What Do Appraisers Look for in a Mortgage Refinance?

  • You’ll go through an appraisal when refinancing your mortgage, just as you did when you bought the home.
  • The appraiser looks at safety, size, location, and any home improvements you’ve made since buying.
  • Consider repainting to increase the home value, and provide documents for any home improvements.
  • Read more of Insider’s mortgage coverage here.

You may remember that when you bought your home, you had to go through an appraisal. A licensed appraiser visited the home to determine how much it was worth before the lender approved you for a mortgage.

The process is similar when you refinance your home — you’ll need to have an appraisal again to see whether the value has changed since you bought the home. The exception is if you streamline refinance an FHA, VA, or USDA mortgage, as these don’t require new appraisals.

What appraisers look for in a refinance

Here are the top factors an appraiser will consider when writing their report:

  • Exterior: They will look at the roof, chimney, deck, porch, and siding.
  • Interior: Is the home safe to live in? Are any parts of the floors, walls, or windows broken? They will check for water damage, infestations, and any issues with the HVAC system.
  • Location: The appraiser will look at the values of nearby homes. They will also see what schools and businesses are nearby and consider the crime rate.
  • Size: How many square feet is the home (including the garage, attic, or basement), and how many rooms and levels are there?
  • Home improvements: If you made any upgrades to the home since buying it — especially energy-efficient improvements to the roof, windows, insulation, or other features — the home could be worth more.

It’s important to note that even if everything is exactly the same as it was when you moved in, the home value will probably still be different. The value of nearby homes may have gone up or down, nearby attractions may have closed, or the real estate market could be better or worse than when you bought it. All of these factors will influence your home’s value when you refinance.

How to improve your home’s appraisal

You can’t control every aspect of your appraisal, such as the real estate market or neighbors’ home values. But you can take some steps to influence the appraisal:

  • Look for major problems. Maybe you know that you’ll need to replace the roof soon. You may want to take on that expense now so that a new roof will improve the appraisal.
  • Repaint. Add a fresh coat of paint to the interior and/or exterior of the house.
  • Document home improvements. Have you renovated a room, replaced the roof, or added energy-efficient upgrades? Leave out any receipts or official documents for the appraiser, and print out before-and-after snapshots if you have them.
  • Tidy up. Technically, dirty clothes on the floor or overgrown grass shouldn’t affect your home value. But cleaning up can leave a nice impression, which doesn’t hurt.

Before you spend money to improve your home’s value for an appraisal, consider whether the higher value will be worth the money you put in.

https://www.businessinsider.com/personal-finance/what-do-appraisers-look-for-in-mortgage-refinance