Appraisal fees are included in closing costs paid by the borrower. These fees can range between $300 and $450 or more and can depend on the size and location of your home.
You almost always need an appraisal before you complete a mortgage refinance. However, your lender may waive the refinance appraisal condition if you have a Federal Housing Administration (FHA), Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA) loan.
Refinance with an appraisal waiver. If you're refinancing with a conventional loan, your lender may be able to waive the appraisal entirely. An appraisal waiver means Fannie Mae or Freddie Mac — along with your lender — agree no appraisal is required and let the homeowner bypass that step.
Depending on your reason for refinancing and the amount of equity you've built in your home, your lender might order a full (in-person) appraisal. A full appraisal will require a home visit. When it comes to a refinance appraisal, you have the option to attend the appraisal if you want.
Traditionally, the buyer pays for a home appraisal because it is required by a lender. When a private appraisal is ordered by a homeowner or executor of an estate, the individual who orders the appraisal will pay for it.
Things that can hurt a home appraisal
A cluttered yard, bad paint job, overgrown grass and an overall neglected aesthetic may hurt your home appraisal. Broken appliances and outdated systems. By systems we mean plumbing, heating and cooling, and electrical systems.
Unfortunately, appraisal fees are non-refundable for one very good reason. They are payments for a service rendered, the same as for any other type of service. The appraiser is paid to do the appraisal work–the outcome is not part of the payment agreement.
Just keep your communication to the appraiser about the facts of the home and neighborhood, how you priced the house, and any other relevant information you think the appraiser should know. And remember, don't discuss value. Don't pressure the appraiser to 'hit the value' and you'll be fine.
A lower-than-expected appraisal can also dash hopes of getting rid of private mortgage insurance on a conventional loan, or reduce the amount of cash the lender will let you pocket in a cash-out refinance. But the appraisal process isn't foolproof, and there are options if you think the appraiser got it wrong.
The home's overall condition and any home improvements made since the last date of purchase. The number of bedrooms and bathrooms compared to other neighborhood properties as well as amenities like fireplaces, decks, bonus rooms, garages, and landscaping. The lot size and neighborhood zoning restrictions.
The home appraisal process typically takes anywhere from a few days to a few weeks. The time frame depends on the property, the complexity of the appraisal, and the appraiser's schedule (i.e., how busy they are). The appraiser may spend 30 minutes or up to several hours examining the home in person.
A refinance typically takes 30 to 45 days to complete. However, no one will be able to tell you exactly how long yours will take. Appraisals, inspections and other services performed by third parties can delay the process.
In short, refinance and purchase appraisers have the same process for determining a home's value. The only difference is that a purchase appraiser has access to the purchase contract and, therefore, the sales price.
Lenders might waive a new in-person appraisal because the home's market value was calculated so recently. The same can be said for refinancing a home. If little time has passed since the original appraisal, a lender may be willing to waive the in-person appraisal when refinancing.
The appraiser will assess the value of the home and report it to the lender. If the requested loan amount is high relative to the value of the home, the homeowner may have to pay private mortgage insurance on the refinance.
It is typically included in the total loan amount to avoid any upfront, out of pocket costs. Expect to pay around 1-1.5% of your principal balance to make up these charges. So, if you have a principal balance of $250,000, expect to pay around $2,500-$3,750.
When determining this market value, an appraiser will study your home's interior and exterior. This includes touring all the rooms of your home, including your bedrooms.
What happens if the appraisal comes in above the purchase price of the home? You're in a good situation if this happens. It simply means that you've agreed to pay the seller less than the home's market value. Your mortgage amount does not change because the selling price will not increase to meet the appraisal value.
Appraisal is lower than the offer: If the home appraises for less than the agreed-upon sale price, the lender won't approve the loan. In this situation, buyers and sellers need to come to a mutually beneficial solution that will hold the deal together — more on that later.
“Generally speaking, a messy house with scattered clothes, toys or belongings does not affect an appraisal. Appraisers are professionals that have been trained to look past the clutter and assess the true value of the property,” explains Albert Lee, Founder of Home Living Lab.
When an appraiser is looking for comparable properties to determine a price, they are supposed to only look at sales within the last 90 days. Now, if there aren't enough sales a lender might go back six to 12 months. But the ideal is 90 days.
Appraisal fraud is a form of mortgage fraud, whereby the value of a home is deliberately appraised at an inflated amount, well above its fair market value (FMV). Appraisal fraud can occur when an appraiser is in on the scam, and dishonestly overstates the value of the property.
Mortgage underwriting is usually the next stage that occurs, once the appraiser has completed his or her report. The mortgage lender's underwriter will review the loan file to make sure all required documents are present.
So when the appraisal comes in, the lender should be more or less ready to go. It shouldn't take longer than two weeks to close on your mortgage after the appraisal is done. It shouldn't take longer than two weeks to close after the appraisal is done.
What Happens After An Appraisal? After your home appraisal is complete, the appraiser will assign a monetary value to the property based on their findings, and send this information on to the mortgage lender. Your loan amount will be based on the number that the appraiser assigns to the property.