What is a mortgage appraisal?

A mortgage appraisal is an evaluation of a home's value that is conducted as part of the mortgage process. It is typically required by the lender to determine the amount of money they are willing to lend you for the purchase of the home. Here's what happens during a mortgage appraisal:

What are the steps in the appraisal process?

The appraiser visits the property: A licensed appraiser will visit the property and conduct a thorough inspection of the home's interior and exterior. They will take into account things like the size, layout, condition, and features of the home, as well as the location and any upgrades or renovations that have been made.

The appraiser compares the home to similar properties: The appraiser will also compare the home to similar properties in the area that have recently sold. This is known as the "comparative market analysis" and it helps the appraiser determine the home's value.

The appraiser creates a report: After completing the inspection and market analysis, the appraiser will create a report that includes an estimate of the home's value. This report will be used by the lender to determine how much they are willing to lend you for the home.

The lender reviews the report: The lender will review the appraisal report to determine if the home's value is sufficient to secure the mortgage loan. If the home's value is lower than the purchase price, the lender may require the borrower to make up the difference in cash, or they may decide not to lend the full amount.

Summary

A mortgage appraisal is an important part of the mortgage process, as it helps the lender determine the amount of money they are willing to lend you for the purchase of the home. By understanding what happens during a mortgage appraisal, you can be better prepared for this step in the home buying process.