What happens at an appraisal for refinance?

During a refinance appraisal, a licensed appraiser will assess your home’s value by inspecting the interior and exterior , evaluating its condition, and comparing it to recent sales of similar properties in the area. They will look at features like square footage , the number of bedrooms and bathrooms, and any upgrades or improvements. The appraiser will then issue a report with an estimated market value, which helps the lender determine whether to approve your refinance and how much equity you have in the property.

What will fail a refinance appraisal?

A refinance appraisal can fail or result in a lower valuation if the property has major issues such as: Structural damage (e.g., foundation cracks, roof problems). Outdated or non-functional systems (plumbing, HVAC, electrical). Unpermitted renovations or additions that don't meet local codes. Poor overall condition , such as excessive clutter, neglect, or visible signs of deterioration.

How clean does my house need to be for a refinance appraisal?

Your house doesn’t need to be spotless, but it should be presentable . A clean and clutter-free home helps the appraiser focus on the condition and features of the property. Ensuring easy access to all rooms, the attic, basement, and exterior areas will make the process smoother and leave a positive impression. Deep cleaning isn't necessary, but general tidiness is recommended.

Can a refinance be denied after appraisal?

Yes, a refinance can be denied after an appraisal if the appraised value comes in lower than expected , reducing your equity and making you ineligible for the loan. Additionally, the lender may deny the refinance if the appraisal reveals significant issues with the property’s condition that would affect its marketability or livability.

How much does a refinance appraisal cost?

The cost of a refinance appraisal typically ranges from $300 to $600 , depending on factors like your location, the size of the home, and the complexity of the appraisal. Larger homes or properties with unique features may cost more to appraise.

How long after an appraisal does it take to close on a refinance?

After the appraisal is completed, it usually takes about two to four weeks to close on a refinance. The timeline can vary depending on factors like the lender’s processing time, whether additional documentation is needed, or any issues that arise from the appraisal report.

What negatively affects a home appraisal?

Several factors can negatively affect a home appraisal, including: Deferred maintenance or visible damage (e.g., peeling paint, broken fixtures). Unpermitted renovations or poorly executed DIY projects. Dated or non-functional systems (heating, cooling, plumbing). Neighborhood decline or proximity to undesirable features (e.g., high-traffic areas, industrial sites). Market conditions , such as falling home prices in the area.

When to Get a Refinance Home Appraisal and When to Skip

Refinance Appraisal: How It Works and What To Expect

In many cases, you need a refinance appraisal in order to secure a lower interest rate.

By Miranda Marquit

Written by

Miranda Marquit

Freelance writer, Credible

Miranda Marquit is a personal finance journalist with over 15 years of experience. Her work has been featured by NPR, MarketWatch, FOX Business, The Hill, U.S. News & World Report, and Forbes.

Edited by Reina Marszalek

Written by

Reina Marszalek

Senior editor, Credible

Reina Marszalek has over 10 years of experience in personal finance and is a senior mortgage editor at Credible.

Updated October 11, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

A home appraiser evaluates your home and determines its market value. When you decide to refinance your home, your lender might require you to get an appraisal before approving the new loan. However, a refinance appraisal might not be required in all cases.

Advantages of a refinance appraisal

There are a few advantages to getting a refinance appraisal. While you might be tempted to skip an appraisal, here are some reasons to consider moving forward with one.

Avoid private mortgage insurance

One of the biggest advantages of a home appraisal for a mortgage refinance is the potential to get rid of your private mortgage insurance (PMI). If the market value of your home has increased to the point where your mortgage loan amount is less than 80% of the home’s value, you can avoid PMI on your new mortgage. That could potentially save you thousands of dollars.

Read On: How to Get Rid of Private Mortgage Insurance (PMI)

Get a lower interest rate

Right now, mortgage refinance rates are near historic lows. Refinancing could help you take advantage of that lower rate, and if your home comes in at a higher value, you could get an even lower rate. This can translate to a lower monthly payment as well as interest savings over the life of your home loan.

If you’re ready to see what refinancing rates you qualify for, Credible can help. Get started by comparing rates from our partner lenders in the table below.

Potential for a larger cash-out amount

With a higher appraisal, you might be able to cash out a higher amount if your mortgage refinancing goal is to get extra money from the deal. Combined with a lower interest rate, this might allow you to reach some of your other financial goals in a more cost-efficient manner.

Find Out: How to Refinance Your Mortgage in 6 Easy Steps

Disadvantages of a refinance appraisal

Even though there can be some advantages to an appraisal, there are also some downsides. Before you move forward, weigh the potential disadvantages to having an appraisal.

Cost

The cost to refinance includes a home appraisal fee as one of the expenses. The average cost of a home appraisal typically ranges from $300 to $500. That’s something to keep in mind.

Lower property valuation

Another downside to an appraisal is that you could end up with a lower property valuation. If that’s the case, you could be stuck with PMI. There’s even a chance you might not be approved for a refinance because of your higher loan-to-value (LTV) ratio.

When it makes sense to skip a refinance appraisal

Depending on your situation, you might be able to skip a home appraisal for your refinance. One of the main factors in whether you can avoid the appraisal has to do with your LTV ratio.

Conventional loans: If you own a primary residence and aren’t getting a cash-out refinance, you might be able to get an appraisal waiver if your current LTV is 90% or lower. Fannie Mae will even allow you to skip the appraisal on a cash-out refinance if your LTV is 70% or lower.
FHA loans: Use an FHA streamline refinance to avoid an appraisal and receive lower documentation requirements. This type of refinancing is designed to lower your principal and interest payments.
VA loans: If you’re just looking for an interest rate reduction on your VA loan, you can use their streamlined loan and skip the appraisal.
USDA loans: As long as you’ve made on-time payments for the last 12 months and your refinance will reduce your monthly payment by at least $50, you can qualify for a streamlined USDA refinance that doesn’t require an appraisal.
ARM loans: If you have an adjustable-rate mortgage, meet LTV requirements, and are switching to a fixed rate, you might be able to avoid an appraisal.