You’ve finally found your dream home. The kitchen is gorgeous, the neighborhood is perfect, and you can really see yourself living there. But before you can close on the house, you need to get an appraisal. What is a home appraisal anyway? And how much sway does it really have over whether you can buy your dream house? Don’t worry, we’re going to walk you through everything you need to know about home appraisals explained so you can feel confident and informed when you reach this step in the home buying process. Getting an appraisal doesn’t have to be scary or confusing – we’ll break it down step-by-step so you’re prepared when it’s time to determine the value of your future home.
Understanding the Home Appraisal Process
A home appraisal is a professional assessment of your home’s market value. When you apply for a mortgage loan, the lender will require an appraisal to ensure the home is worth at least the loan amount.
– An appraiser will visit your home to inspect and measure it, taking note of details like square footage, number of bedrooms/bathrooms, layout, condition, and features.
– They will look at comparable homes recently sold in your area to help determine your home’s value. Location, school districts, crime rates, and other local factors are considered.
– You’ll receive a detailed appraisal report with photos of your home and comparable properties, explanations of the valuation methods used, and an estimate of your home’s market value.
– The appraised value becomes the basis for your loan amount. If the appraisal comes under your offer price, you may need to provide more cash at closing or the lender may deny the loan.
Getting an accurate appraisal is crucial when buying or refinancing. Don’t be afraid to ask questions and understand the process. With some preparation and knowledge, you can ensure your home’s full value is recognized.
How to Prepare for Your Home Appraisal
Getting an appraisal can seem mysterious, but it doesn’t have to be. Here’s a quick rundown of what to expect:
– The lender will order the appraisal once you are under contract. This is to protect their investment by ensuring the purchase price is in line with the home’s market value.
– A licensed professional appraiser will visit the home, taking photos and making notes on the property’s condition, size, features, and more. They will look at similar recently sold homes in your area to help determine value.
– The appraiser then provides a detailed report to the lender, which includes their opinion of the home’s market value along with supporting data. This allows the lender to assess if the loan amount you are requesting aligns with the value.
– You’ll receive a copy of the appraisal from your lender as well. Review it to make sure there are no major inaccuracies about the home itself. But don’t worry about minor details, the value conclusion is what matters most.
– If the appraisal comes back lower than the agreed purchase price, you may need to negotiate a lower price with the seller or make up the difference in cash. But in many cases, you can provide additional comps to dispute a low appraisal if needed.
The home appraisal gives you assurance that you aren’t overpaying and protects the lender’s investment. While the process itself is fairly straightforward, the valuation methodology can be complex. Rest assured the appraiser is a neutral third party providing an unbiased opinion.