How Do Home Appraisals Affect Your Mortgage Loan?
Financing your new home is a process with numerous steps and the home appraisal process is one that can be particularly confusing to first time home buyers. Here are some answers that you need to get you through one of the final—and most important—steps of the home buying process.
What Is a Home Appraisal?
A home appraisal is an unbiased report on the worth of a house in the fair market, performed by a trained and licensed individual. Home appraisals are done before closing so the homebuyer, the home seller and the mortgage lender receive the accurate and true value of the real estate in question. In most residential property transactions, you are able to choose your real estate agent and your lender, but you cannot choose your appraiser. Instead the appraiser must be chosen by your lender to provide a level of independence from the buyer and seller.
Can An Appraisal Affect Your Mortgage Loan?
Yes! When buying a home, your appraisal can play a role in determining if your lender will approve your loan. All lenders order an appraisal during the mortgage process to assess the home’s market value and make sure the borrower is not attempting to borrow more money than the house is worth. If your appraisal comes in below the purchase price of your home, you may need to pay the difference in cash, lower the purchase price, or get a second opinion.
What Do Appraisers Look For When Valuing A Home?
The goal of an appraisal is to determine the fair market value of a home, so anything that may raise or lower the price someone is willing to pay will be considered and factored into the report. Most often, an appraiser will look at the size and type of the home and property, the condition the home and property and the overall real estate market in the area. Any major flaws to the property, like a leaking roof or cracked foundation will also be noted.
What Does a Home Appraisal Cost and Who Pays For It?
While your lender will typically arrange for an appraisal, the buyer is ultimately responsible for the cost. Generally, appraisal fees range between $450 and $600, depending on the size and location of your property but don’t let this cost stop you from making offers! The home appraisal will only occur after your offer has been accepted by the seller and you have begun to work with a lender to finance your new home. You do not need to complete appraisals on every house you choose to bid on.
How Can You Save on the Appraisal Process?
Planning to purchase a new home? Now is the perfect time to apply for a Mortgage at Palisades CU. Complete an application from June 1, 2017 through July 31, 2017 to receive a free appraisal valued up to $600 when you purchase a home with us. Schedule an appointment today to speak with a Mortgage Loan Originator or simply apply online! For more details on the free appraisal offer click here.
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