What do appraisers look for in a refinance? A checklist to prepare

Refinancing your mortgage¹ relies on your home's current value, which is determined during a refinance appraisal that helps lenders see how much equity you have.

Because so much rides on this valuation, it helps to know what appraisers are looking for in a refinance – your home's condition, size and layout, location, upgrades, and recent comparable sales nearby – so you can walk into the process prepared.

Key takeaways:

• A refinance appraisal estimates your home's current market value and condition, so your lender can confirm it supports your loan amount.
• Appraisers weigh condition, size and layout, location, recent comparable sales, permanent upgrades, and market trends.
• A clean, accessible home and documented upgrade records help the appraiser see your home accurately, but prep doesn't guarantee a higher value.

What is a refinance appraisal?

A refinance appraisal is a professional, independent evaluation of your home's fair market value for a new mortgage, separate from the lender or anyone with a financial stake in the loan. Fair market value is the price your home would likely sell for on the open market.

In a traditional refinance appraisal, the appraisal is ordered by the lender, the appraiser visits the home, and then they compare your home to the rest of the market and similar homes in the area, resulting in a report of value that’s delivered to you and your lender.

The types of appraisals used for refinancing vary, and may include:

• In-person appraisal. A licensed appraiser inspects the inside and outside of the home.
• Drive-by appraisal. The appraiser views the exterior and neighborhood, then uses public records and comps. They don't go inside.
• Desktop appraisal. The appraiser doesn't visit. They use data like MLS listings and tax records.
• Hybrid appraisal. A trained third party visits and records details. The appraiser then finishes the report using that data and market analysis.

Why appraisals matter when refinancing

When you refinance, you replace your current mortgage with a new one, but your home is still the collateral – the asset the lender accepts as security for the loan. Lenders require appraisals to confirm you aren't borrowing more than the home is worth. That protects the lender's investment, and it also keeps you from taking on more debt than the home supports.

The result feeds into your loan-to-value (LTV) ratio, which compares your loan amount to the appraised value, using the current appraised value at the time of your refinance. A lower value means less equity, which is the gap between your home's value and what you still owe. It can also change your terms in three ways:

• Loan amount. Each loan type has a maximum LTV, so a lower value can shrink what you can borrow or the cash you can take out.
• Pricing. On conventional loans, price adjustments can apply based on LTV and credit score.
• Mortgage insurance. Borrowing more than 80% of your home's value generally means paying for mortgage insurance.

What do appraisers look for in a refinance?

During a refinance appraisal, the appraiser evaluates the home's condition, size and layout, location, permanent features, upgrades, comparable sales, and market conditions.

• Condition and systems. Overall condition, including the roof, foundation, HVAC, and any visible wear.
• Size and layout. Finished basements and other below-grade spaces are often counted differently than above-grade living space, so they may add less square footage than you'd expect.
• Location. Neighborhood trends in property values, housing supply, and time on market. If nearby sales have come in lower since you bought, your appraisal may fall short of what your purchase price or past equity growth would suggest.
• Permanent features. Built-in cabinetry, permanently attached items, and curb appeal, such as landscaping and exterior condition.
• Upgrades: Needed repairs, added features, finish quality, and modernization relative to the neighborhood.
• Comps and market. Recent comparable sales with similar physical and legal characteristics (room count, square footage, style, condition) that would appeal to the same types of buyers.

Appraisal red flags

A red flag in a refinance appraisal is anything that lowers your value or delays financing. What might hurt an appraisal can look like:

• Safety or structural problems. Foundation settlement, active roof leaks, and inadequate electrical or plumbing can make an appraisal “subject to” repairs, meaning they must be finished and verified first. A C6 condition rating can block conventional financing until they're fixed.
• An unusual layout. A bedroom level with no bath, or a kitchen on a different level than the dining room, can limit market appeal.
• Additions without permits. The appraiser must comment on the work's quality and its effect on value.
• A weak local market. Falling values, oversupply, and long selling times get extra scrutiny.

Minor wear, like worn carpet, cracked window glass, or a missing handrail, is usually appraised "as is,” meaning on conventional loans, it doesn't have to be repaired for financing purposes.

Refinance appraisal checklist to help you prepare

To get ready for a refinance appraisal, focus on what you control: visible upkeep, a clean and accessible home, documented remodel upgrades, and realistic expectations.

1. Improve curb appeal

Curb appeal is how your home looks from the street, and a few low-cost fixes go a long way:

• Power-wash siding, walkways, and the driveway
• Pull weeds and refresh mulch beds
• Clean the gutters
• Replace broken or outdated exterior light fixtures
• Paint the front door and swap out rusted house numbers
• Trim overgrown shrubs or trees blocking windows or the entryway

2. Declutter and deep-clean

An appraiser needs clear sightlines to assess square footage, finishes, and condition accurately, and clutter can visually shrink a room or hide its best features. Deep-clean a few days ahead of the appraisal, then do a final tidy up the morning of the appraisal.

“Decluttering does not, in and of itself, directly increase the value of your house,” says Joshua Walitt, a certified appraiser in Grand Junction, Colorado. But it can help the appraiser collect more accurate details about the house and reduce corrections later.

3. Create a list of your upgrades and improvements

Records help the appraiser document what’s been done. If you can, gather:

• Contractor invoices and receipts for any permanent improvements
• Permits, if the work required them
• Before-and-after photos for anything not obviously visible, like new electrical or plumbing

Remember only permanent upgrades count, also called fixtures, tend to count toward the appraised value: kitchen remodels, new HVAC systems, a finished basement, replacement windows. Anything you'd take with you when you sell doesn’t factor into the appraiser's opinion of value.

