You entered into a contract and agreed to a purchase price with the seller. You are applying for a mortgage, and the lender asks if you are ready to order the appraisal. What is the appraisal and why is it necessary?

An appraisal is an independent opinion of value provided by a licensed appraiser. The lender requires an independent appraisal of the property to assure that the agreed-upon contract price is representative of the value of homes in the area. The lender will rely on the appraiser’s opinion when approving the loan. So, if the appraised value is less than the contract price, the lender will use the appraiser’s lower value when approving the loan. If you were putting 3% down, it would be 3% down from the appraised value, not the contract price.

If you have questions on how an appraisal can affect your loan, give us a call and we can help.

If you’d like to see other videos in the First-Time Homebuyer Video series, click here: https://counselmortgagegroup.com/category-first-time-homebuyers/