Do Appraisers Come Inside for a Refinance?
Understand refinance home appraisals. Learn if an appraiser needs to enter your property, the different inspection types, and factors determining access.
A refinance appraisal assesses a home’s market value, a requirement for lenders when homeowners seek to replace their current mortgage. This evaluation helps lenders determine the property’s worth, ensuring it sufficiently secures the new loan. The appraisal also aids in calculating borrower equity, especially for cash-out refinances.
Understanding Appraisal Types
Whether an appraiser comes inside for a refinance depends on the appraisal type ordered by the lender. The most comprehensive is the full interior appraisal, where a licensed appraiser physically visits the property. They conduct a thorough inspection of both the interior and exterior, examining rooms, interior features, major systems, and verifying square footage. Outside, they assess exterior condition, lot features, and curb appeal. This detailed inspection is common for standard refinance transactions.
An exterior-only appraisal, or “drive-by” appraisal, does not involve the appraiser entering the home. The appraiser assesses the property solely from the outside, observing exterior condition, structural integrity, and the neighborhood. They use public records and Multiple Listing Service (MLS) data for valuation. This method is generally used for lower-risk refinance loans or when sufficient market data is available, offering a faster and more cost-effective option. Government-backed loans, such as FHA and VA, sometimes permit exterior-only appraisals for certain refinance programs.
A desktop appraisal involves no physical visit. The appraiser performs the valuation remotely, using public records, MLS data, tax information, and online resources. This approach is typically reserved for very low-risk loans or when property data is readily available. While offering speed and convenience, desktop appraisals are generally not used for cash-out refinances or complex properties.
Preparing for the Appraisal
If an appraiser is expected to visit, homeowners can prepare by ensuring the home is tidy and decluttered. A clean, organized environment allows the appraiser to easily access and assess all areas, including basements, attics, and garages. This can positively influence their perception of the property’s condition.
Gather documentation of significant home improvements, renovations, or repairs. Include dates and costs for projects like a new roof, HVAC upgrades, or kitchen and bathroom remodels. Providing this information helps the appraiser understand property enhancements, which can support a higher valuation. Have property documents, such as blueprints or previous appraisal reports, available if requested.
Factors Determining Appraisal Type
Several factors influence the appraisal type a lender requires. The loan-to-value (LTV) ratio is a key consideration; higher LTVs, indicating less homeowner equity, often require more comprehensive appraisals like a full interior inspection. A lower equity position presents a higher risk to the lender, necessitating a thorough valuation to secure the loan.
Property type and condition also influence the appraisal method. Unique or complex properties, or those with deferred maintenance, often require an interior inspection for accurate valuation. Standard, well-maintained properties in stable markets may qualify for less intrusive methods, such as an exterior-only or desktop appraisal.
Current market conditions and comparable sales data also guide the decision. In stable markets with abundant recent sales, alternative appraisal methods may be feasible. In volatile markets or areas with limited sales data, a full interior appraisal is often necessary for a credible valuation. Lender policies and specific loan program requirements, including those for conventional, FHA, or VA loans, also dictate permissible appraisal types.