"Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit." -- Napoleon Hill

Dear Kate,

We need your best mortgage advice regarding a low property appraisal.

We want to buy a vacation home. After a lot of searching we found our perfect vacation dream home! The price is reasonable too. But now we hit a road block. The bank completed the house appraisal below the purchase price. They claim the septic system is too old but since we'll use the home just on week-ends, the septic is adequate for our purposes. We feel strongly the bank appraiser called this one wrong. Please, Kate, will you help us?

Dear Madeline,

Opportunity is knocking. This could be your lucky day. I know the secrets to a low property appraisal. Here's how to get your dream home AND better terms too!

Due to the mortgage foreclosurecrisis, banks are becoming stricter on property appraisals. You might be satisfied with the septic because it is adequate for a vacation home. But the bank anticipates buying a new septic system if they were forced to resell the property. So, it boils down to the golden rule of mortgage lending. She who has the gold makes the rules.

Madeline, here is my best mortgage advice. I understand banks lend a lot of credence to appraisals but I also know a secret. A house appraisal is just one person's opinion. So, look at it this way...opportunity is knocking at your door. Don't be discouraged. You have options for getting your dream vacation home AND better terms too. Here are some options to consider and I'm confident you'll come up with more.

Imagine getting better mortgage terms because of a low property appraisal...

• Consult your real estate agent about renegotiating a lower purchase price with your seller. Then ask your lender to agree to the septic being replaced by you, after closing, under an escrow hold-back. (if practiced in your locale)

• Ask the seller to have the septic inspected, serviced and repaired if necessary. The seller knows if you are asking for this, another home buyer likely would too.

• Consider renegotiating with your seller to replace the septic before the transaction closes. Talk it over with your real estate agent.

• If you have enough cash, ask your bank to waive the septic requirement in return for a greater down payment. Bonus! You'll get a lower mortgage payment.

• Speak with a second property appraiser who may have a different opinion about the septic system's longevity.

• Not all mortgage lenders are created equal, so consider switching to a lender who is not as property sensitive. Discussing this with your real estate agent might be helpful.

• Perhaps your mortgage lender would reverse their decision if the seller provides a warranty from a septic company.

Madeline, you have options for getting your dream vacation home AND better terms too. A house appraised too low is just like everything else in life, an opportunity for something better. This could be your lucky day.

Best wishes and good luck,

Kate

P.S. Madeline, go to my Best Mortgage Rate Blog, an entertaining source of mortgage information. Subscribe now to the RSS feed.

The views expressed in this article are opinions of the author. Consult an attorney and/or real estate agent for counsel before taking action.