Refinance vs. Purchase Appraisal: Key Differences That Could Save You Time & Money | reAlpha Mortgage
July 30, 2025
8 minutes
You’re about to either refinance your current mortgage or buy a new home, but then comes the appraisal. That single step can make or break your timeline, budget, or even the entire deal. So, how do you know what to expect? Here’s the truth: Refinance and purchase appraisals may sound similar, but they serve very different purposes.
Heads up, this guide breaks it all down, from cost differences and lender expectations to when you might qualify for an appraisal waiver. Whether you’re a first-time buyer, seasoned investor, or just trying to lower your interest rate, this could be a serious edge.
Let’s sort through the confusion so you can move forward with confidence.
Key Takeaways:
- Refinance appraisals focus more on current market value; purchase appraisals emphasize sale price.
- Purchase appraisals are often more scrutinized due to lender risk and sales contract validation.
- Refinance appraisals may offer flexibility, including appraisal waivers.
- Appraisal costs vary by loan type and market conditions.
- Understanding each process empowers better mortgage decisions.
What Is a Mortgage Appraisal?
A mortgage appraisal is a third-party, unbiased estimate of a home’s market value. Lenders use this figure to ensure the loan amount requested is supported by the property’s actual worth.
Appraisals Are Used To:
- Protect the lender’s investment
- Determine the loan-to-value ratio (LTV)
- Confirm the home is priced appropriately
- Identify potential red flags with the property
What’s the Difference Between Refinance and Purchase Appraisals?
1. Intent of the Appraisal
- Purchase Appraisal: Validates the price agreed upon in the sales contract.
- Refinance Appraisal: Confirms the current market value for equity-based lending.
2. Timing & Process
- Purchase: Ordered soon after contract acceptance; timing is critical.
- Refinance: Can be scheduled more flexibly, sometimes even waived if eligibility is met.
3. Scrutiny & Documentation
- Purchase: Often more strict since it protects a new investment.
- Refinance: Lenders may use automated valuation models (AVMs) or desktop appraisals.
4. Waivers and Exemptions
- Purchase: Rarely waived.
- Refinance: Fannie Mae/Freddie Mac may grant an appraisal waiver if LTV and risk metrics are favorable.
Why Refinance Appraisals Might Be Easier?
- You already own the home, which may increase lender confidence.
- Equity position is typically stronger.
- Automated data can supplement or replace physical inspection.
- Waiver eligibility is more common with strong credit and low LTV.
Pro Tip:
A conventional refinance with a low loan-to-value ratio may qualify for an appraisal waiver, saving you both time and fees.
What’s the Cost Difference?
Appraisal fees vary, but here's a ballpark:
- Purchase Appraisal: $400–$750, often paid by the buyer.
- Refinance Appraisal: $300–$700, sometimes covered by the lender or rebated at closing.
How Does It Affect Your Loan?
Aspect | Purchase Appraisal | Refinance Appraisal |
|---|---|---|
Purpose | Validate sales price | Validate equity/value |
Cost | Often higher | May be waived or lower |
Process | In-person required | May use AVM/waiver |
| Risk to Lender | Higher | Lower (existing borrower) |
