How can I refinance when my house is now appraised at a lower value?

You may well be in luck. If you haven’t investigated the HARP program you should do so. It’s also sometimes called DU Refi Plus. IF your current loan was originated before 5/31/2009 and was backed by Fannie Mae or Freddie Mac, you may be able to refinance despite your decrease in value. IF you’re not currently paying PMI, you won’t have to on the new loan even if you no longer have 20% equity. It’s a great program, I’ve helped a LOT of folks with it over the past two years. If you have an FHA loan, you can do a streamline refinance without an appraisal as long as you don’t roll any closing costs into the loan other than FHA’s fee. Let me know if you’d like any more info.