In most cases, an appraisal is required to buy or refinance a home.
The appraisal protects you and your lender from paying or financing a home for more than what it is actually worth.
An appraisal - also known as a property valuation - is an unbiased, professional assessment of the property's current fair market value. They are conducted by qualified, licensed property appraisers, and they must not be affiliated by either the borrow or the lender. This ensures an honest valuation of the property, that doesn't favor either party involved.
As your mortgage broker, we will take care of ordering the appraisal for you. During this process, the appraiser will conduct a complete evaluation of the property. This is typically done in-person, but with the spread of the COVID-19 pandemic, some are now being conducted remotely. Some of the factors that the appraiser will consider during their evaluation includes:
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Location of the property
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Type of neighborhood (Is it rural, suburban, or urban? Is it established or growing?)
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Total square footage of the home and property (including any additional structures built upon it, like separated garages, sheds, guest houses, etc.)
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Layout of the home
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Condition and age of the overall structure, including the roof, walls, and foundation.
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Condition and age of major appliances (like air conditioning units, water heaters, washers and dryers, etc.)
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Extra amenities (like swimming pools, outdoor spas, decks, fireplaces, etc.)
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Risk of natural hazards (like flooding, fire risks, hurricane risks, etc.)
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Prices for comparable homes in the neighborhood or local surrounding area
A property appraisal is not the same as a home inspection! A property appraisal is an evaluation strictly focused on the value of the home and property. A home inspection, on the other hand, reviews the overall condition of the property and can highlight any necessary repairs that need to be made.
Once the evaluation is complete, the appraiser will put together a final appraisal report, which is submitted to the lender for review. We'll also provide you with a copy of the report for your records. Most appraisal reports are only valid for 120 days, and must be valid through your closing date. (If your appraisal expires before your loan closes, an updated appraisal may be required.)
The cost of an appraisal can vary based on the type and location of the property. Most appraisals cost between $500 - $1000, but keep in mind the cost can exceed this range. Depending on the type of mortgage you are looking to get, this fee can be rolled into your loan.
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Contact us today to get started on your home loan.