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