How to prepare for a mortgage refinance appraisal

Part of the mortgage refinance process is a property appraisal. Your lender hires an independent real estate appraiser to calculate your home’s market value based on several criteria, such as its size, age and condition.

The professional appraiser takes note of any home improvements you’ve made or any areas of disrepair. The entire visit generally takes between 30 to 45 minutes, but may be longer depending on the size and features of your home. Then, based on that visit and the home values of properties similar to yours, the appraiser determines how much your property is worth.

Home appraisal checklist

Preparing for your appraisal can help boost your home’s market value. While you don’t need to do an expensive remodel, you can tackle a few projects to improve the condition of your home’s interior and exterior.

Here are six tips for how to increase the appraised value of your home for refinancing:

Clean up and remove clutter

Think of an appraiser as a guest in your home that you’re trying to impress. Tidying up and organizing your home helps make a good first impression.

Repaint or do a few touchups

Peeling, chipped or faded paint can give the impression that the home isn’t in good shape. And dirty, marked-up walls can date a home. A coat of fresh paint or touching up critical areas can show that your property is well-maintained.

Fix damaged carpet or flooring

While you might not replace all of your carpet or flooring, as you may if you were selling a house, you might want to address the obvious, damaged sections. And a thorough, professional carpet cleaning couldn’t hurt, either.

Update the kitchen and bathroom

Appraisers actively look for home improvements. The kitchen and bathroom are big selling points that can affect your home’s value. Consider low-cost upgrades that are aesthetically pleasing and can add real value to your home. For example, you can replace light and sink fixtures, repaint cabinets, change cabinet hardware and refinish countertops.

Up your curb appeal

The exterior of your home can be just as important as the interior. According to Alex X. Niemiera, a professor at the School of Plant and Environmental Sciences at Virginia Tech, an attractive landscape can increase the perceived value of a home by 5.5% to 11.4%. That means a $200,000 property could seem $11,000 to $22,800 more expensive.

Make a list of things to point out

Point out upgrades or features to the appraiser that may not be readily obvious. You may also want to mention if your tax records are incorrect. The appraiser must have all the necessary information about your home before they issue a report.

The importance of a refinance appraisal

A proper appraisal can make or break your refinance. A low assessment can negatively affect what interest rates you qualify for and jeopardize your refinance approval altogether. Your eligibility to refinance may be at risk if your appraisal comes back lower than you expected.

Should you skip the refinance appraisal?

Qualified borrowers of specific loan programs — like the FHA Streamline refinance — may have the option of skipping a refinance appraisal. But if the homeowner feels that their home value has increased, a full appraisal may be beneficial.

Pros and cons of a refinance appraisal

Here are some advantages and disadvantages of a refinance appraisal.

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Bottom line

An appraisal is critical to your mortgage refinance. Proper preparation can help increase the appraised value of your house. A high appraisal can make you a more attractive borrower and give you an edge when refinancing, while a low appraisal can negatively affect your refinance application.

Frequently asked questions

• Does a refinance appraisal affect property tax?

  No. Municipalities use property assessment reports from their assessors to calculate your property taxes. A refinance appraisal is primarily for your lender.

  But if you get a cash-out refinance and use the money to make improvements on your home, you may raise the value of your property and trigger a tax reassessment. A new tax assessment will likely increase your property tax.

• What to do if your refinance appraisal is low?

  If your appraisal is lower than you expected, you can appeal it to the lender or the appraisal management company. The appraiser will review and respond to the appeal, potentially prompting a reevaluation. You may also request a second opinion at your own expense, but you’ll probably need to show that the appraiser made a significant mistake.