Understanding Home Appraisals for Refinancing: What to Expect

When a home is being reappraised for refinancing, many individuals wonder if it is normal for a company to come take pictures inside the property. The answer is yes, it is a standard practice, and it plays a crucial role in the lending process.

Pictures are Part of the Appraisal

When a full appraisal is required, photographs are an essential component. This is particularly important for 'A' lenders who demand comprehensive appraisals to make an informed decision, especially with new clients. While older, established clients are often exempt from a full appraisal, rental properties still require a rent roll with proof of revenue.

What is a BPO and When is it Used?

Brokers’ Price Opinion (BPO) is a type of valuation estimate where a mortgage company might conduct a drive-by inspection rather than a thorough interior appraisal. This method, while more convenient and cost-effective, is often used for refinances. Lenders typically estimate the property's value based on recent comparable sales within a certain radius of the property being refinanced.

Requirements for the Appraiser

For FHA/VA loans and appraisals, the appraiser is required to take pictures of various aspects of the property, including interior and exterior areas. They must document the home's conditions and features, such as running water and properly installed safetyrails. The lender’s exact requirements can vary, so it's important to consult with them to understand the specific details of the appraisal process.

Standard Practices in Modern Appraisals

Nowadays, it is standard for appraisers to take pictures of all rooms and systems in the home, including any renovations or repair items. Prior to 2005, appraisers typically only photographed the front, back, exterior, and recent renovations, if present. Modern lenders now require comprehensive documentation to ensure a thorough understanding of the property's condition and value.

Conclusion

While it might be surprising for homeowners to have strangers take pictures inside their home, these interior photos are a normal part of the appraisal process for refinancing. It helps lenders make informed decisions about the property’s value and condition. Understanding the reasons behind these requirements can help ease concerns and ensure a smooth refinancing process.