So, you’re a first-time homebuyer and you keep hearing the words ‘home appraisals.’ But you may have no idea what that means or why it’s important when buying a home. There are a lot of things to learn and think about as a new homebuyer, so here are a few things to consider as you hear those words in your process:
A lender may order an appraisal
So, here’s the thing: you may be looking into buying a house, and you have an offer that has been accepted for said house. However, in some scenarios, before the lender says yes to your joint VA loan, they may order an appraisal. This is not uncommon.
Lenders in loan programs want to be confident about the worth of the home and want to be sure that this is a wise investment. This doesn’t always happen, but it’s important to be aware that it could, and you’ll want to be ready for it if it does. When you think about it, a lender doesn’t want to lend more money than a home is worth.
What they look for
There are a few things that will be important to the person doing the home appraisal. They want to look into the value of the home in its area, how much rent it’s worth, what other homes are selling for in the same neighborhood, etc. Essentially, the lenders want to be confident that they’re making a worthwhile investment, much as the homebuyers themselves want to do the same. If you’re looking to buy a home in a nice area that is up and coming, chances are that it may be appraised higher than, say, one in an area that isn’t that popular.
What a low appraisal means
While a lot of people want to get home appraisals with a value that is consistent with the price that the home is being offered, sometimes the appraisal will come back with a lesser amount. Nobody wants to buy a home that is being offered more than what it’s actually worth, and this could be a headache when wanting to be approved for your loans.
In some cases, homeowners looking to sell may be willing to offer the house at a lower price (consistent with the home appraisal’s reported value). In some other situations, the best decision for a new homebuyer is to look elsewhere. After all, you want to be careful with your home-buying investment.
Learn about the contingencies
When hoping to buy a home, you’re going to want to be sure that you know all about the contingencies, especially if the offer is on the table and you’re this close to buying the house. You want to be sure that you can walk away from the home purchase if it turns out that the house isn’t worth the price that has been quoted.
It’s unfortunate, but you can’t do much to change the outcome of an appraisal, so when shopping around for a house, always learn about the best contingencies to have in place so that you don’t get caught up in a pricey home that isn’t worth all that money.
Work with a trusted realtor
A smart, experienced, expert realtor can be a godsend to first-time homebuyers so that they can help you navigate the ins and outs of the process and help you avoid making a mistake when trying to buy a house. A trusted realtor will have your best interests in mind, and because of their experience, they’ll likely know what’s a good idea and what’s not. If you want to buy a great home, choose a great realtor.
In Conclusion
Home appraisals are a part of many home purchases. Avoid overspending on a house by taking time to learn about contingencies and making sure you have a dependable realtor who helps you make the best choices in the process.