Do You Always Need an Appraisal When Refinancing?

You’re thinking about refinancing your home, but the idea of paying $400–$700 for an appraisal, or risking a low valuation, has you second-guessing. We get it. A refinance should bring financial relief, not more stress. So here’s the deal: you don’t always need a home appraisal to refinance. But the when, why, and how aren’t always straightforward.

This guide lays out exactly when appraisals are required, when they’re not, and how to make smart refinance decisions, without the guesswork.

• Appraisals are often required in refinance loans, but can sometimes be waived.
• Eligibility for appraisal waivers depends on factors such as loan type, equity, credit score, and others.
• Appraisals affect loan costs, rates, and approval timelines.
• Knowing the rules can save you money and time during your refinance.

A refinance appraisal is an independent assessment of your home’s current market value. Lenders use it to:

• Confirm the property’s worth before issuing a new loan
• Determine your loan-to-value (LTV) ratio
• Decide if you qualify for a certain interest rate

Heads up: If your home appraises for less than expected, your refinance loan amount could shrink, and your rate could go up.

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In most traditional refinances, an appraisal is required. Common scenarios include:

• Cash-Out Refinances: Always require an appraisal.
• High-LTV Loans: If you’re close to the minimum equity threshold (usually 20%), lenders want an updated valuation.
• Conventional Loans without Desktop Underwriter (DU) Waivers
• FHA and Non-QM Loans: Typically require full appraisals.

Pro Tip: If your credit score is borderline or your income is variable, the lender might request a full appraisal to reduce risk.

Thanks to appraisal waivers (also called PIW: Property Inspection Waiver), some borrowers may qualify for an exception, especially in low-risk scenarios:

• Conventional Refinances with strong credit, stable income, and solid equity (usually 20%+)
• Loans underwritten through Fannie Mae DU or Freddie Mac LPA that auto-approve the waiver
• No-cash-out refinances where risk is deemed minimal

Not all lenders offer these waivers, so make sure to ask directly.

"Skipping the appraisal saved us $600 and shaved a week off our refinance." — Recent borrower via Reddit

Appraisals affect more than just closing costs. They can impact:

• Loan-to-Value (LTV) Ratio: A lower appraised value increases your LTV, which could affect loan approval.
• Interest Rate: Better valuations often mean better rates.
• Closing Timeline: Appraisals can add 1–2 weeks to your refinance process.

If you’re refinancing to eliminate PMI (private mortgage insurance), an appraisal might be your only path to proving enough equity.

Don’t panic. Here are your options:

1. Dispute the Appraisal: Provide better comps and data.
2. Switch Lenders: Try again with a new appraiser.
3. Bring Cash to Close: Offset the difference.
4. Reconsider Refinance Terms: Adjust loan amount or strategy.

Lenders must follow strict guidelines for responding to low appraisals, so ask about your rights.

Not always. While skipping the appraisal saves money and time, you might lose negotiating power or equity leverage. If your home’s value has increased significantly, a fresh appraisal could unlock:

• Lower PMI costs
• Higher loan amounts
• Better rate offers

Consider your home’s market trends and recent upgrades before waiving the appraisal.

This article is for informational purposes only and does not constitute legal, financial, or lending advice. All loans are subject to credit approval, underwriting guidelines, and property eligibility.

reAlpha Mortgage is an Equal Housing Opportunity Lender.

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