Should You Refinance To 15 Years?

Refi 15

Appraisals establish the value of a given home, making them extremely important to lenders, tax authorities, the housing industry, the economy, builders, buyers, and sellers. They’re integral to building home equity and wealth, giving advantages to some homeowners and disadvantages to others.

Many lenders use automated valuation models to save time and money more so than to limit human bias, but historical data submitted by appraisers with conscious or unconscious bias, particularly in majority black and ethnic areas, may be subject to decades of undervaluation.

Appraisers limit competition by requiring candidates to undergo apprenticeships to become licensed, yet found that 77% of appraisers said they have no apprentice trainee and have no intentions to train anyone – effectively “closing the gate behind them.” The found just over 78,000 active licensed appraisers in 2019 in the U.S.

New innovations in software could make a difference, notes Algorithms could search for patterns of neighborhood bias and focus on more relevant data. Artificial intelligence can assess a home visually, like a human appraiser, but with absolute objectivity. The appraisal industry could also overhaul itself to better compete with automated valuation software.

Meanwhile, there are ways you can fight appraisal bias. Make sure the appraiser has geographical knowledge of the area. Insist on a thorough on-site appraisal, not a drive-by. Check the comparables used in the appraisal for relevance and proximity. Draw the appraiser’s attention to improvements made in the home and ask for an adjustment if the appraisal seems too low.

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