When refinancing is a high appraisal better than a low appraisal?

Question:

We’re looking at getting a refinance right now. We’re not committed yet to a lender, but we’re just exploring it because we want to reduce our mortgage insurance, hopefully get a lower rate and move from a 30 year mortgage to a 20 year term.

Where I’m lost is how much to prep for the appraisal. I spoke to a few people and some of them are telling me that I should blow the appraisal or try to get out of it entirely because a good appraisal could raise my property taxes. I’m also being told that it could not affect the amount of equity we have in the house and thus shouldn’t be a factor in whether or not the PMI will come off.

Answer:

You want the highest appraisal value possible in order to lower the loan to value (LTV) when you get your refi. A lower LTV improves the refi terms that you’ll qualify for. So definitely a high appraisal is better than a low one. I’m not sure why anyone would tell you that you should tank the appraisal to push the appraised value lower. This appraisal should not affect your property taxes since the assessed value does not go up just because you have a new appraisal. Some people may confuse appraisal and assessment leading to this incorrect conclusion, but remember that the assessment only happens when there’s a change of ownership…and a refinance doesn’t count as a change of ownership.

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