What is a home appraisal and why does it matter?
Learn why a lender may require an independent opinion of property value.
A home appraisal is an independent opinion of a property’s value prepared for a lending purpose by a qualified appraiser.
A lender may require it to evaluate whether the property supports the proposed loan.
An appraisal can affect financing, but it is not a home inspection and does not guarantee the property’s condition.
What the appraiser considers
The analysis can include the property’s characteristics, condition relevant to valuation, location and comparable market information. The specific method and report depend on the assignment and property.
Why the value matters to financing
The lender bases key calculations on the value it can accept under the loan program. If the appraised value is below the contract price, the planned loan amount or cash requirement may need to change.
Appraisal and inspection are different
An inspection is intended to help the buyer understand systems and condition. An appraisal is a valuation for the lending transaction. Buyers should not rely on the appraisal as a substitute for an inspection.
Your rights and questions
Consumers generally receive a copy of appraisals or other written valuations for covered first-lien mortgage applications. Ask the lender about timing and the process for raising factual concerns.
Understand how the property enters the loan decision
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