A real estate appraisal can help you, the first time home buyer, know how value is determined on your property. Learn how this works and why necessary below.
Determining the house value and inspection are typical parts of the process of purchasing a home.
Mortgage lenders use the information found on the house appraisal and the inspection document to determine the estimated value of the home, and to justify the amount of money that is reasonable to loan on the property.
For the first time home buyer, this estimate of value can make or break a mortgage deal.
I've seen it where this value estimate came back far below the price of the house. Now the first time home buyer has to either make up the difference in the down payment or renegotiate with the seller.
The appraisal will include information about other homes that were sold in the near vicinity of the home they are evaluating while the inspection provides information about the current condition of the home including the roof, and appliances such as the air conditioning system.
The lender as well as the buyer both benefit from knowing what the specific condition of the home is they are interested in, and that includes a newer construction as well as the older home.
While this house evaluation and inspection can provide a bit of peace of mind they offer no guarantee that the home is free of defects. Even though professionals are in charge of examining the home to provide documentation for the various entities, the buyer has an obligation to themselves to do their own evaluation of the homes condition.
These reports created on a home are estimations of what an interested party could expect to pay for the property. Here is the way this process can work.
It is this value that allows lenders to determine what they are willing to loan on the home.
The lender, that the first time home buyer has started the mortgage process with, will not approve a loan that is higher than this home value estimate. So if you really want the house, you have to add the difference to your down payment. For many this presents a problem. That is why the first time home buyer should be concerned with how this estimation of value comes back. Especially since it can affect the loan.
So understanding the process can be helpful to you, the first time home buyer.
Learn what methods are used to figure this estimate of value by reading House Value Methods.
Why would a lender need this estimate when deciding on a loan for you? Value Assessment Needed to Obtain a Loan gives an awesome explanation on how this process works.
Understand why this assessment is ordered at Why do Lenders Need to Order This?
FHA has their own set of rules. FHA Appraisal Guidelines explains those standards in a nice way for your.
Help the Assessor gives some suggestions to help this process proceed in a timely fashion.
Assessment Helps Establish the Market Price explains what is involved in developing the market price on a home.
Go to House Buyer Solutions Home Page.
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