You’ve spent months trying to find your dream home. You finally find a house you could see you and your family in that is affordable. You may have been pre-approved for the property’s asking price and you’re ready to take the next steps to secure a loan. Before a lender can determine how much money you can obtain in the form of a loan, an appraisal needs to take place.
An appraisal is a document which determines an opinion of value on residential real estate. A certified residential/general real estate appraiser will be contracted to determine the current value of the property. An appraiser is a state-licensed professional who is considered an expert at property evaluations. If an appraiser determines that your house is worth less than the asking price, you may request a reduction in the sales price from the seller based on this appraised value in accordance with the conditions of the Real Estate Contract of Sale you may have already signed.
Inside the Appraisal Process
The appraisal process can vary slightly depending on what lender you use but in general it is as follows:
Once a borrower finds a lender they would like to use, an appraisal is required to ascertain the current value of the subject property. The lender will contact an Appraisal Management Company (AMC). The AMC in turn contacts a local appraiser within the area that the property exists, and then the borrower is contacted to schedule an appointment. The appraiser will go to the property to ascertain the condition of the home, take measurements and pictures while making notes about any upgrades, deferred maintenance, materials used during construction of the home, amenities located within the neighborhood, etc. The appraiser will then review recent sales of similar homes within the subject’s market area to compare with the borrower’s property. An appraisal report is then prepared comparing the borrower’s property to the others as adjustments are made for differences in each home such as: size, room count, condition of home and other amenities to ascertain the subject’s market value and within the next few days the report will be sent back to the AMC, who in turn sends it to the lender.
At NFM Lending
After obtaining an accurate appraisal from a state certified general/residential appraiser, a processor who works in conjunction with a licensed Mortgage Loan Originator, packages the appraisal with other documents in the file for submission to an underwriter who determines the acceptability of the appraisal and borrower’s credit/income worthiness.
Should you have any questions regarding appraisals and your home, please contact a Licensed Mortgage Loan Originator by clicking here.