Woman preparing for a refinance appraisal.

What To Expect From A Refinance Appraisal

April 12, 2024 7-minute read

Author: Rachel Burris


Are you considering refinancing your home, but you’re hesitating over the refinance appraisal? It may feel intrusive to open your home to what feels like an inspection, especially since you already have a mortgage on your home. Understandably, many homeowners wonder why another appraisal is even necessary.

Understanding the appraisal refinance process can empower you to help you feel more comfortable and ensure you get the most out of your refinance.

What Is A Refinance Appraisal?

If it’s been a while since you first purchased your home, you may not recall the details of the home appraisal process. However, a refinance appraisal is similar to a purchase appraisal. Just like when you bought your home, an appraisal plays a crucial part in getting a refinance loan. Like a purchase appraisal, a refinance appraisal provides a professional assessment of a home’s market value, which helps determine how much home equity you can borrow against.

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Why Do Lenders Need A Home Appraisal For A Refinance?

Your lender needs to confirm that the value of your home covers the amount of your new loan. And in the event of a default, your lender can recoup their initial investment by selling the home.

If you want to use a cash-out refinance to tap into your home equity, a refinance appraisal lets you know how much equity you have in your home.

The value of any home is subject to two main factors: the market for comparable homes and how well you’ve maintained your home.

Changes In Market Conditions

Homes typically appreciate in value, but sometimes they depreciate. Depreciation can happen when you purchase a home at the peak of a rising market, and then area home values drop due to an economic event or decline in demand.

An economic crisis or drop in buyer demand could decrease your home’s value. In more extreme cases, you could end up with an underwater mortgage, meaning you owe more on your loan than the home is worth. A lower appraised value than your mortgage balance can limit the amount you can borrow or disqualify you from refinancing.

Changes To Your Home’s Condition

Lenders must confirm that you’ve been maintaining your property. Poor or inconsistent home maintenance can also cause a home’s value to decline and threaten a lender’s investment. An appraiser will assess your home's interior and exterior, noting any factors that impact its value. The upgrades you’ve made on the property can potentially increase your home’s value.

What’s The Difference Between A Refinance Appraisal And A Home Inspection?

The home appraisal process is almost always required to refinance your loan and establishes your home’s current market value, which helps determine how much you can borrow. A lender won’t likely be interested in your home’s repair needs unless they affect market value.

A home inspection usually happens when you buy a house. The inspection is optional and not required for a refinance. The point of the inspection is to ensure the home is in good condition, uncover any major issues or red flags and give the prospective home buyer a deeper understanding of a home’s maintenance needs.

What Can You Expect From An In-Person Appraisal?

Depending on your reason for refinancing and the amount of equity in your home, your lender may order a full, in-person appraisal. A full appraisal requires a home visit. With a refinance appraisal, you can attend the appraisal if you want.

The appraiser will thoroughly examine the home’s exterior and interior to judge the property’s condition and make note of its size and features. Next, they run an analysis that determines the current fair market value of the home by comparing it to similar, recently sold homes in the area.

Lenders schedule appraisals – they don’t perform them. In most states, a licensed and independent appraiser must conduct the appraisal.

What Factors Do Refinance Appraisers Consider?

An appraiser considers several factors inside and outside the home to determine its value. Let’s review some factors appraisers consider to determine a home’s value.

Basic Condition Of The Home

The appraiser won’t check to see if outlets are working or consider the paint color on your walls. An appraiser is there to assess the home’s basic condition. They’ll count the number of bedrooms, check for health hazards like lead paint, and run tests to see if the HVAC system and cooling systems are functional. They’ll also make sure that the home meets basic livability standards. If an appraiser determines that the home doesn’t meet livability standards, you can expect an appraisal amount that’s significantly less than surrounding homes.


Your appraiser will evaluate any upgrades or improvements you’ve made to the property. The upgrade must be a permanent fixture to increase the home’s value. If the upgrade is something you can take with you when you move, your appraiser probably won’t consider it an upgrade. The appraiser also considers upgrades outside a home’s living space, including upgrades to a garage, pool or basement.

Comparable Homes In Your Area

Appraisers don’t just look at your property when they assign a value to your home. They also look at public records for the homes near yours. Because location is a major factor in determining the value of a property, appraisers use real estate comps to determine how much similar area homes have recently sold for and how property values trend.

Are Appraisals Required To Refinance?

