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Do you need an appraisal for your mortgage?

Posted on: 22nd Dec, 2005 04:20 am
An appraisal involves the evaluation of the market value of real property including mobile home. It gives an estimate of the price that can be obtained by selling the property in a competitive real estate market. Appraisal is required when you intend to buy a property with the help of a mortgage loan taken against the same property. An appraisal is also necessary when you refinance your existing mortgage with a new home loan.

Your lender may need an appraisal in order to ensure that the property will sell at least at the amount which he will be offering as loan. The lender or the bank offering the loan needs an assurance that in case of default they can make up for the amount of cash they have invested in making the loan. This is why an appraisal is carried out on the property that is kept as security for a home loan.

A home appraisal is different from that of home inspection. The appraisers take notice of the various problems in the property but they never test appliances or inspect different areas in the property.

A residential appraisal report generally consists of the following information:
  • Details of the property under appraisal.

  • A comparison of the property with 3 similar properties in the neighborhood.

  • Evaluation of the real estate market in the area where the property is located.

  • The type of area where the property is situated.

  • Estimate of the average sales time required for the property.

  • The appraiser's comments and remarks on the issues that may affect the property value.

  • Instructions regarding the defects in the property including the foundation.
Appraisers who are licensed by their respective states can evaluate your property value. Your lender may appoint an independent appraiser or else he may use his staff for conducting an appraisal. In both cases, the lender charges an appraisal fee which is included within the closing costs paid for your mortgage.

You may also select an appraiser, but in such a case, the results of appraisal will be reviewed before they are accepted. It is always better if the appraisal is done by a third party who has no financial dealing with either of the parties involved in home-buying or refinancing.

Your final approval in the loan process depends on a satisfactory appraisal of the property against which you have taken the mortgage loan. If the appraised home value does not support the loan amount, then the loan is never originated. The appraisal determines the loan-to-value ratio in mortgage loan, and if the loan amount exceeds the appraised property-value, then it is the borrower who has to pay higher costs and interest for getting a higher loan amount.

Related References:
No, I do not. we commit for that
Posted on: 11th Jul, 2009 03:25 am
sw, you've brought nothing to the table. why not leave it and depart?
Posted on: 11th Jul, 2009 05:37 am
hello ,Mable, i think that is because the lender will only trust the appraisal they ordered rather than from anybody else' .
Posted on: 25th Jul, 2009 08:56 pm
jk...not only is your post untimely (4 months late) but the "second appraisal" would have been ordered by the lender who ordered the "first appraisal." second appraisals are not uncommon for odd types of property. we never did get a definitive answer on why the lender requested a second appraisal in this case.
Posted on: 25th Oct, 2009 08:58 pm
PAPA stands for Property Appraiser Public Access. We designed PAPA to make your research quick and easy, and even fun. As your Property Appraiser, I believe you have the right to know how your property is appraised and PAPA is the fastest way to access your property information. PAPA also provides quick links to other government agencies in Palm Beach County, such as taxing authorities, the Tax Collector's Office and the Clerk of Courts.
Posted on: 11th Jan, 2010 09:15 pm
are we to assume that PAPA is exclusive to Palm Beach County in Florida? is this a tool for appraisers only, for the general public only, for me and my friends? please elaborate on these questions. your post came out of the blue, srinuadipudi, so we don't know what the overall meaning of it is.

Posted on: 12th Jan, 2010 08:47 am
In most cases your Appraisal that you get on your own is worthless to the lender. The HVCC that impacts most lenders, forbids that to happen. The lender has to chose the Appraiser or in some cases an AMC, but never, never the borrower or the seller. FIRREA also forbids that as well - the Savings and Loan Bail Out bill from 1989, you know the one that was supposed to prevent a repeatt that we are going through more severely now
Posted on: 09th Feb, 2010 03:24 pm
"Worthless to the lender" in my opinion extends to all appraisal reports that a borrower (or potential borrower) would obtain.

The report generated must be independent - a borrower who hires his or her own appraiser isn't going to be obtaining an independent report. The borrower is the appraiser's client in that situation, and no lender operating under the law would allow such a thing.
Posted on: 16th Feb, 2011 10:13 am
I was preapproved to purchase a new constructed home for $141,000. However, new constructed home was appraisal for $87,000. Why the low appraisal?
Posted on: 16th Jan, 2013 06:59 am
Hi eworld,

The appraised value of the property depends on various factors. So, it's difficult to say why your property appraisal came so low. You can read through the appraisal report and check out if the appraiser has mentioned any particular reason for a low appraisal.

Posted on: 19th Jan, 2013 10:49 pm
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