HomeBuyer University: Buying a Home, Just Got Easier
Course 1: The Home Buying Process
Step 1: Getting Pre-approved
Step 2: Hire A Real Estate Agent
Step 3: Search For a Home
Step 4: Make An Offer
Step 5: Complete Submit Your Mortgage Application
Step 6: Get A Home Inspection
Get the Home Appraised
An appraisal is mandated by lenders to determine the current market value of the real estate. Your loan officer must order the appraisal, and will help coordinate to have someone present to let the appraiser into the property. Appraisers will compare your property to other homes that have recently sold to other homes in close proximity to the property you plan on buying. The value of the real estate must satisfy the amount that your bank is loaning to you, because it is the basis of your loan qualification and any down payment required.
Occasionally, the purchase price the home buyer and home seller agree upon ends up being higher than what the home is actually worth. This is discovered when the completed appraisal report indicates a lower value than anticipated. This is called an “under-appraisal”. Lenders will not approve home financing for a purchase price higher that the home’s market value indicated in the appraisal report. Therefore, you will have to take action if an under-appraisal occurs.
Under-appraisals are often easy to resolve because the market value isn’t too far off from the contract purchase price. Renegotiate the contract’s purchase price for the appraised value. Your real estate agent will help you with this.
NOTE: Generally, the person applying for a mortgage is responsible for paying the appraisal fee. Appraisal fees typically range from $300-$350 for a single family home, and are non-refundable.