Before the coronavirus pandemic changed daily life in the United States, Can Erbil, of West Newton, Massachusetts, decided to refinance his mortgage so he could lower his monthly payments by about $300.
Then businesses shuttered and government officials recommended people stay at home or practice social distancing in public.
As Erbil followed those guidelines with his wife and his teenage daughter, he was surprised when his lender required an in-home appraisal at the West Newton property to complete the refinancing transaction.
“It just doesn’t seem safe,” Erbil said. “This is not the right policy from a public policy point of view. And I also don’t think it’s fair.”
Emily Roy had a similar reaction. She lives in South Boston with her husband and 2-year-old son.
The Roys, who moved in four years ago, would save about $400 per month by refinancing. But they also were informed an in-home inspection would be required.
“It’s a very difficult decision,” Roy expressed. “You shouldn’t have to allow people into your home. I don’t even let my own sister come over.”
Steve Sousa is executive vice president with the Massachusetts Board of Real Estate Appraisers, an association representing about 500 appraisers across the state.
Sousa said concerns about coronavirus transmission are also making appraisers uneasy.
“We hear from appraisers that they really don’t want to go into homes,” Sousa said. “And homeowners, when they find out an appraiser has to come inside, are simply refusing to let them go in. As a result, the refinance transaction dies.”
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Erbil, an economics professor at Boston College, has been teaching more than 200 students remotely from a studio set up inside his West Newton home.
During a Zoom chat, he took me on a tour of the house and wondered why appraisals can’t be accomplished virtually like so much other business during the public health crisis.
He also said rates could be locked in and appraisals deferred for 120 days until it’s safe to allow people back inside homes.
“Those types of things may potentially save lives,” Erbil said.
Meantime, in South Boston, Roy said it feels like she is making a decision between family health and finances. A deadline is looming for when the couple’s interest rate lock will expire.
“We’re at the end of our rope. Either we give up or we let them into the house,” said Roy, her voice cracking with emotion. “It just makes me more anxious than anything. It’s my family and my child that I have to worry about.”
Most lenders closely follow guidelines published by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the two government-sponsored entities that help fuel the housing market.
Those guidelines now offer more flexibility for appraisers to evaluate how much a home is worth without having to set foot inside, either by surveying the exterior or reviewing photos and other information remotely.
Banking industry professionals told NBC10 that most appraisals can now be performed without an in-home visit, although there are exceptions, including when borrowers refinance and cash out some of their equity. In some cases, federal guidelines also require a traditional appraisal when homeowners apply for a loan to purchase a second home.
If you are in the midst of the refinance process, it’s a good idea to check with your bank to see how the new guidelines might affect whether or not an in-home appraisal is required.