Why you need an appraisal
and they work.
ILenders typically need a
professional, independent appraisal of the
property you want to purchase or refinance
to ensure that it is worth at least as much
as the property is being sold for.
Factors such as making a smaller down
payment or have a lower credit score will
effect how the lender is going to
review the property and your loan. The
lender will be interested in assuring the
property in question for collateral is worth
lending the amount being requested.
A professional,
independent appraiser will typically visit
the home and inspect both its interior and
exterior. The appraiser will assess the
homes condition, location and other factors
that can affect the value of the property.
This is a very important step and you do not
want to postpone the appraisal
as all information being collected
has an impact on the loan process and needs
to be done as soon as a decision has been
made to purchase.
The appraiser will form an
opinion on the probable market value of the
property considering sales of similar homes
in the area as well as other factors. He or
she will prepare an appraisal report
explaining the conclusion and a realistic
property assessment. The appraisal
belongs to the lender considering lending
money with the home as collateral. Often,
you can receive a copy of the appraisal
either as a courtesy or in keeping with
state law.
The lender needs to know
if the property is worth at least as much as
the loan amount. In the unlikely event the
lender would have to foreclose, they need to
know if they will be be able to recoup at
least the loan amount. If your loan program
depends on you borrowing, for example, 95
percent of the property's value and no more,
the appraisal could impact your eligibility
for the loan that's right for you. In a
"close" case like that, the best solution is
almost always to increase your down payment,
or we can help find another solution such as
another loan program that works to suit what
is best for you.
An appraisal ranges from
$200 to $500 or even more for very complex
properties. You as the borrower will need to
repay the lender for its cost in paying the
appraisal fee upon settlement of the loan.
In many cases the appraisal is considered to
be an out of pocket expense which is not
refundable.
