One of the first few things you would do while buying a home is applying for a mortgage. This might be the easy part, considering the many lenders who may get in touch with you via mortgage leads. However, before approving your loan, your lender might order a home appraisal.
Although one of the most important steps of the home-buying process, the home appraisal is not something that all home buyers are familiar with. Nevertheless, if you need to make the right decision it is better to be informed about what is involved in the home appraisal. Here are a few things you may want to know:
What is home appraisal?
The home appraisal is an estimate of the fair or true market value of your home, given in an unbiased manner. This report is prepared after taking into account many aspects such as the location of the property, its current condition, and details about recent sales of similar properties.
Why do mortgage lenders order a home appraisal?
Any mortgage lender, who comes to you via mortgage leads, might order a home appraisal. This will help them assess your home’s market value and make sure the amount that you are requesting via a mortgage, is appropriate.
How to select the right home appraiser?
Most home appraisers are highly trained professionals who are certified and licensed to assess the fair market value of homes, in an objective and unbiased way. They have all completed their education in home appraisal, cleared a number of tests and gained a lot of on-the-job experience as home appraisers. They are heavily regulated and subject to severe consequences if they issue biased or misleading reports deliberately. There are little chances that you might go wrong while choosing a good home appraiser. In fact, the lender who might come to you through mortgage leads might suggest or recommend one.
What do appraisers look for before giving the home appraisal?
A home appraiser will take a close look at the general construction of the property. He will assess the size of the property and evaluate various things such as windows, doors, walls, roof, flooring, and the quality of electrical and plumbing work done. He may also check out the home appliances, light fixtures, and any other improvements that the seller might have made on the home.
How much does a home appraisal cost and who pays for it?
Generally, it is the lender who will arrange for the home appraisal. However, it is the buyer who is responsible for paying for it. The appraisal fees might range anywhere between $450 and $750, based on the location and size of the property. This is a one-time cost which will be charged only after the seller has accepted your offer and the lender is ready to finance your new home. There is no need to complete appraisals on each and every house that you bid on.
What can you do to improve the home appraisal process?
Ideally, the home appraisal process should protect you by giving you an estimate of the fair value that you can pay for the house. You have to compare it with your inspection report and look for inaccuracies if any. Consider the difference between the appraised value of your home and the agreed selling price. The lender, who might contact you through mortgage leads, may not wish to finance if the difference is too big. However, you can solve this problem by bringing in some additional “cash to close.” All that you need to do is increase your down payment by the difference amount or negotiate with the seller for a better price.
What if you are not happy with the appraisal report?
There is no rule that says that you have to accept the appraisal report the way it is given to you. You should read and review it along with the supporting documents that the appraiser gives you and challenge the same in case you find any inaccuracies or discrepancies.
Most lenders, who contact home buyers through mortgage leads, tend to run a comparison of the appraisal report with the other appraisals that happen in the neighborhood. Such a comparison should catch discrepancies if any. But if there is any information that you can provide to your lender, you should definitely go ahead. If the report seems inaccurate to the lender, he may arrange for another appraisal with a new home appraiser.