How to prepare for a home appraisal for refinancing

A few improvements can make a big difference in your refinance

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What do you prioritize most?

a model house viewed through a magnifying glass

Most homeowners refinance for financial reasons, such as to lock in a lower interest rate or switch from an adjustable- to a fixed-rate loan. Refinancing can also help you extend your repayment term to get a lower monthly payment or allow you to access a lump sum of money through a cash-out refinance.

In all of these scenarios, a home appraisal is a crucial part of the process. However, it’s also out of the homeowner’s hands, as appraisals are conducted by third-party professionals. That said, if you're considering a refinance but are worried your home won't be appraised for as high a value as you’d like, there are ways to make your property seem more attractive and valuable.


Key insights

  • A home appraisal estimates the value of a property and is done by professional property appraisers and assessors.
  • Most appraisals are ordered and facilitated by lenders, although buyers or homeowners seeking a refinance are required to pay for the appraisal.
  • Factors considered in a home appraisal include the age and condition of the home, the property's location, amenities and the size of the home.
  • To improve your chances of a high appraisal, clean and declutter your home, complete essential repairs and make a list of recent improvements for the appraiser.

What is an appraisal?

An appraisal is a written report that describes the estimated value of a property based on factors like:

  • Location
  • Size and condition of the home
  • Other structures and features
  • Characteristics of the local neighborhood

These reports are created by professional property appraisers and assessors, who typically visit homes in person to assess their condition and features.

In addition to inspecting properties, appraisers also consider outside factors when creating the appraisal report for a home. For example, real estate agent Troy Robillard of Premiere Plus Realty in Naples, Florida, says appraisers also look at comparable sales in the area to determine the value of the home.

"They will look at the sale prices of recently sold homes that are similar in size, condition and location to the home being appraised," he said.

What do appraisers look for?

Appraisers can consider any and all factors related to a property when determining its value. That said, the most common features considered include:

  • Age: The age of a home can impact its appraisal, although a home being older doesn't always result in a lower value. For example, historic homes in excellent condition can be worth much more than newer homes of comparable size.
  • Amenities: Amenities such as a pool, garage or finished basement can also affect the appraisal. A home with upgraded interior features like a new kitchen or built-in closets may fetch a higher appraised value.
  • Condition: How well a home is cared for can decrease or increase its value. "Homes that are well-maintained and have recent updates tend to be worth more than homes that are in need of repairs," said Robillard.
  • Location: According to Robillard, location is one of the most important factors that appraisers consider. "Homes in desirable areas with good schools and access to amenities tend to be worth more than homes in less desirable areas," he said.
  • Size: Robillard says homes that are larger tend to be worth more than smaller homes.

How to strengthen your appraisal

There are certain aspects of your home that you have no power to change. You have no control over the location of your home after you buy it, nor do you control the quality of the neighborhood or the local schools. You also can't do much to make your home bigger or smaller without extensive renovations, and you cannot change the age of your home or how that factor impacts appraisal values.

However, there are plenty of ways you can make a difference in your home's appraisal value. If you're hoping to refinance your mortgage, consider taking any or all of the following steps.

Make sure your home is clean
Omer Reiner, a realtor and owner of Florida Cash Home Buyers, says that when it comes to getting an appraisal, it's all about first impressions. So, clean and declutter your home before the appraiser arrives. Reiner says even simple touches like a freshly mowed lawn or a newly painted front door can make a difference.

In addition to making sure the home is clean and in good repair, removing or reducing clutter can also make interiors appear more organized and spacious.

"I suggested a client give their home a thorough cleaning and some minor touch-ups, and it was appraised significantly higher than similar properties in the area," said Reiner.

Consider key upgrades to your home
In addition to cleaning, decluttering and touching up paint and other minor imperfections, Reiner says you should consider making improvements that can boost your appraisal value.

"Upgrades to key areas like kitchens and bathrooms usually yield the highest returns," he said.

However, plenty of other, smaller upgrades can also make a difference. Zonda Home’s 2023 Cost vs. Value Report showed that some of the best upgrades to help with resale and appraisal value include the installation of a new garage door, the addition of manufactured stone veneer and replacing the entry door.

Supply the home appraiser with a list of recent improvements
Reiner also suggests providing the appraiser with a list of improvements and upgrades done to the home, along with their costs.

