Home appraisals help homebuyers and homeowners get approved for a mortgage. Home appraisals are necessary whether buying a home or refinancing your current home.
Mortgage lenders require a professional, independent property appraisal to ensure its price and value meet their standards. Therefore, home appraisals are crucial for financing, and lenders will not provide funding without an appraisal since the home is collateral for a mortgage.
Why Might You Need an Appraisal?
A home appraisal helps ensure borrowers do not overpay for a property. Home appraisals also offer helpful information, such as repairs to the interior or exterior of the home.
Mortgage lenders typically require a home appraisal to protect themselves from lending more than the home is worth.
There are many cases where you might need an appraisal:
- Selling your home.
- Applying for other loans.
- Getting a home equity loan.
Related: Can I Select My Own Appraiser for a Home Loan?
How do Home Appraisals Work?
Getting a home appraisal done early in the loan process is essential, as lenders typically wait to review a file until after the appraisal is complete.
A professional, independent appraiser will visit the home and inspect its interior and exterior. Next, the appraiser will form an opinion on the probable market value of the property by considering several factors, such as sales of similar homes in the area, landscaping, and the home’s foundation. They will then prepare an appraisal report explaining the conclusion.
Often, the current housing market affects the home appraisal process. For example, in previous years, the appraiser could justify excluding specific properties from their report if they sold for lower prices due to foreclosure, as these were not very common. However, these sales reflect the current market conditions and must be included depending on the housing market environment. In addition, the appraiser should make appropriate adjustments for a poor condition or significant disrepair.
The lender wants to know whether the property is worth at least as much as the loan amount. In the unlikely event of foreclosure, the lender wants to confirm that they can recoup the loan amount.
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.
To get started with a mortgage to buy your next home, please fill out our Quick Mortgage Application or contact us.