4. Prepare for the appraisal

The appraisal industry has tightened its process. In addition, the volume of real estate transactions has slowed considerably making comparables difficult. More troubling is that short sales and foreclosed homes make up a healthy portion of sales volume.

For these reasons, and others, expect lower appraisals. If you bought your house within the last few years this could mean less equity than you expect, and less than the 20 percent lenders are looking for. A healthy cash reserve will ensure your refinancing options remain intact. If additional cash down is not an option, a home equity line in conjunction with a new loan could be an alternative, but run the numbers and make sure the math works.