What You Need To Know About Appraisals and Refinance Loans

Buying a home requires the borrower to pay for an appraisal on the property in order to determine its fair market value--an important part of establishing how much of a home loan you can apply for. But appraisals are not just for new purchase transactions, you may also be required to get an appraisal for a cashout refinance loan, a home equity line of credit, home equity conversion mortgage, or in some cases a non-cash out refinance loan that raises the mortgage payment by a certain percentage.

Appraisals, where required, mean the borrower will be held responsible for paying the fee. The appraisal is a service, and the fee is paid regardless of the outcome. Don’t be surprised if there are additional fees for any compliance inspections that may be needed to satisfy the repairs or corrections noted in the appraisal report when applicable.

Many loan applicants want to know in advance how much the appraisal fees may be--budgeting for them can be an important part of your financial prep for the new loan. 

There is no single standard fee for appraisals or compliance inspections. The appraisal fee that costs $425 dollars in Illinois for a single family residence may cost only $400 in Minnesota. Housing markets vary from state to state, and even among different markets within in every state. Hence, there are different fee structures associated with those markets.

Compliance or repair inspections may be less than the initial appraisal but don’t expect that in every case. And there are other variances, too-- appraisal report timeliness varies from state to state; what applies in one state may not apply in another. Illinois may have a 10-day requirement for “origination appraisals” while North Dakota has a 20 day requirement. (These numbers are also subject to change.) If you have questions about how appraisals are priced in your area you may wish to speak to a real estate expert in your local area or ask a loan officer to help.

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