You have researched the options available to you and realized the benefits of moving forward with a refinance. The paperwork has been processed, the home loan has been conditionally approved and the next step is the appraisal.

There are several questions surrounding the appraisal process and what to expect. The appraisal is ultimately your safeguard against spending more on your home than it’s worth. It’s also a safeguard for your mortgage company to not lend out more on a property than it’s currently worth. Appraisers are always 3rd parties in the mortgage process (it’s illegal for the appraiser to work directly with or for the mortgage company) and they have only one purpose – to realistically judge a property for its actual worth at the time of the appraisal.

Watch our Real Estate Appraisal Video Series on YouTube. We’ll walk you through an entire appraisal in this six-part video series, which will certainly answer any questions you may have about mortgage refinance appraisal inspections.

If you’d rather continue reading than watch a video, below are the top things to understand about an appraisal. These should answer most of your questions regarding the appraisal process during a refinance, but in case you still have a questions, please call us at (800) 863-4332 or email help@quickenloans.comand we’ll answer all your concerns.

  1. How long will an appraisal inspection take?
    The physical appraisal inspection usually lasts anywhere from 5-30 minutes, depending on the size and complexity of the home. The appraiser will make note of the floor plan or any significant upgrades and features.
  2. Measuring the House
    • An appraiser has several different ways of obtaining measurements to the house.
      • Physically measure the property
      • Obtain measurements from a prior mortgage survey
      • Obtain measurements from a previous appraisal
      • Obtain measurements from county or city assessor’s records
    • Square footage is generally determined from exterior measurements.
    • Please keep in mind that proper county permits are required in order to include any square footage that had been added on to the home.
  3. Finished Basements and Gross Living Area
    • Basements, below grade or partially below grade area are typically not considered part of the square footage or room-count on an appraisal, regardless of window size, ceiling height or walk-out features.
    • Adjustments to value may be made in favor of finished basements
  4. Cost Improvements
    Improvement costs are not usually recovered in the market. For example, one may have spent $45K in remodeling their kitchen. The remodel may have included granite countertops, tumbled marble backsplash and glazed porcelain flooring. However, the additional value given by the appraisal will only be for the updated kitchen and will not take into account the separate materials and their cost. Also, improvements such as a new roof, new furnace, new windows, etc. are considered a part of typical wear and tear and do not typically bring additional value.
  5. Differences in Bedroom Counts The market recognizes very little difference between a 3-bedroom and a 4-bedroom home. Typically there is not an adjustment for this and the difference in square footage is adjusted under the Gross Living Area. There is usually a market difference between 1-, 2- and 3-bedroom homes and comparable sales for 1- and 2-bedroom homes are typically difficult to find.
  6. Comparable Sales Data
    • Recently closed sales similar in location, size, style and features are used to help determine value during an appraisal. These sales must be closed and verified by a public data source at the time of the appraisal inspection. Comparable home sales should have taken place within the last 90 days, however that’s not always possible in slower markets. Additionally, the sale should have taken place within 1-mile of the home being appraised. Distance and time guidelines are usually exceeded for rural property locations. Comparable sales within your subdivision (if applicable) would be looked at first – however, not all homes sold in your neighborhood may be comparable. For instance, your home may be a ranch home with an unfinished basement and a two-car garage. The home next door to you may have just sold, but it is a 4-bedroom colonial with a fully finished basement and 300 more square feet of living space. These homes wouldn’t be considered comparables.
    • Evaluations must be based on the closest comparable homes. Similarly, appraisers must consider the most recent sales in your area, regardless of the value.
  7. Appraiser Qualifications
    • To become an approved appraiser with Quicken Loans, all appraisers must submit a completed package to Quicken Loans vendor management for review. Each appraiser must provide their licenses, E&O insurance, fee schedule, coverage areas, three work samples, and a W-9 form. The first five orders are flagged for audit to determine if the appraisers are meeting our standards. All of these standards and requirements are put in effect for one simple reason – to make sure our appraisers provide excellent service and fair appraisals for our clients 100% of the time – no exceptions!
    • Certified trainees are allowed to complete appraisal inspections in many states. The supervisory appraiser must sign the report which will place full responsibility of the appraisal report and its contents on the supervisory appraiser. The appraisal is still valid.
    • The appraiser is NOT an employee of Quicken Loans. All appraisers who work with us are 3rd parties, licensed to perform appraisals in specific counties. The majority of the information in an appraisal comes from the MLS (Multi Listing System) which is available to licensed real estate professionals.
  8. Appraisal Reassignment
    An appraisal CANNOT be reassigned to another mortgage company regardless of a consent form from the prior company. The exception to this guideline is an appraisal completed for the purpose of an FHA loan within the specified time frame allowable by FHA.
  9. Appreciating/Depreciating Values
    In general, homes across the county are experiencing a decrease in value. This could lead to varying reported values in a short period of time. For example, a home appraised 6 months ago at $200, 000 could now be valued at $150,000 depending on how homes sold in the recent months following the original appraisal.

Understanding the appraisal process is a very important part of getting the right home refinance mortgage. Knowing how appraisals work will allow you to work closer with your mortgage banker to find the best possible mortgage for your situation. If you have any questions about appraisals or buying a home in general, please call us at (800) 251-9080. If we can make your experience better or easier to understand, we are doing our jobs!


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This Post Has 11 Comments

  1. Once the appraisal is complete, how long does it typically take to finish the loan process and make a date for buying the home and signing papers?

    1. Hi Grant:

      It’s impossible to give a firm timeline, because it depends on the lender and the type of loan you’re getting. That said, I can tell you that the appraisal is usually one of the last major hurdles and it typically happens pretty quickly after that.

      Kevin Graham

  2. How long does it take to schedule and get the appraisal completed. I have a set date for closing and the appraisal isnt done my closing date is 2 weeks away

    1. Hi Theresa:

      In terms of your situation, I can tell you that it’s probably just best to stay in contact with your mortgage company. Appraisal scheduling and turn times can vary based on where you live. It’s very hard to say how long it takes. You can find more information here, but it’s just a matter of staying in communication.

      Kevin Graham

  3. Can the price of the appraiser be rolled into the loan or does the homeowner pay it our of pocket prior to closing?

    1. Hi Jeanine:

      In many cases, the cost of your appraisal is covered entirely by your initial deposit with us. Hope this helps!

      Kevin Graham

    1. Hi Kelli:

      I’m not sure of the answer to that question, but I’m going to get this to someone who might be able to give you more information.

      Kevin Graham

  4. I have a refi in work with Quicken using my VA. If the house does not appraise where I think it
    will, will I have to get PMI with a VA loan. Many thanks

    1. Hi Terry

      There is never PMI with a VA loan. You can refinance up to 100% of your home’s value and you won’t have to worry about PMI. It’s just one of the many reasons to choose a VA loan.

      Thanks for chosing Quicken Loans and let us know if you have any more questions.

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