| During the home buying process, you'll hear | | | | protects its own financial interests. |
| the term "appraisal" mentioned at some point. | | | | |
| | | | Generally, you'll have little control over |
| Chances are, you already have a general idea | | | | the appraisal process and won't even be |
| what this term means. But when it comes to | | | | present for it. Chances are, your lender will |
| mortgages and home buying, you need to know | | | | arrange the appraisal, and the house will |
| exactly what an appraisal involves and how it | | | | either appraise at the asking price or not. |
| affects you. | | | | Hopefully the former. |
| | | | |
| First, a definition: | | | | If the home appraises for less than the |
| | | | asking price, you have two options. You can |
| Appraisal -- A professional appraiser's | | | | come up with the difference, or the seller |
| estimate of the market value of a property. | | | | can reduce the asking price to match the |
| Appraisals take into account the local market | | | | appraisal. |
| conditions and the characteristics of a | | | | |
| property. They are required by most lenders. | | | | Also keep in mind that an appraisal is not a |
| | | | home inspection. A home inspection is |
| In other words, the appraisal is the lender's | | | | something you should obtain to protect your |
| way of determining a realistic market value | | | | investment. An appraisal is the appraiser's |
| of your future home. The lender uses the | | | | opinion about the value of your prospective |
| appraisal to ensure that the home is actually | | | | home. But that's it. Appraisers will not test |
| worth the price you've agreed to pay. | | | | the functionality of appliances, inspect the |
| | | | roof, or perform other tasks a home inspector |
| In the unfortunate event that you can't pay | | | | would do. |
| your mortgage, the bank will foreclose on the | | | | |
| home and resell it. Not a nice thought -- but | | | | * Copyright 2006, Brandon Cornett. |
| it's reality. The appraisal is how the lender | | | | |