6 steps to challenging a low home appraisal during a mortgage refinance

Key takeaways

• Challenging a low home appraisal during a mortgage refinance involves reviewing the appraisal report, gathering recent comparable sales and documenting home improvements to support your case. 
• Homeowners can formally dispute a low appraisal by submitting a reconsideration of value to their lender, but policies on second appraisals and appeals vary by lender. 
• Keeping records of upgrades and staying informed about local market trends can help prevent low appraisals and make future refinances easier. 

A low home appraisal during a mortgage refinance can change your loan terms or even stall the process. If the appraiser values your home below what you expected, your lender may reduce the amount you can borrow or require extra cash at closing.

Here are six steps homeowners can take to challenge a low appraisal and improve their chances of a successful refinance.

The appraisal sets your home's value. This determines how much you can borrow and your loan-to-value ratio, or LTV.

LTV is the percentage of your loan compared to your home's appraised value. For example, if your home is valued at $300,000 and you want to borrow $240,000, your LTV is 80%.

Most lenders set limits on LTV. A low appraisal can mean you qualify for a smaller loan or need to bring more cash to closing.

If your LTV is too high, you may not get the best rates or may have to pay for private mortgage insurance.

Low appraisals often happen because the appraiser uses outdated comparable sales, misses recent upgrades or doesn't account for local market changes.

Sometimes, the appraiser may overlook improvements like a new roof or remodeled kitchen. Other times, slow sales in your area or declining property values can pull the appraisal down.

In some cases, errors in property details or missed square footage also affect the result.

Appraisers may review property tax assessments for property details, but market value is primarily determined by comparable sales.

Start by reading the full appraisal report. Look for mistakes in your home's square footage, bedroom and bathroom count, lot size or condition rating.

Appraisers sometimes use incorrect data or overlook features like a finished basement, updated heating, ventilation and air-conditioning system (HVAC) or attached garage.

Even small errors in property details can lower the appraised value.

If you find mistakes, note them clearly so you can include them in your dispute.

• Square footage 
• Bedroom and bathroom count 
• Lot size 
• Condition rating 
• Finished basement 
• Updated HVAC 
• Attached garage 
• Other overlooked features 

Find recent sales of similar homes in your area that support a higher value.

Good comps are nearby (within a mile, if possible), sold within the last three to six months and are similar in size, age and condition.

Your real estate agent or lender can help you pull this data.

If the appraiser used comps that are farther away or significantly different from your home, point that out in your challenge.

• Nearby (within a mile) 
• Sold within last three to six months 
• Similar size 
• Similar age 
• Similar condition 

Collect receipts, permits and before-and-after photos for any upgrades you've made.

A new kitchen, updated bathrooms, added square footage or energy-efficient systems can all affect value.

If the appraiser didn't account for these improvements, your documentation can support a higher number.

• Receipts 
• Permits 
• Before-and-after photos 
• New kitchen 
• Updated bathrooms 
• Added square footage 
• Energy-efficient systems 

A reconsideration of value, or ROV, is a formal request asking your lender to review the appraisal.

Include your comps, documentation of upgrades and a written explanation of why you believe the value is too low.

Your lender sends the ROV to the appraiser, who decides whether to adjust the value.

Be specific and factual in your request.

• Recent comps 
• Documentation of upgrades 
• Written explanation 

Stay in contact with your lender throughout the process. The lender acts as the go-between; homeowners typically don't communicate directly with the appraiser.

If the appraiser or lender asks for more information, respond quickly.

Clear, timely communication can help move the dispute forward.

If the appraisal value doesn't change after your challenge, you still have options.

You may be able to request a second appraisal (if allowed by your lender), apply with a different lender or file a formal appeal, depending on lender policies.

Some homeowners choose to wait and refinance later when market conditions improve.

If you want to compare recent sales in your area, browse homes for sale for current listings.

After you challenge a low appraisal, the value may be adjusted upward, stay the same or require further review.

If the appraiser finds errors or new evidence, your home's value could increase, improving your refinance options.

Sometimes, the appraiser stands by the original value, especially if comparable sales and market data support it.

In rare cases, the lender may order a second review or another appraisal if the dispute raises significant questions.

A higher appraisal can help you qualify for a larger loan, lower your loan-to-value ratio and possibly remove private mortgage insurance.

If the value stays low, you may need to bring more cash to closing, accept a smaller loan or wait to refinance until market conditions improve.

Taking steps to prevent low appraisals makes future mortgage refinances easier.

Keep detailed records of every upgrade, including receipts, permits and photos, so you can quickly show proof of improvements when refinancing.

Staying informed about local home sales and market trends can help you anticipate some appraisal issues before refinancing.

Work with a real estate agent who understands refinance appraisals and can supply recent comps to support your home's value.

Prepare a fact sheet listing your home's improvements and special features to hand to the appraiser, which can help avoid missed details that might lower your value.

If you need expert help, find a local real estate agent.

• Keep records of upgrades (receipts, permits, photos) 
• Stay informed about local sales and market trends 
• Work with a real estate agent familiar with refinance appraisals 
• Prepare a fact sheet of improvements and features 

Most lenders allow only one formal challenge per appraisal. If you switch lenders or your dispute raises major concerns, you may be able to request a second appraisal. Always check your lender's policy before pursuing another challenge.

Strong evidence includes recent comparable sales, records of upgrades, permits and clear photos. Written explanations that point out errors or overlooked features can also help, especially if they relate directly to your refinance goals.

Most disputes are settled in one to three weeks. The speed depends on how quickly you submit your documentation and how responsive the appraiser and lender are during the refinance process.

Disputing an appraisal can extend your closing timeline by several days or weeks. The exact delay depends on the lender's review process and whether a second appraisal is needed.

You can change lenders but expect to pay for a new appraisal. This option may be worth considering if you believe the original value was inaccurate, though it can add time and costs to your refinance.

This story was updated on May 27.