Bay Area Logo

Back

Home Appraisal FAQs

Why do you need one?

To qualify for a mortgage, your lender has to believe that he will make money on your loan, as the alternative is losing money - which most banks aren't fond of. Proof of your history of on-time payments via your credit score will be a big factor in securing your ideal mortgage, but due to the size of most home loans, banks require a little extra incentive. This is where the appraisal comes in, as that little extra certainty.

In case you default on your mortgage, your lender will look to recover his money - and often, foreclosing and selling your house is the only option he has left. The appraisal is a guarantee for the lender that in this worst-case scenario, he will be able to sell the house for enough to recoup the money he loaned you. Without that extra guarantee that your house could sell on the market for enough to cover his investment, you won't be getting that mortgage.

What does an appraisal entail?

An appraisal will generally cost under $400, consisting of an evaluation of the cost to replace the physical property plus a good estimate of the land value if your house is new, or a comparison of your potential home with similar houses in the neighborhood. Updated roofing, appliances, landscaping, plumbing, electrical work, windows, and more can all increase your appraisal.

Warning!

When getting an appraisal, consider using one of your lender's approved appraisers to avoid running into problems later on if your appraisal is rejected, forcing you to pay for another one. Fortunately, an appraisal affects your bank's money too, so they should be directing the process and making sure you make no mistakes.

Share this:

Comments

Leave a comment:

* Login in order to leave a comment. Don't have an account? Join for Free



Become an Expert Contributor

Have some knowledge to share, and want easy and effective exposure to our audience? Get your articles or guides featured on BayAreaForSale.com today! Learn more about being an expert contributor.

Learn More