Home Appraisals

An accurate home appraisal is essential to getting the loan you want!

The home appraisal is part of the mortgage loan process. All mortgage lenders require a home appraisal. Before your loan is approved, the property must first be appraised and meet certain requirements.

The valuation of your home is carried out by an appraiser who is qualified and approved by the lender. An appraisal is required to assure the lender that the property is worth the sales price and that the required loan to value ratio is met. An appraisal represents a reasonable estimate of the property's value that is based on comparable home sales in the area.

There are different kinds of home appraisals. This report only discusses the conventional appraisal. A conventional appraisal is on all loans that do not have government backing. Most conventional appraisals are good for six months. There are no required warranties on conventional loans. Conventional appraisals are not interchangeable with Federal Housing Association (FHA) or Veterans Administration(VA)home appraisals.

As a buyer, you may pay more or less than the appraised value for the home that you select. If you pay more than the appraised value, you must pay the difference in cash. However, you should make every effort to renegotiate the sales price with the buyer to reflect the appraised value as much as you can. If you pay less than the appraised value, the loan amount is based on the sales price of the property.

A home appraisal will list any serious defects on the appraisal form. These defects usually are structural problems rather than cosmetic. These defects have to be corrected for the house to qualify for your loan. Usually, the seller pays for the repairs. The values of these repairs are listed on the appraisal. All repairs have to be completed before the loan can be closed.

Existing houses are sold "as is". If the repairs are not listed on the home appraisal, there are no required repairs. The only exception to this would be a written agreement in the sales contract between you and the seller. Some real estate agencies offer a one-year service warranty as a insurance to you on a new existing home.

Because of the "as is" status of existing homes, you should always examine the house carefully. If necessary, seek professional inspection for reassurance of its condition. You should also make sure that the home appraisal is not overpriced for the area.

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