on the bank.
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So you got that home equity line of credit but it turned out it wasn't enough. The question now is “Do I need an appraisal first if I want that line of credit increased?â€
It would seem that a home equity loan and an appraisal of the value of a home are inseparable. An appraisal, along with a title search, is a common prerequisite when applying for a home equity loan. But is this always the case? Is an appraisal always a major prerequisite?
Is it possible to get a home equity loan increased without an appraisal? Yes. There is no hard or fast rule that states an appraisal is absolutely mandatory for being approved for a home equity loan. Therefore, there are a number of lending institutions that will provide a home equity loan without an appraisal.
Keep in mind, while some lenders will gladly offer a home equity loan (whether initial or an increase) without an appraisal, quite a number of lenders will make in an absolute requirement. That is just the nature of the lending business. Regardless of whether or not an appraisal is required, it is always in the best interest of the borrower to have an appraisal done.
The reason an appraisal is generally recommended, is because an appraisal will assess the fair market value of your home. This fair market value of the home is what the lender will use to compute the maximum amount of the home equity loan amount. As such, you can get an accurate loan and not be shortchanged on the loan amount.
Also, it is not surprise many institutions prefer to have the appraisal so they don't over estimate the value and approve a loan that the house is not valuable enough to secure. If the banks got into this habit, they would probably find themselves out of business in a short period of time. And that situation has happened in the past when bad and risky loans were approved and backfired on the bank.