4. Research comparable homes before the appraisal

Knowing what similar homes have sold for sets a realistic expectation going in, and it also arms you with specific comps to cite if you need to request a reconsideration of value later. Look up recent sales of similar homes in your neighborhood on public listing sites, or ask a real estate agent for a comparative market analysis. Do this before the appraisal, not after you're seeing a number that feels low.

5. Make sure everything works

The appraiser won't test every outlet, but the major parts of a home’s functionality affect both the condition rating and the overall impression of upkeep. Walk through and make sure that:

• Heating and cooling run and reach a comfortable temperature efficiently.
• Windows open, close, lock, and show no cracking or warping at the base.
• Kitchen appliances should work: Run the dishwasher, test the oven and stovetop burners.
• Ceiling fans turn on and off without delay or noise.
• Water and drains should have hot water flowing, sinks and tubs that drain fully, and toilets that flush completely.

Schedule repairs before the appraisal date, not after, since safety or soundness problems can make the appraisal “subject to” repairs, which need to be finished and verified before the loan moves forward.

6. Invest in small, cost-effective repairs

Prioritize budget-friendly fixes that address obvious wear: cracked windows, loose handrails, or peeling paint. Small repairs and updates can also protect the value you've built and support building equity.

If you have a previous appraisal or inspection report with unaddressed notes, use it as a starting checklist. While these usually won't block your loan, visible wear can decrease the rating.

7. Handle day-of logistics

Finally, on appraisal day, make sure you’ve planned for the best possible outcome:

• Plan to be home, or arrange for a trusted family member to walk the appraiser through if you can't be there. You're usually allowed to attend a refinance appraisal.
• Secure pets and kids elsewhere, or keep pets calm and crated.
• Write a short, factual list of your home's standout features and recent upgrades to hand the appraiser.
• Do a final light clean the morning of the scheduled appointment.
• Open curtains and turn on lights so natural and ambient light show the space well.
• Provide access to areas the appraiser will need to look at, like an attic, basement, closet, or crawl space.

Can a refinance be denied after appraisal?

Yes, a refinance can be denied after appraisal if your home's appraised value doesn't support the loan amount you're requesting. Since your new loan is based on current market value rather than your original purchase price, a low appraisal is one of the reasons a refinance application might get denied, delayed, or restructured after underwriting.

How a low appraisal affects your refinance

When the appraisal comes in low, your LTV goes up, which can push your loan outside your program's limits. On a one-unit primary residence, conventional guidelines allow a higher maximum LTV for a no-cash-out refinance than for a cash-out refinance. That makes cash-out refinances most sensitive to a low appraisal, since a lower value directly shrinks the equity you can convert to cash.

You're also entitled to review the appraisal yourself, since lenders must provide a free copy no later than three days before closing, which gives you a window to weigh these options before your closing date.

Your options if the value comes in low:

• Request a reconsideration of value. If the report contains factual errors, omissions, or comps you believe don't reflect your home fairly, you can ask your lender to have the valuation reviewed.
• Reduce your loan amount to fit within what the appraised value supports.
• Bring cash to closing to cover the gap. This mostly applies to a rate-and-term refinance, where the new loan must pay off your existing balance in full. If the maximum loan your new LTV allows is smaller than what you currently owe, you'd need to cover that difference yourself to close.

FAQ

How much does a refinance appraisal cost?

A refinance appraisal can cost $375 to $500 for smaller properties, with larger homes or estates edging closer to the $1,000 to $3,000 range, according to Angi appraisal data.

What disqualifies you from refinancing?

Refinance requirements vary by lender and loan type. On the appraisal side, too little equity, a low home value, safety and soundness issues, or an LTV above your loan's limit can stop a refinance. Lenders also review your credit score, debt-to-income ratio, and cash reserves, so a weak spot in those can also stop a refinance.

How is a refinance appraisal different from a purchase appraisal?

Both refinance and purchase appraisals estimate market value. A refinance appraisal supports a replacement loan on a home you already own, and the LTV is determined by the appraised value. A purchase appraisal supports financing for a home sale. On purchases, Fannie Mae uses the lower price or appraised value to determine the loan-to-value ratio.

Will you always need an appraisal to refinance?

Not always, and depending on your loan type, lender, and how much equity you have, you may qualify for a value acceptance offer (also called an appraisal waiver), where an appraisal isn't required at all. Government-backed loans like FHA and VA loans² follow their own rules.

FHA loans require an appraisal, except for certain streamline refinances.³ The appraiser must flag problems that affect health, safety, or structural soundness. Your lender can tell you which rules and options apply for your loan type.

The bottom line: Know what appraisers look for to know where you might stand

During a refinance appraisal, the appraiser looks at your home's condition and compares it to nearby sales to determine its value. You don't need a full renovation to prepare. Keep the home clean, make repairs beforehand, and have a folder of receipts for past upgrades on hand.

Bring smart questions to ask when refinancing, and use these refinance tips to compare your choices. When you're ready to explore your refinancing options, you can apply online with Rocket Mortgage.

¹ Refinancing may increase finance charges over the life of the loan.

² Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

³ The FHA Streamline program may have stricter requirements in some states. In order to qualify for the FHA Streamline program, an immediate .5% minimum reduction in interest and mortgage insurance premium is required. Some states may require an appraisal.

This article is for informational purposes only and is not intended to provide, and should not be relied on for, medical, legal, financial, investment, or tax advice. You should consult with a qualified professional for advice specific to your situation. Consumers should independently verify that any services, products, or programs referenced meet their needs and comply with applicable requirements.