Generally, since the mortgage bubble, lenders will want an estimate on the value of a home since they want to make sure it's not inflated.
When a potential home buyer applies for a mortgage, the value of
house must be determined. The lender will always require that the
property be appraised by an appraiser they approve of, so they tend to be the one order an
Working through a pre-approved appraiser will help to assure greater consistency with appraisals and the buyer will also receive the benefits of having a certified and licensed professional determine the value of house they wish to buy.
When it's possible, you may want to be the one who selects the
appraiser. On this page I will explain why and also teach you what to
expect when getting an appraisal done.
It is the responsibility of the borrower to pay for the appraisal even though the lending institution will likely order an appraisal. It typically costs around $300-$350, but that will depend on the value of house in question. This amount will be added to the cost of the mortgage at closing.
A good reason why you want to be the one that orders the appraisal is because the appraiser is then working directly for you and not the lender. In my opinion this keeps the transaction honest. Not that an appraiser would be dishonest, but if they know you are the buyer, it could prove helpful.
You do not want the sellers real
estate agent to order an appraisal because then it could be weighted
towards the high side. Since the seller wants as much money as possible
on the sale of the house, I think you can see the reason not to allow
them to be the ones to order it.
The lender in most cases does not care who orders it, they just need it to determine value so they can make a loan. So if you have already been pre-approved for a mortgage as I recommend on this website why not get involved? This could help you in the long run save money.
When an appraisal is ordered by you or your bank orders it, the valuation will not only be of the home itself but of any permanent structures and the land it is sitting on. The lending institution will use the value of the house to determine the amount they are willing to loan on the property.
Lenders will be conservative when it comes to placing a value on the property. They take the appraisal and run it through their own database to cross check the appraiser. Sometimes they challenge the value if they feel it is too high. They like it when the value comes back higher than the sales price because it protects their investment.
So as the first time home buyer, you want a good, fair and proper value placed on the home. Not too high, not too low.
If you believe the value of house is underestimated, you should ask to see the appraisal, and may ask for a second appraisal if you feel the appraiser has missed something that will impact the final appraisal. When maintenance issues or repairs are the problem, the seller may be willing to make corrections and you can then order an appraisal to be completed a second time.
Even though the most common reasons to order an appraisal is for a real estate or mortgage transaction, there are other reasons that a report such as this would be ordered. They are also used to settle an estate, for insurance reasons, or for just compensation.
So don't get worried when your lender wants to order an appraisal. This is a normal part of the transaction. I just think it is good if you the buyer can be involved in the process from the begining. After all, you're the paying customer. No money moves until you approve every step of the deal.
Would you like to know what you can do to help the appraiser? Follow the link below to find out.
What can you do to help the appraiser? Learn some helpful tips on Help the Appraiser with Home Appraisal Tips.
Chances are, as a first time home buyer you will be using an FHA insured mortgage to buy the home. Visit this webpage to learn more about FHA Appraisal Guidelines to be better informed.
Do you have more questions about appraisals? Have a Question is a cool place to look for answers or ask your own questions. Go ahead...pick my brain!
Go to House Buyer Solutions Home Page.
Apr 15, 19 12:36 PM
When buying a home out of state, should we wait for employment contracts? Or can we use our current state's bank? Find the answers here.
Apr 15, 19 12:13 PM
Will bankruptcy affect my mortgage approval? Can I still buy a home? Find the answer to these and more on this page.
Apr 01, 19 05:30 PM
If someone is added to mortgage entitle them when home is sold? Or if adding to title? Can it affect my own home purchase? Find the answers here.
Follow Us On Twitter