Mortgage Appraisal
|
Mortgage appraisals help lenders determine the market value of a house, which helps establish whether the loan is a good risk and, therefore, whether the loan will be approved. An appraisal is based on many factors, for example, the age, condition, and square footage of the house, as well as the size of the lot that the house sits on. Appraisers also factor into consideration the recent sales of neighboring homes when deciding on values.
Home buyers who will be applying for loans should have a good idea of what the mortgage appraisal will reveal, even before it is completed. By checking with the local newspaper (in some locations) or one of several home valuation web sites, people can learn about recent real estate transactions in their neighborhoods. Knowing what similar homes sold for on one's street within the past few months gives a fairly good indication of the home's market value. This information figures prominently in mortgage appraisals. It's important that the appraiser use recent real estate transactions for this information, especially in today's market where property values are steadily increasing.
Although setting values on homes is conducted according to federal guidelines, some of the information, such as the condition of the house or the neighborhood, is subjective. One appraiser may value a house at one figure, while another could determine its worth much higher, or lower for that matter. Always ask for a second opinion on a mortgage appraisal as it may be undervalued. This is where doing homework ahead of time could help to convince a lender that the dollar amount of the mortgage application is justified. "Righteous lips are the delight of kings; and they love him that speaketh right." (Proverbs 16:13)
If the value is lower than the purchase price, the lender will go with the lower figure, which could prevent the buying the house. If this happens, ask for a review of the appraisal with the appraiser or speak with the lender about the specific concerns and they may order another mortgage appraisal or speak with other industry professionals about changes in the market or improvements to the property that the first appraiser was unaware of. Some people have successfully used the given value as bargaining tools to renegotiate the purchase price of the house.
Some lenders choose their own appraisers for the job, but the buyer may have a say in the process. If so, experts recommend choosing a state licensed or certified appraiser. Mortgage appraisals are big business now and, unfortunately, some of them operate fraudulently. Feel free to ask potential appraisers what they charge and what can be expected in terms of turnaround time. Also inquire about whether the appraiser is familiar with the area and the property type. The appraisal is a big part of the home buying process, so make sure to be comfortable with all of the responses before agreeing to a transaction.
|
|
|
|
