Is there any way to avoid paying for a home appraisal, when it's ridiculous but the bank won't waive it?

I suggest you seek out other financing options and use that possibility either to get a better deal entirely, or else to convince your current bank that you will go elsewhere if not satisfied.

If your current mortgage prevents you from doing so without paying some type of penalty, you would need to weigh the penalty against reduced interest costs & cost of appraisal.

The requirement for appraisal is to avoid some of the problems that existed in the housing bubble in the mid 2000's. Some companies took shortcuts or they approved mortgages without requiring people to document income. In other cases appraisals were inflated. The idea was that as prices continued to skyrocket, there was always somebody to to sell a risky mortgage to. Until there wasn't.

In your situation you believe the numbers are good. Keep in mind that in some places tax values are divorced from what the property can sell for. Also what it sold for or was appraised for X years ago is meaningless. They want the picture from today.

Your best hope of skipping the appraisal is to find a lender that doesn't sell their mortgages.

Here is what Fannie Mae says about appraisals for refinances:

Use of an Appraisal for a Subsequent Transaction

Fannie Mae will allow the use of an origination appraisal for a subsequent transaction if the following requirements are met:

• The subsequent transaction may only be a Limited Cash-Out Refinance.

• The appraisal report must not be more than 12 months old on the note date of the subsequent transaction. If the appraisal report is greater than 4 months old on the date of the note and mortgage, then an appraisal update is required. See preceding section, Age of Appraisal and Appraisal Update Requirements, for requirements for completing an appraisal update.

• The lender must ensure that the property has not undergone any significant remodeling, renovation, or deterioration to the extent that the improvement or deterioration of the property would materially affect the market value of the subject property.

• The borrower and the lender/client must be the same on the original and subsequent transaction.

That is their policy. They don't want an appraisal older than a year.

There is no way the bank will see reason on this.

Have you ever made a special order at McDonald's, like, say, a Big Mac without pickles, and the cashier shoots you a dirty look? And you think, "What the heck? It should be easier to make a Big Mac without pickles than a Big Mac with pickles? You should give me a happy look and also you should charge me less!" But the cashier knows the normal process it to create a lot of Big Macs with the standard set of ingredients so they are available as soon as the customer orders them. A special order requires more attention from the McDonald's crew and you will wait longer to receive your order.

A $500 procedure to protect a 5 or 6 figure investment is almost always a good idea from the bank's perspective, and it is deeply entrenched in their normal operating procedure. A loan application without an appraisal, for whatever reason, will take a lot longer to process as each step in the loan processing workflow has to manually override their internal procedures and risk controls to push the application through. The hassle to the bank will be worth a lot more than $500 to them, so they will do what they can to avoid making an exception for you.

There are many factors that go into whether or not a bank will waive the appraisal beyond just the loan to value ratio. Some factors, such as if you live in a flood plain or if the loan is over a set amount, will necessitate an appraisal no matter what the LTV is.