Flickr: clvrmnky

An important, but often overlooked, part of buying a home is the appraisal. Unlike a home inspection, which helps you decide if you want to buy a home or not, a home appraisal is a way for lenders to determine the value of your property. Just because you’ve been pre-approved for a mortgage doesn’t mean your lender will approve your purchase, especially if they think you overpaid! Read on to learn more about what a home appraisal is and why it’s required by most lenders.

A Conditional Offer

One of the most common conditions included in an offer to purchase is a financing condition. Once your offer has been accepted by the seller, you’ll want to contact your lender as soon as possible to request a home appraisal. You can shop around for lenders willing to cover the appraisal fee, however, home appraisals typically cost between $250 and $350 – a minimal closing cost, when you think of what it could be worth. Just make sure your lender performs an appraisal before you waive the financing condition.

A Requirement

A mortgage is likely the largest loan you will ever take out, so your lender will want to do its due diligence before approving your mortgage. The home appraisal provides the lender with the reassurance that your property is worth the selling price. Even though you might be willing to pay $550,000 for a house, your lender might say it’s only worth $450,000. Continue reading →