Inflated Appraisals Cause Problems

\r\nEven if you manage to complete a purchase, sale or refinance on a home without falling prey to the many mortgage scams out there, a new, very legal, problem has crept up. The current housing market has cooled and home values have leveled, but many homeowners are left with a mortgage for much more house than they have. When the boom started, appraisals went up as sales prices went up and the housing market followed suit. This is normally not a problem; unless the market tapers the way it has in the past year.\r\n

The result is an inflated appraised value of the home, and a price tag that few are willing to pay. Homeowners that bought their house for $500,000 in 2004 may be paying the mortgage of a home that has a resale value of $400,000, leaving them, in effect, upside down on their house. It may sound like a scam, but appraisers use recent sales of other houses in an area to gauge the value of a home. Now that the market has stabilized, that might leave homeowners with an inflated value of their home.\r\n