Appraisals for
Refinancing
When refinancing, the appraisal becomes one of the most important parts of the entire approval process.
Why This Matters
Refinancing decisions are based on the critical relationship between your home’s value and the amount you want to borrow.
The Risks of Unexpected Values
Understanding the refinancing appraisal process helps you prepare properly, avoid surprises, and present your home effectively to meet your financial goals.
Step-by-Step Breakdown
How Refinancing Appraisals Work
- The appraiser cannot be directed by the client
- Ensures an arm's-length, objective valuation
- Total square footage and layout
- Condition, upgrades, and lot features
- Photos are taken for lender audit logs
- Recency, Proximity, and Style
- Size and Renovated Condition
The process is highly structured to protect both the borrower and the lender. By providing a list of recent upgrades and a copy of your tax bill to the appraiser during step 2, you help ensure all property details are accurately captured for the final report.
What Lenders Look For
Refinancing appraisals are reviewed with even more caution than purchase appraisals. Lenders focus on risk mitigation and data accuracy.
1. Clear, Strong Comparables
Underwriters verify that chosen sales are recent (usually within 90 days), local, and structurally similar to your property to ensure the benchmark for value is current.
2. Logical Adjustments
Differences in size, condition, and upgrades must be supported by market evidence. Outsized adjustments for "luxury features" without supporting local sales can trigger flags.
3. Accurate Property Characteristics
Underwriters meticulously verify the living area, basement finish, garage type, lot size, and condo fees to ensure the Loan-to-Value (LTV) ratio is calculated on factual data.
4. Legal Use and Zoning
Illegal suites, unpermitted additions, or zoning conflicts can slow or stop the approval. Lenders need to confirm the property is a compliant security for the loan.
5. Condition Matching Photos
The written report must match the visual evidence. Lenders check that the appraiser's condition rating (e.g., C3 vs C4) is supported by the interior and exterior photos provided.
6. Market Commentary
Lenders need to see how the appraiser interpreted current market conditions—such as trends in supply and demand—to assess the stability of the asset's value over time.
How to Prepare for a Refinancing Appraisal
🔑 Ensure Full Accessibility
Make all areas accessible, including utility rooms, electrical panels, the garage, and mechanical areas. If the appraiser can't see it, they can't value it.
📦 Remove Physical Obstacles
Clutter does not lower market value, but it can limit visibility and slow down the inspection. Clear paths allow for more accurate measurements and photos.
📝 Prepare Upgrade Records
Gather invoices, permits, and completion dates for any renovations. Clear documentation helps the appraiser verify and justify improvements to the lender.
🛠️ Address Minor Maintenance
Small issues rarely "break" a value, but unresolved minor items can create a perception of deferred maintenance that may raise questions for an underwriter.
💰 Income Property Requirements
If the property generates income, prepare rental contracts, market rent data, and expense details. Lenders require these to evaluate your total debt-service ratio.
FAQ
Common questions regarding the refinancing appraisal process.
While "deep cleaning" doesn't technically increase market value, it drastically improves visibility. A tidy home allows the appraiser to see the actual condition of finishes and reduces the risk of overlooking high-value features or upgrades.
Yes, you can share information about local sales you believe are relevant. However, the appraiser is required by professional standards to independently verify the data and determine if those sales meet the strict regulatory criteria for proximity, recency, and similarity.
If you believe the value is incorrect, you can request a reconsideration of value through your lender. You must provide specific evidence—such as omitted comparable sales or factual errors in the property description—to support your request.
Most lenders require a full interior and exterior inspection for refinancing. These reports must follow rigid guidelines regarding comparable selection and adjustment logic to ensure the loan is backed by a conservative and defensible valuation.
Ready to Secure Your Home Equity?
If you are preparing for a refinance and want to understand how your home’s value will be assessed, our team can guide you through the process and help you get ready.