Most lenders will require an appraisal before you can close on your refinance. However, some loans allow you to skip the appraisal or use alternative methods to traditional in-person appraisals.

Alternatives To In-Person Home Appraisals For A Refinance

Depending on your lender’s refinance requirements and a borrower’s circumstances, a lender may require one of a few appraisal methods. Lenders are discovering that using technology or noninvasive appraisals can reduce costs and speed up the appraisal process.

Hybrid Appraisal

Hybrid appraisals allow appraisers to use information from a third party to complete an appraisal without physically visiting a house. In certain cases, a lender will allow an appraiser to use photographs from the home inspection or hire someone to collect information on the property, such as its condition, home features and location.

Desktop Appraisal

A desktop appraisal is similar to a hybrid appraisal, except there’s no third party involved. The appraiser uses information online – like property records, floor plans and comparable listings – to gather what they need to produce an estimate. Rocket Mortgage® doesn’t offer desktop appraisals at this time.

Drive-By Appraisal

Lenders may be satisfied with a drive-by appraisal, also known as an exterior-only appraisal, for many homeowners. The Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) allow exterior-only appraisals for most refinances.

No Appraisal

Although most refinances require an appraisal, there are no-appraisal refinances available. The following loan products typically don’t require appraisals:

These government-backed loans allow borrowers to take advantage of lower interest rates without incurring the costs of a full refinance. Rocket Mortgage doesn’t currently offer USDA purchase loans or USDA Streamline loans.

FAQs About Refinance Appraisals

Find answers to the most frequently asked questions about refinance appraisals.

How long does underwriting take after a refinance appraisal?

Once the appraisal is complete, finalizing the refinance generally takes 1 – 2 weeks.

Can a refinance be denied after the appraisal?

Yes, a lender may deny a refinance if the appraisal is lower than the amount you owe on the mortgage. An appraisal establishes a home’s fair market value. If the home’s fair market value is lower than your requested loan amount, you may not qualify for the entire amount. The lender can’t offer as much for the loan if the appraisal comes in lower than expected.

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

A spotless home isn’t required. What’s critical is ensuring your home appears well taken care of. To make sure the appraiser can easily see your home is in good condition and well maintained, clear away any messes, mow your lawn and maybe empty the sink before the appraiser knocks on your door.

What should I do to prepare for a mortgage refinance appraisal?

Once your lender tells you which type of appraisal they plan to order, you’ll have a better grasp on how to prepare. The primary way to prepare for a refinance appraisal is to tidy up the interior and exterior of your home. Check out our refinance appraisal checklist for a complete list of steps to help you get ready.

How much does a refinance appraisal cost?

The price of an appraisal will depend on several factors. First, you’ll need to know what type of appraisal your lender requires. Second, it’ll depend on where you live. For example, appraisers may find it harder to assess fair market value in rural areas. It’s challenging to make direct comparisons because there are fewer comparable sales. If your property is unique, it can also be difficult to assess its value because the more one-of-a-kind your home is, the harder it is to determine its fair market value.

Your lender will estimate closing costs after you’re preapproved and include them in the loan agreement. Three business days before closing, your lender will send you a Closing Disclosure that details the final closing costs. A home appraisal can cost between $600 – $2,000. A single-family home appraisal will typically be on the lower end of the cost spectrum, and a multifamily property will usually be on the higher end.

Who pays for a refinance appraisal?

The borrower pays all costs associated with the origination of the new home loan at closing or rolls the costs into the loan. When you fold your costs into your loan, you won’t have to worry about having the cash to cover the cost of your appraisal at closing.

The Bottom Line: Refinance Appraisals Allow All Parties To Understand A Home’s Market Value

While you may not look forward to the prep work associated with an appraisal refinance, it will give you and your lender a good understanding of your home’s worth. You may even be pleasantly surprised by your home’s value.

Ready to get your refinance application started? Our refinance experts will help you every step of the way. Start an application online with the Home Loan Experts at Rocket Mortgage today.

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Rachel Burris

Rachel Burris is a writer covering topics of interest to present and future homeowners, as well as industry insiders. Prior to joining Rocket Companies, she worked as an English teacher for the New York City Department of Education and a licensed real estate agent for Brown Harris Stevens. She holds a bachelor's degree in creative writing from Bucknell University, a postbaccalaureate certificate in psychology from Columbia University and a master's degree in English education from Teachers College, Columbia University.