When you are in the market for a new home, there are many steps involved in the process. One of those steps is getting an appraisal ordered. An appraisal is when a professional comes to your home and determines its value. This information is used by the lender to decide how much money to loan you for your new home. In this blog post, we will discuss when an appraisal is ordered in the loan process, and what that means for you!
When Is an Appraisal Ordered in the Loan Process Table of Contents
What is a Home Appraisal?
A home appraisal is when a professional appraiser comes to your house and assigns it a dollar value. This number is used to determine how much your house is worth on the market, as well as how much you can borrow from a lender.
Appraisals are important because they protect both the borrower and the lender. For borrowers, an appraisal ensures that they're not paying more than what their home is worth. For lenders, an appraisal protects them from lending more money than what the property could sell for if the borrower defaults on the loan.
How Is an Appraisal Ordered?
In most cases, when you're applying for a loan, the lender will order the appraisal. However, there are some circumstances when the borrower orders the appraisal. For example, if you're applying for a refinance, you might order an appraisal yourself in order to get a sense of your home's current value.
The appraiser will usually schedule the appointment directly with you or your real estate agent. Once the appraiser has come to your house and looked around, they'll compile a report that includes their estimate of your home's value as well as any relevant comparable sales in your area.
It's important to note that appraisals are different from home inspections. An inspection is when a professional comes to your house and looks for any physical defects that need to be fixed. Appraisals don't focus on physical defects, but rather on the value of your property.
What if My Appraisal Comes in Lower than I Expected?
If your appraisal comes in lower than you expected, don't panic. There are a few things that you can do.
First, you can try to negotiate with the appraiser. If there are comparable sales that support a higher value for your home, bring them to the appraiser's attention and see if they're willing to revise their estimate.
Another option is to order a second appraisal. This is more common when the first appraisal is significantly lower than what you were expecting. You'll have to pay for the second appraisal yourself, but it could be worth it if it results in a higher value for your home.
Finally, you can try to find a lender who's willing to use a different valuation method. Some lenders are willing to use the appraised value of your home as collateral for the loan, even if it's lower than what you were expecting.
An appraisal is an important part of the loan process, but it doesn't have to be stressful. By understanding how appraisals work and what your options are if yours comes in low, you can make sure that everything goes smoothly when you're applying for a loan.
When Is an Appraisal Ordered in the Loan Process?
The appraisal is one of the most important steps in the loan process, and it's also one of the most misunderstood. So when is an appraisal ordered in the loan process?
There are two types of appraisals: those for pre-approval and those for final approval. A pre-approval appraisal is typically ordered when you first apply for a loan. The purpose of this appraisal is to give the lender an idea of your home's value so they can determine how much money to lend you.
A final approval appraisal is ordered after you've been approved for a loan and are ready to close on your home purchase. The purpose of this appraisal is to confirm that your home is worth at least the purchase price. If the appraised value is lower than the purchase price, you may need to negotiate with the seller to lower the price or come up with additional cash to make up the difference.
What is The Difference Between an Appraisal and a Home Inspection?
An appraisal is an opinion of value. A home inspection is a physical evaluation of the condition of the property. Appraisals are ordered when you're taking out a loan. Home inspections are generally not required but may be recommended by your real estate agent.
What Happens During an Appraisal?
The appraiser will visit the property and take measurements. They will also look at recent comparable sales in the area to help determine value. The appraiser will then prepare a report with their findings which will be sent to the lender.
How Much Does an Appraisal Cost?
Appraisals typically cost between $300-$600 depending on the location and type of property. The borrower is responsible for paying the appraiser.
What if the Appraisal Comes in Lower Than the Purchase Price?
If the appraisal comes in lower than the purchase price, there are a few options. The buyer can negotiate with the seller to lower the price. The buyer can also pay for a second appraisal. If the borrower is unable to reach an agreement with the seller, they may have to walk away from the deal.
What is Paying for Appraisal Before Loan Approval?
Before a bank approves your loan, they will order an appraisal to make sure the house is worth what you are paying for it. If the appraised value of the home is lower than the agreed upon purchase price, you may have to renegotiate with the seller. In some cases, the buyer may be asked to pay for the appraisal upfront.
This is so that if the deal falls through, they are not out any money. Paying for an appraisal before loan approval is not required in all situations and should be discussed with your lender beforehand.
How Long Does a Home Appraisal Take?
A home appraisal generally takes a few days to complete. The appraiser will need to schedule a time to visit the property and may need to come back for a second visit if they have any questions. Once the appraisal is finished, the lender will receive a report with the appraised value of the home.
How to Prepare for an Appraisal
It's not uncommon for home sellers to want to know when an appraisal is ordered in the loan process. After all, the appraised value of your home can impact how much you ultimately receive for your home.
Here's a complete guide to appraisal during the loan process:
First and foremost, it's important to understand that an appraisal is typically ordered when a borrower is applying for a mortgage. The lender wants to ensure that the property is worth at least as much as the amount being borrowed. An appraiser will visit the property and compare it to similar properties in order to determine its value.
The next thing you should know is that there are two types of appraisals: interior and exterior. An interior appraisal is when the appraiser goes inside the property and looks at things like the condition of the home, size of the rooms, etc. An exterior appraisal is when the appraiser only looks at the outside of the property.
In most cases, an interior appraisal is ordered. However, there are some circumstances where an exterior appraisal may be ordered instead. For example, if a borrower is refinancing their home, an exterior appraisal may be all that's needed since the lender already has an accurate value for the property on file.
Once an appraisal is ordered, it usually takes around two weeks to receive the report back from the appraiser. In some cases, it may take longer if there are any delays with scheduling or if additional information is needed from the borrower.
Once the appraisal report is received, the lender will review it to determine if the property is worth at least as much as the loan amount. If so, the loan process can move forward. If not, the borrower may need to come up with additional money for a down payment or find another property to purchase.