Home Appraisals When Refinancing: What to Look For and Timeline

If you aim to refinance your mortgage loan, chances are your home will need to be professionally appraised – which is often required by the lender. Lenders rely on appraisals to assess whether a property’s value is sufficient to back a new loan and to determine the appropriate loan amount and borrowing limit.

It’s normal to have questions about this process: What do appraisers look for in a refinance? What hurts a home appraisal for refinancers? What are appraisal refinance costs? And how long does a refinance take after appraisal? Read on for answers, including how to get a high appraisal for refinance.

What Is a Refinance Appraisal?

A refinance appraisal is a professional valuation of your party’s current market value, conducted by a licensed professional appraiser, which is typically needed when you’re looking to refinance your mortgage.

“This appraisal is crucial because it assures the lender that the property’s value supports the loan amount, which is a safeguard for both the lender and the homeowner,” explains Robert Mann, CEO of Triangle Appraisal Group in Raleigh, North Carolina.

Robert Sheperd, owner of Peak & Home Partners in Rockville, Maryland, notes that your lender will order an appraisal to assess whether the current market value of your home justifies the amount being borrowed.

“The appraiser will perform a thorough inspection of the property, comparing its features to similar comparable homes in the area that have recently sold. This appraisal helps lenders determine the loan amount and interest rate and whether mortgage insurance is required,” Shepherd says.

A refinance appraisal is very similar in purpose and process to the original appraisal conducted when you first bought your home.

What’s the Difference Between a Refinance Appraisal and a Purchase Appraisal? 

The primary difference between a refinance appraisal and a home purchase appraisal lies in the purpose.

“A home purchase appraisal is designed to confirm that the property’s value meets or exceeds the purchase price, protecting both the buyer and the lender,” says Carl Holman, director of Communications and Content for A&D Mortgage in Hollywood, Florida. “A refinance appraisal focuses solely on determining the home’s current value to ensure it supports the new loan terms. The process itself is largely the same.”

Mann agrees.

“A purchase appraisal emphasizes making sure the buyer pays a fair price, whereas a refinance appraisal is about securing a new loan under potentially more favorable conditions,” he says.

Also, unlike the original appraisal done on your house, a refinance appraisal allows you to be present, if you choose, while the professional appraiser visits your property. This provides the benefit of being able to point out any renovations, upgrades, or repairs you’ve made.

Why Do You Need an Appraisal When Refinancing?

A professional appraisal is typically necessary when refinancing to safeguard the lender and provide a more accurate assessment of the home’s value.

“This is crucial to protect the lender from lending more than the home is worth. The appraisal is required by the lender, but it’s beneficial for homeowners,” Shepherd continues.

Here’s how a refinance appraisal benefits borrowers:

• It determines loan eligibility. “It helps homeowners qualify for better loan terms and/or lower interest rates,” adds Shepherd.
• It assesses equity. “It provides a clear picture of how much of the home you own outright – home equity – which can be used for cash-out refinancing,” he says.
• It prevents overborrowing. “The appraisal ensures that you do not take on more debt than the property can support, reducing the risk of foreclosure.”

How Do Appraisers Determine Your Home Value When Refinancing?

According to Mann, professional appraisers look at several different factors to evaluate your home’s value.

“These include the home’s location, its size and overall condition, comparable recent sales in the area, and broader market trends,” he says. “Each of these factors helps us build a detailed picture of what your property is worth in the current market.”

Some of the different factors and methods used to help gauge your home’s worth include:

• Comparative market analysis (CMA). “This is the primary method, where the appraiser looks at recent sales of comparable homes in the neighborhood. These comps should be similar in size, age, and features to provide a fair comparison,” says Shepherd.
• Property features. The appraiser will evaluate the number of bedrooms and bathrooms, overall layout, square footage, and any unique features like a finished basement or pool.
• Condition of the property. The overall state and condition of the home and grounds, including any repairs or upgrades made, will affect the appraisal. “A well-maintained property typically receives a higher appraisal value,” Shepherd notes.

Holman points out that appraisers typically look at the condition of key features such as the foundation, roof, electrical systems, and landscaping.

What Hurts a Home Appraisal?

Red flags can create a bad impression and lower your home’s value in the eyes of the appraiser.

“Things like noticeable disrepair, outdated interiors, or unfavorable market conditions can negatively impact the appraisal,” cautions Mann. He adds that the following design features, which might not appeal to the broader market, can further contribute to a poor appraisal:

• Overly customized designs
• High-maintenance features like large swimming pools
• Outdated systems like single-pane windows
• Extensive wall-to-wall carpeting
• Bold design choices
• Closed floor plans

“Visible damage, such as leaks, cracked walls, or mold that indicate poor maintenance, can also significantly decrease value, as can old appliances, worn-out flooring, or outdated bathrooms,” Shepherd says.

