When it comes to real estate transactions, whether you're buying a new property or refinancing your current one, you'll need to get an appraisal. An appraisal is an unbiased estimate of the value of a property based on a variety of factors, such as location, condition, and comparable sales in the area. However, there are some differences between a refinance appraisal and a purchase appraisal that you should be aware of. In this blog post, we'll explore those differences to help you understand what to expect.

What is a Refinance Appraisal?

A refinance appraisal is an appraisal that is required when you're  refinancingyour current mortgage. The main purpose of a refinance appraisal is to determine the current market value of your home so that your lender can make an informed decision about how much money to lend you. The appraisal will take into account factors such as the location of your home, the condition of the property, and recent sales of comparable homes in the area.

One of the main differences between a refinance appraisal and a purchase appraisal is the focus on the value of the property. With a refinance appraisal, the appraiser is primarily concerned with the current market value of the property. This is because the lender wants to ensure that the value of the property is sufficient to cover the amount of the new  loan. In other words, if the value of your property has declined since you took out your original mortgage, you may not be able to borrow as much money as you need.

Another important factor to consider with a refinance appraisal is that it is typically paid for by the borrower. This is because the borrower is the one who benefits from the appraisal, as it allows them to refinance their  mortgageand potentially save money on their monthly payments. The cost of a refinance appraisal can vary depending on the location of the property and the complexity of the appraisal, but it typically ranges from a few hundred to a few thousand dollars.

What is a Purchase Appraisal?

A purchase appraisal, on the other hand, is an appraisal that is required when you're  buying a new property. Like a refinance appraisal, the purpose of a purchase appraisal is to determine the market value of the property. However, a purchase appraisal has some differences compared to a refinance appraisal.

One major difference is that a purchase appraisal is typically ordered by the lender, not the borrower. This is because the lender wants to make sure that the property is worth the amount of the loan they're providing. If the value of the property is less than the loan amount, the lender may not be willing to lend the full amount, or they may require a larger down payment.

Another difference between a purchase appraisal and a refinance appraisal is the timeline. With a purchase appraisal, the appraisal is typically ordered early in the  home-buying process, often before the borrower has even made an offer on the property. This is because the lender wants to make sure that the value of the property is sufficient before they approve the loan.

The cost of a purchase appraisal is typically similar to that of a refinance appraisal, but it is usually paid for by the borrower at closing. This is because the appraisal is part of the closing costs associated with buying a new property.

Conclusion

In summary, both refinance appraisals and purchase appraisals are important parts of the real estate process. While they both serve the same basic purpose of determining the market value of a property, there are some key differences between the two. A refinance appraisal is typically paid for by the borrower and focuses on the current market value of the property, while a purchase appraisal is typically ordered by the lender and focuses on the value of the property compared to the loan amount. Understanding these differences can help you navigate the real estate process with confidence.