Supplying a list of upgrades is smart since some home improvements are not obvious or even noticeable. For example, a new roof or heating, ventilation and air conditioning system may go unnoticed by an appraiser unless these improvements are pointed out to them. Your kitchen countertops might be made of imported Italian marble that looks like locally available material to the untrained eye.

Any of these expensive upgrades can make a property more valuable for resale or appraisal purposes, so you'll want to let the appraiser know.

How to get a refinance appraisal

Because a home appraisal is meant to protect a lender's interests, it is typically booked and facilitated by a lending institution. After someone applies for a mortgage refinance loan, they usually receive correspondence about when the appraisal will take place and which company was hired to create the report.

However, lenders will add the cost of an appraisal to your closing costs for the refinance. An appraisal will typically cost between $200 and $600, but it may cost up to $800 or more for larger homes. While requiring a homeowner to pay to see how much their home is worth may seem counterintuitive, this fee is just one of the many closing costs required to refinance a mortgage.

Lenders are also required to supply homeowners with a copy of the appraisal report upon request.

» MORE: How to refinance a mortgage

What to do if your appraisal is low

If you wind up getting a lower appraisal amount than you expected, this can create several different problems, depending on the reason for your refinance.

For example, if you were hoping to show you have at least 20% equity in your home in order to have private mortgage insurance (PMI) removed from the loan, a low appraisal could spoil your plans. The same logic applies if you were expecting to get a certain sum of money through a cash-out refinance that cannot be justified given your home’s appraisal value.

Homes that are well-maintained and have recent updates tend to be worth more than homes that are in need of repairs.”
— Troy Robillard, Premiere Plus Realty

According to the experts, you can consider several steps to remedy a low appraisal:

  • Challenge the appraisal. If you believe there were errors or the appraiser overlooked certain aspects of your property, Reiner says you should bring it up with the mortgage refinance company. "Gather evidence to support your case," he said. "This could include recent comparable sales in your area, any improvements you've made that may not have been considered or even notable features of your home that were missed."
  • Offer to pay for a second appraisal. Robillard says some lenders may want to work with you to help you get the appraisal amount you need. You may even be able to pay for a second appraisal and get a different result in the middle of the refinancing process.
  • Improve your home's condition and try again. If there are needed repairs or upgrades you've been putting off, now might be the time to take care of them. Once you complete improvements that could help you get a higher appraised value for your home, you can apply for a new refinance loan and pay for another appraisal.

» MORE: Best mortgage refinance companies

What do you prioritize most?

FAQ

Can I refinance without a home appraisal?

Most lenders will require a home appraisal before you can refinance, but there are exceptions to this rule. For example, you may not have to pay for an appraisal if you have so much equity in your home that your lender deems an appraisal unnecessary.

Certain government-backed refinance loans also come without any appraisal requirements, including refinance loans from the Department of Veterans Affairs, which are called interest rate reduction refinance loans, and streamline refinance loans from the Federal Housing Administration.

How long does a home appraisal take?

According to Redfin, it can take anywhere from a few days to a few weeks to get an appraisal report back after an appraiser has visited your home. However, the home visit itself typically only takes a few hours or less.

Can I dispute my appraisal if I disagree?

If you don't agree with the appraisal amount you receive for your home, your lender may honor your request for a second opinion. However, you'll usually need to pay for a second appraisal in this scenario.

Bottom line

Whether you're refinancing your home to get cash out or you just want to get PMI off your loan, getting your house in the best possible shape before an appraisal makes sense. By cleaning and tidying your home and making some basic improvements, you have the potential to increase your home's appraised value and move one step closer to your intended goal.


Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. Consumer Financial Protection Bureau, " What are appraisals and why do I need to look at them? " Accessed July 9, 2023.
  2. U.S. Bureau of Labor Statistics, " What Property Appraisers and Assessors Do ." Accessed July 9, 2023.
  3. Remodeling, " 2023 Cost vs. Value Report ." Accessed July 9, 2023.
  4. Amerimac, " Why Do Home Appraisals Cost so Much? " Accessed July 9, 2023.
  5. Benefits.gov, " Interest Rate Reduction Refinance Loan (IRRRL) ." Accessed July 9, 2023.
  6. U.S. Department of Housing and Urban Development, " Streamline Refinances ." Accessed July 9, 2023.
  7. Consumer Financial Protection Bureau, " What is private mortgage insurance? " Accessed July 9, 2023.
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