The one time I refinanced my mortgage in 2015, I paid about $2,100 in closing costs, $400 of which was for an appraisal fee. Several factors like size of the home and location of property can effect the cost of an appraisal, which can vary from $300 on the low end to about $800 on the higher end, but on average most websites I’ve seen seem to put the typical cost of an appraisal at around $450.
Most appraisal fees for home purchases are unavoidable, but if you’re simply refinancing your existing mortgage, then depending on your situation you may actually be to avoid this fee and put several hundred dollars back in your pocket:
I learned recently during my home’s refinance that you can avoid this appraisal fee altogether with one simple factor: An appraisal waiver. To get an appraisal waiver, you need to be applying for a certain type of loan. Specifically, a conventional loan, AKA one that’s backed by a private lender. You can’t get an appraisal waiver for a VA loan, an FHA loan, or a USDA loan, which are all types of loans backed by the federal government.
https://www.apartmenttherapy.com/appraisal-waiver-36761664
An appraisal waiver gives the home owner the option to decline to have someone come out to the property to appraise the home, thereby avoiding the appraisal cost, so the lender will just instead use a sophisticated data system to estimate the value of your home.
Most of the time, the home value the automated data system calculates should be very close to what an in-person appraisal would have calculated, but there could obviously be situations where you might still be better off paying for an appraisal. If the home was recently remodeled and upgraded, the lender’s system may not accurately capture those improvements and it might undervalue your home, so in that case you might just want to pay for the appraisal if that’s a lot more likely to get your home valued higher.
Every situation is different and everyone needs to determine the benefits and drawbacks for themselves, but I think for the vast majority of people, if their lender permits it and the home buyer qualifies, then I think avoiding the appraisal fee probably makes the most sense in the majority of cases.
It probably would have made sense for me to request the appraisal waiver when I refinanced in 2015 because based on the requirements, it seemed like I would have definitely qualified if my lender offered it, but I didn’t even know that was a thing.
If you plan on refinancing your mortgage soon or anytime in the future though, you may want to consider it.
