Refinance Appraisal Vs. Purchase Appraisal
Author:
Victoria ArajApr 5, 2024
•6-minute read
An appraisal is an important part of the home buying process because it determines the fair market value of a property. But did you know it’s also usually required when refinancing your mortgage?
Before you refinance, you may want to understand the key differences between the refinance and purchase appraisal processes. You’ll also want to know when you need a home appraisal and when you can skip it.
Let’s take a look at how an appraisal for a home purchase differs from an appraisal for a mortgage refinance. Then, we’ll go over a few tips you can use before your appraisal to maximize your home’s value.
What Is A Home Appraisal?
A home appraisal is a professional opinion of the home’s fair market value. An appraisal can be an important part of the home buying process because it protects you from overpaying for a new house. Purchase appraisals also protect lenders from loaning home buyers more money than a property is worth. This prevents the buyer from borrowing more than the home’s value and having potential financial difficulties later, because they are underwater on their mortgage.
Appraisals are also important in the refinance process because they give you updated information on the appreciation or depreciation of your home’s value. This process determines how much equity you may be able to tap into should you choose to utilize it for your financial goals.