What’s more, high crime rates, poor schools, or proximity to undesirable features in the neighborhood like highways or factories may lead to a lower appraised value.

“Also, in areas with few recent sales, it can be challenging to establish a solid value – potentially resulting in a lower appraisal,” says Shepherd.

How to Increase Your Chances of Getting a High Appraisal

Eager to learn how to get a high appraisal for refinance? Follow these tips:

• Complete needed repairs. Resolve any obvious defects, such as broken tiles or leaky faucets, to present the home in good condition.
• Make minor upgrades. Apply a fresh coat of paint to worn walls, tidy up your landscaping, and complete cosmetic improvements. “Updating fixtures and fittings and improving the home’s curb appeal can make a big difference,” advises Mann.
• De-clutter and clean. “A thoroughly clean and organized home can create a more favorable impression, making the space feel larger and more inviting,” continues Shepherd.
• Document your improvements. “Keep records of any upgrades made, such as new countertops or energy-efficient windows, and present this information to the appraiser,” Shepherd recommends.
• Furnish comps. If you are aware of recent sales of similar properties in the area that indicate a higher value, share these details with the appraiser.

Do You Need a Refinance Appraisal?

Again, your lender will likely require a new appraisal for your refinance. But there are some circumstances where you can avoid an appraisal.

“The appraisal may not be required if you qualify for an appraisal waiver from the lender,” Holman points out. “These waivers are often granted when you have a low loan-to-value ratio, an excellent credit history, or are refinancing with the same lender under specific programs.”

Also, a refinance appraisal may not be required for certain loan types.

“Some government-backed loans may not require an appraisal if you meet specific criteria. These programs are designed to make the refinancing process quicker and less costly by potentially bypassing the appraisal step, focusing instead on the homeowner’s payment history and benefits from refinancing,” Mann says.

Three government-backed refi loans that don’t obligate you to have an appraisal are:

• FHA Streamline Refinance
• VA Interest Rate Reduction Refinance Loan (IRRRL)
• USDA Streamlined Assist refinance

Also, instead of a traditional in-person appraisal, your lender could use an alternative appraisal method that employs technology and non-invasive techniques to accelerate the process and reduce costs. These include a:

• Desktop appraisal – which relies on online data, such as floor plans and property records, without involving third parties.
• Hybrid appraisal – which involves using third-party information like property details or home inspection photos without an in-person visit.
• Drive-by appraisals – where the appraiser assesses the property from the outside only, which may be accepted for FHA and VA refinances.

Refinance Appraisal Costs Explained

The bad news about a refinance appraisal is that the homeowner must foot the bill. Expect this appraisal to cost between $300 and $600, on average. This fee covers the appraiser’s time and expertise.

“What you pay will depend on the type of property being appraised, such as a single-family home, townhome, or manufactured home, with each type potentially requiring different evaluation efforts,” says Mann. “The fee can be paid upfront or rolled into the refinancing closing costs with your lender.”

Keep in mind that you are on the hook for this charge even if the appraisal turns out too low for loan approval. 

What Happens After the Appraisal Comes In?

After the appraiser submits their report to the lender, the lender will review it and adjust the loan offer as necessary.

“The entire refinancing process usually is completed within 30 days from when the appraisal report is received,” notes Mann.

Here’s a summary, step-by-step, of what that timeline looks like:

1. Review of the appraisal (1-3 days). The lender will review the appraisal report to confirm the home’s value supports the proposed loan amount.
2. Loan adjustment (1 to 2 days following appraisal review). “Based on the appraisal, the lender will adjust the loan terms as necessary. If the appraisal value is lower than expected, this may involve renegotiating the terms or deciding not to proceed,” Mann continues.
3. Underwriting process (7-14 days). Your loan is underwritten, and the lender verifies all financial information while assessing risk.
4. Final approval (2-3 days after underwriting completes). “Your loan receives final approval from the lender. All terms are finalized, and the preparation for closing begins,” says Mann.
5. Closing (3 to 5 days after final approval). You attend a closing meeting to sign all the loan documents and finalize the refinance.
6. Disbursement of funds (1 to 2 days after closing). If applicable, funds from cash-out refinancing are dispersed. The new mortgage terms take effect immediately after closing.

What Happens If the Appraisal Comes in Low?

If your home value comes in lower than expected on the appraisal report, you have a few options.

“You can dispute the appraisal and request a second opinion, especially if you suspect there were errors. Alternatively, you can negotiate with the lender for different loan terms. Or you can make up the difference with a larger down payment,” suggests Holman. “In some cases, you may need to reconsider the refinance altogether.”