Garnering Offers From Multiple Lenders With One Appraisal

[Josh Smalley]

Quick question as I've never done this before. I'm starting the process of applying with a few lenders for various products (HELOC, 2nd mortgage, refinance, etc.) that can help me take equity out of a rental property so that I can repurpose that money for another investment.

How do I manage the appraisal process? Do I just start with one lender, set up the appraisal, and then make sure the other lenders agree to this particular appraisal? Obviously I don't want multiple appraisals going on what with tenants in there right now and the costs associated. Or do I try to get everyone on board at the same time to approve of the appraisal (agree on the who and the when, for example)? I've never had to orchestrate this process.

Also, is it best to let your lenders know that you are shopping around to keep them a bit honest/competitive, or is it best to keep that information on the low down?

Thanks in advance.

[Kent Nielson]

The hardest part for you is deciding whether you want to do a HELOC or cash out refi. HELOC is better if you plan on repaying it in the near future. If you don't plan on paying it back I would recommend doing a cash out refi. The difference is a HELOC will have a variable rate and who knows what it will be 20 years from now. On the other hand you probably have a pretty low rate right now and the cash out refi will probably bump it up another 1-3% Hopefully that makes sense.

As far as the appraisal, my understanding is that if you are doing a HELOC, banks and credit unions don't require an appraisal if they go off the valuation provided by the county tax assessor. A majority of the time they don't reflect the true value, so if you want to pull out more than that, you will need to get an appraisal done.

Cash out refinances will always require an appraisal. They will most likely want their own appraisal as well.  For example If you get one done and switch lenders, you will end up paying for another appraisal.

It's perfectly fine to let lender's know you are shopping around, you're right it will keep them honest and more competitive. Also get more than one quote, and I would recommend skipping banks and credit unions and go to an actual mortgage company. They know their stuff.

For the most part appraisers come up with the valuation the same way, so even if you got three different appraisals they would be pretty similar. I would concentrate more on finding a lender you feel good about. Hope that helps!