Because the
property you are purchasing will be used to
secure your loan, lenders employ professional
appraisers to evaluate the property. The final
appraisal will contain an estimate of your
property's fair market value and will be an
important factor in determining how much of a
mortgage will be approved. If the appraisal
falls short of the amount you are asking to
borrow, then your application will be refused
even if you are creditworthy, or you may be
offered a smaller loan and be required to pay a
larger
down payment.
A professional
appraiser is someone hired by the
mortgage
lender to evaluate your property. It is also
possible to locate your own appraiser through
professional organizations such as the
Appraisal
Institute or the
American Society of Appraisers.
Appraisers generally take into consideration how
much it would cost to rebuild your home, and
compare it with properties of similar size,
quality and location when filing their report.
Before buying
your home, ask your realtor for a Comparative
Market Analysis (CMA). The CMA shows recent sales of properties in the neighborhood where
you want to buy your home, and can provide you
with an idea of a fair market value for your
home.
If the property
you are looking to purchase receives a low
appraisal, obtain a copy of the appraisal report
and go over it yourself. It's possible that the
appraiser doesn't know the neighborhood property
values, in which case you can put in a request
for a reappraisal. Another option is to use the
low appraisal as a bargaining device to
renegotiate the price with the seller.
Mortgage Glossary6
