I am refinancing my first mortgage (no cash out). The new loan amount is about 58% of my purchase price (purchased 14 years ago). The loan amount is also about 52% of an appraisal I paid for 5 years ago and 44% of a more recent property tax valuation. And, get this: The loan amount is only 96% of the tax valuation of the land.
However, the bank will not waive an appraisal. (In fact, the bank wants to sell the loan through Fannie Mae, and I think it's really Fannie Mae who won't waive the appraisal.)
I understand that a bank (and whoever buys a mortgage) has many forms of risks when it loans money. One of those is the risk that the house is not really worth enough to serve as collateral for the loan. So appraisers serve a valuable function. But anyone (like a bank mortgage officer) who can see the 5 dollar figures that I used to calculate percentages above can immediately see that the bank's risk, in the value of the home, is zero. Under these circumstances, paying more than $500 for an appraisal is nothing more than throwing money away.
Is there any way to get the bank, or Fannie Mae, to see reason on this?
If the government is anywhere close to correct on this valuation, I could close on this loan, cancel my insurance and burn my house down, and the bank would still be able to recoup most of its money from the land. (This is a hypothetical, to argue a point. No arson planned.)
You might want to say that I shouldn't worry about this, because it's a tiny part of a large transaction. You're right. But nobody wants to throw $500 away. And it bothers me to pay for an appraisal when an appraisal is so nonsensical.