Why Do I Need an Appraisal to Buy a Home?
As a first time homebuyer, you might wonder the reasoning behind many of the tasks you are expected to complete in order to obtain a mortgage or loan and take possession of the home. Being required to have your new home appraised is often seen as the most questionable necessity. However, from the perspective of a financial institution, a new home appraisal provides vital information on the home’s true worth.
In the eyes of a lending agency, the home appraisal is a necessity. It reveals how much your potential home is worth in its current condition and often serves as a collateral value for the loan itself. If a problem is discovered during the inspection and appraisal, the bank will often change the conditions of a loan guarantee or drop out of the deal altogether. This can happen even if you were prequalified for a specific amount. On the other hand, a home that is valued for more than the mortgage loan is approved for makes the deal that much sweeter for lending companies that look to make a large profit should foreclosure become necessary.
To maximize the benefits of a home appraisal, you can have your dream home inspected and appraised before you decide how much to request on a mortgage loan. This will ensure that what you get for the loan matches the value of the home and gives you the most potential for a successful home buying experience. Unless you have previously agreed otherwise, the home appraisal fee, which usually costs between $200-$400, is your responsibility.
Have further questions, or interested in getting started in the pre-approval process? Visit our Financing Page. Our preferred lender can help you get started in making your dream home come true. Click Here to learn more.