Refinance

The lender needs to confirm that your current property value supports the new loan amount. The appraisal drives loan-to-value (LTV) calculations, which determine: maximum loan amount, interest rate, PMI requirements, and program eligibility. Even if you’ve owned the home for years, the lender needs current value because market conditions have changed.

A low appraisal can: reduce your maximum cash-out amount, require PMI if it pushes LTV above 80%, increase your rate or fees, or in rare cases derail the refinance. You can: (1) accept the lower amount, (2) bring cash to lower the LTV, (3) request a Reconsideration of Value (ROV) with supporting evidence, or (4) wait and try again when market conditions improve.

Sometimes. Fannie Mae and Freddie Mac offer Appraisal Waivers (formerly “PIWs”) for eligible loans — typically lower LTV, lower-risk refinances. The waiver decision is made by Automated Underwriting (DU or LPA) and depends on your loan amount, LTV, credit, and property type. FHA and VA also offer streamline refinances that skip the appraisal. Ask your lender if you qualify.

Requirements vary by loan type. Conventional refinance typically needs 5%–20% equity (3% for HomeReady/Home Possible if income-eligible). FHA streamlines can refinance with little equity. VA streamlines work similarly. Cash-out refinances require more equity (typically 20%+ for conventional, 80% max LTV for FHA cash-out). Your loan officer can confirm what your equity position supports.

On average, a refinance appraisal takes 3–4 business days from inspection to completion. Rush options are available for time-sensitive refinances. Inspection scheduling is typically straightforward since the borrower is the owner. Once delivered, the appraisal moves to underwriting where the lender finalizes the loan terms based on the value.