Understanding appraisals?

[Anonymous]

We purchased our home in Sept 2009. We paid $209,900 - although our mortgage was for $204,900. It appraised at $210,000 at time of purchase.

We received a letter some time after (can't remember date - in the 1st year, I believe) that the city did an appraisal and it came in at $190,100.

We currently owe $195,000 so we're technically under water, right?

If we attempted an FHA streamline (can't at the moment because it turns out our $10k downpayment assistance is actually a lien to be paid back on refi or sale - but our broker says that's changing in the next or two), what appraisal would they go by? Or would they do a new one?

If they don't require a new appraisal, would the refi would allow us to pay back that $10k and lower our interest rate which is currently 5.625%?

Is the city appraisal even accurate? I don't know how appraisals work, I know they didn't enter the house. How do they figure that value? Just based on the area and land size? I know our taxes have been raised twice in the last 2.5 years for almost $100 total.

Thanks in advance!

[StartingOver10]

An appraisal is a determination of current market value as of the date of the appraisal (like a snapshot of value) and is "good" for 6 months only.  In rapidly changing markets, maybe even less.

What you probably received from the city was a tax assessed value, which is variously referred to as an appraisal or as market value; neither label is actually correct.

The city/county will assess the value of your property annually to determine your property tax liability.  In our area, S Fl, the value is assessed as of Jan 1 each year. The sales from the previous year in the neighborhood are used to determine the current valuation. The actual assessment is not completed until June of each year and then the city/county notify the homeowners in Sept for a November due date. As you can see the taxes are collected in arrears on old information.

You can check with your city/county to see what your timeline is as far as the valuation date and which period it applies to for your property. Generally tax values are less than actual market value.

Back to your question: tax assessed values have nothing to do with actual market value. You may or may not be upside down in your property. You would need an actual appraisal to determine the current market value. The city uses an automated valuation formula to determine your value. The formula doesn't take into consideration the condition of your homes interior.

If you want to know what your home is worth and you don't want to pay for an appraisal, check with a Realtor to get the comparable sales for your neighborhood over the past 3 to 6 months and you will have a good idea of the current market value of your home.

If you choose to refi then your lender will require a new appraisal except in the case of a FHA streamline refi.

For a streamline refi, you can check this link for details:  :http://portal.hud.gov/hudportal/documents/huddoc?id=4155-1_6_secC.pdf 

[Booner72]

IMO,the lower the taxed value the better.  Less Taxes To Pay!

(However, mine is 10,900 higher than what we paid, tried to appeal, no luck.)