What are Mortgage Financing Appraisals?
The home appraisal is an essential step of the mortgage loan process. Most lenders will order an appraisal before approving the loan requested by the buyer. The appraisal helps the lender determine whether the loan amount matches the fair market value of the home.
Why Mortgage Financing Appraisals Are So Important
Say you wanted to buy a house for $200,000. You have the cash for a down payment of 50,000 (25% of the home’s value) but need the bank to cover the rest. In this case, the mortgage loan you would seek would total $150,000 (the remaining 75% of the home’s value).
But just because someone lists a house at $200,000 doesn’t necessarily mean it’s worth that. Market values in real estate constantly fluctuate, and it is this fluctuation that causes so much negotiating on home purchase prices – and also a reason why mortgage loan appraisals are necessary.
If a buyer overpays for a property, then they accrue more risk. That risk transfers over to the lender, who may not be able to make their money back in the event of a foreclosure. On the other hand, if the appraised value of the property is considerably lower than the agreed-upon purchase price, the buyer can use that information to renegotiate with the seller or get out of the contract.
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How Mortgage Financing Appraisals Work
To perform the appraisal, the bank will hire a third-party professional who is not associated with the buyer or the seller. This way, the appraiser will be well-positioned to provide a fair and objective assessment of the house.
The appraiser will take multiple factors into account when establishing the property’s value:
- The size and condition of the house
- The size of the lot
- Recent sales data for comparable homes in the same area.
- Things that might lower the value like drafty windows, cracks in the wall, and damaged siding.
- Things that might increase the value like a new roof, modern stainless-steel appliances, and well-tended landscaping.
Why Choose Authority Appraisals
Authority Appraisals provides a team of certified and experienced appraisers. Not only are we experts in our field, but our knowledge of the Greater St. Louis area and local markets is unmatched.
Authority Appraisals also can offer professional Brokerage Services under our sister company Rhodes & Associates Realty. For more information on our Brokerage services please visit us on the web at www.Rhodes-Associates.com
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Feel free to contact us and get a free quote!