Home Appraisal for Mortgage Refinancing

Oct 9, 2018, 2:30 PM | Robin Kocherhans
Home looking nice ahead of appraisal for a mortgage refinance

If you want to refinance or sell your home, getting a high appraisal value can be the difference between making money on your home and not being able to move forward.

It's crucial to understand what the appraiser will be looking for so you can be prepared and behave appropriately during the appraisal.

Finally, if the appraisal results are truly unfair, you'll need to know the best way to appeal them.

Why Appraisals Are Critical for Mortgage Refinance Loans

If you hoping to refinance your mortgage, you want the appraiser to value your home as highly as possible.

That's because a low home appraisal can lead to less than ideal terms on the loan, including needing to pay private mortgage insurance. It could even prevent you from being able to refinance.

On the other hand, a high appraisal can lead to you being presented with several good loan options, along with a lower interest rate and lower payments.

Getting Ready for the Appraisal

In order to accurately value your home for the new refinance loan amount, most lenders will usually require you to get an appraisal. Often, a third-party firm will pick an appraiser for you so that neither you nor the lender can pick a biased appraiser.

Even though that is a good thing, it does also mean that the appraiser might not be experienced in your neighborhood, or even your city. Accordingly, you might need to show the appraiser information about comparable houses in your area and, possibly, why yours is worth more.

Understand What an Appraiser Will Be Looking For

It helps to get inside the appraiser's head a little. He or she will be looking at numerous features of your house, including:

  • Interior and exterior appearance and condition
  • Number of rooms
  • Location
  • How well the design and layout of the rooms function
  • Porches, decks, garages, and other exterior elements
  • Upgrades to heating, plumbing, electrical, bathrooms, kitchens, roof, and windows
  • The age of the home's systems and how well you've kept them up

Gathering together the following documents can help the appraiser figure all of this information out faster:

  • Your latest real estate tax bill, which shows the value of the land and structures
  • A survey or plan of the structure(s) and land
  • Any title policy that you received when you bought the property
  • General home inspection reports and specific reports on issues like septic systems, wells, or termites
  • A listing of all upgrades ever done to the house, especially expensive ones such as a roof, new furnace, or remodeled kitchen, as well as any new appliances that will stay with the house
  • A report on recent sales of nearby houses that are like yours in regards to the number of bedrooms and bathrooms, square footage, and floor plan
  • A listing of new nearby shopping centers, parks, and schools

We'll mention this again later, but remember it's your job to simply hand the appraiser this packet of information and then to let him or her decide how to use it.

Prepare for Appraisal Day

Appraisers are humans just like you and me. They'll feel better about your home if it looks like you take good care of it. So, clean up the outside and inside. For starters, it's a good idea to get rid of trash, make the area smell good, wash the dishes, and mow the lawn.

You can also use this checklist to clean and repair more:

  1. Make Small Repairs – Do the DIY projects you've wanted to, such as fixing leaky faucets so that you can make your house look cared for.
  3. Increase Curb Appeal – Look at the approach and entrance to your house with a critical eye, especially if you don't use your front door often. Some things that can help bumb up your curb appeal include:
    • Cleaning outdoor lights
    • Trimming foliage, shrubs, and trees
    • Putting seating and cushions on the porch
    • Adding mulch to flower beds
    • Putting out new pots full of flowers or other plants
    • Getting rid of outdoor clutter
    • Weeding the flower beds
    • Removing dead trees, if possible
  5. Check Your Safety Systems – Make sure security, carbon monoxide, smoke, and other alarms are all working.
  7. Repair Minor Damages – Carefully inspect areas you don't normally look to find potential repairs, such as:
    • Nailing down loose floorboards
    • Patching a leak in the roof
    • Clearing out gutters
  9. Update Cosmetic Features – Make your house look more contemporary with:
    • A fresh coat of paint on cupboards and inside and/or outside walls
    • New countertops, even if they're just laminate
    • New flooring that isn't linoleum (or at least linoleum with an updated print)
    • Shinier faucets and/or doorknobs
    • New curtains
  11. Use the $500 Rule – An appraiser can easily knock $500 off of your home's value for each instance of a broken door, outdated vanity, damaged floor tiles, and so on. In order to prevent these dings, and potentially save thousands of dollars on the value of your home, do any repair that costs less than $500 before your appraisal.
  13. Clean, Clean, Clean – Your house will simply look newer and more valuable when it's really, really clean. Shampoo the carpet. Wash the walls. Powerwash the exterior. You won't regret it.

How to Win on Appraisal Day

On the day that the appraiser is due to arrive, have the house ready and be ready to act appropriately by following these four pieces of advice:

  1. Improve Accessibility – Make sure every room, crawl space, and attic are all easy to enter.
  3. Make the Appraiser Comfortable – Set the thermostat at a medium temperature, keep pets and children away, and do anything else to make him or her comfortable.
  5. Give Information Diplomatically – Before the appraisal, hand over your information packet about the property and surrounding area. Then, after the appraisal, ask they appraiser if they have any questions.
  7. Give Some Space – Let the appraiser do their job undisturbed. Be available to answer any questions, but don't hover.

How to Contest a Low Appraisal

After an appraisal is finished and the appraiser has decided on the home's value, it's often difficult to change his or her mind. But if it's necessary, you need to try; otherwise, you could get less than your house is worth.

But,in order to even have a chance of success at contesting the appraisal, you need to rely on good data, such as:

  • The Latest Comparables – Provide examples of comparable properties with higher values that were sold after the date of the appraisal.
  • Check the Quality of Comparables – Look at the comparables that appraiser did use to see if they might be unfair or incomplete. This could include checking for properties that may have sold for an unusually low amount due to foreclosure (or other similar situation). You will also want to see if they may have left out a key nearby property similar to yours that sold for more.
  • Check the School District – If the appraiser used a comparable property that was actually from a different school district, that might unfairly affect your home's value.

If you respectfully show this information to the appraiser, it might help. On the other hand, you might need to request a new home appraisal, if you're very sure that the appraised value is completely wrong. A second appraisal might cost you up front, but it could end up being worth it.

Start Your Home Refinance and Appraisal Process

You have a good chance of getting your home appraised at a high value if you understand what the appraiser is looking for, diplomatically supply information, and repair and clean your house. Appraisers are human and can be influenced by a great experience.

And, if your appraiser makes an error, the decision might not be final if you have good information to respectfully correct the mistake.

To learn more about getting a mortgage refinance, contact Elevate Mortgage Group today.

Robin Kocherhans

Robin has been writing about mortgages for almost 2 years and has been a professional writer for 8. She loves researching and answering your questions about home loans and the mortgage process, as well as helping simplifying complex topics to make them easier for you to understand.