One of the possible fees involved when you refinance your home mortgage is an appraisal fee, but will you need an appraisal when you are only refinancing, not taking out an original mortgage? In many cases the answer is yes, an appraisal will be required to get approval for mortgage refinancing. This will depend on the specific lender though, as well as how long it has been since your home was last appraised.
In some cases, if you have an appraisal which is recent, the lender may accept this documentation instead of having a new appraisal done. Not all lenders will work with you on this when you are trying to refinance your mortgage though, so you should discuss this with any potential lenders before you make any final decisions.
What Is An Appraisal?
An appraisal is a professional valuation of your home, and it is normally needed for refinancing purposes. Each home is different, with unique features, a different location, and other factors that can influence the value of the home. An appraisal uses an independent third party to evaluate all of the factors and determine what the appraisal value for your home is.
An appraisal is normally needed for the lender, even when you are refinancing the original mortgage. Property values may have dropped, the condition of the home may have deteriorated over time, and other changes may have occurred since the original mortgage was approved. Having an appraisal done during the refinancing process reassures the lender that the home value is accurate.
Every Mortgage Refinancing Lender Is Different
When you refinance your home mortgage, each lender may have different requirements, fees, and other factors. Some lenders will require an appraisal every time, even if your home was appraised a year or two ago. This allows the lender to document all of the factors surrounding your mortgage refinance loan, and lowers the risk that the home is worth less than stated.
Some lenders will only require an appraisal if your home has not been appraised within the last few years before the mortgage refinancing is started. These lenders may accept the documentation from the recent appraisal for the refinancing purposes, and this can save you some money in costs.
Make sure you are aware of the appraisal requirements for the mortgage refinancing company that you choose. If a recent appraisal will be accepted ask how recent the appraisal must be, to ensure that your documentation falls in the timeline for the mortgage lender.