Why
might you need an
appraisal? How do
appraisals work?
In many cases,
lenders need a
professional,
independent
appraisal of the
property you want to
buy or refinance to
ensure that it is
worth at least as
much as they are
being asked to lend
on it. If you are
making a smaller
down payment and
have a lower credit
score, the lender is
going to be even
more interested in
making sure the
property that will
be collateral for
the loan is worth
lending the amount
requested.
A professional,
independent
appraiser will
usually visit your
home and inspect its
interior and
exterior. The
appraiser doesn't
want to buy your
home, and isn't a
visiting head of
state. So whatever
you do, do not
postpone the
appraisal until you
get a chance to
"clean up a little."
Cleaning does not
make your appraised
value higher! And
delaying adds time
to an already
lengthy process.
The appraiser will
form an opinion on
the probable market
value of the
property considering
sales of similar
homes in the area
among other factors.
He or she will
prepare an appraisal
report explaining
the conclusion. 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. Let us know
you're interested
and we'll help.
The lender wants to
know first of all
whether the property
is worth at least as
much as the loan
amount. In the
unlikely event the
lender would have to
foreclose, it wants
to know it should be
able to recoup at
least the loan
amount. But if your
loan program depends
on you borrowing,
for example, 95
percent of the
property's value and
no more, the
appraisal can 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.
An appraisal can
cost from $200 to
$500 or more for
very complex
properties. You as
the borrower repay
the lender for its
cost in paying the
appraisal fee upon
settlement of the
loan.
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