Appraisal Needed To Obtain Loan

Mortgage companies require an appraisal of the property being purchased or refinanced to ensure that the mortgage will be based on collateral that is worth more than the loan amount. If a mortgage company is forced to take a home back through foreclosure, their goal is to try and sell the property for enough money to satisfy the outstanding loan balance.

While most borrowers are simply focused on trying to close on the loan, the appraisers responsibility is to provide an accurate assessment of the homes value.  In a typical purchase transaction, should the home not appraise for at least the purchase price, most contracts call for the borrower to be able to do one of the following options:

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  • Buy the home anyway by making up the difference between the purchase price and the appraised value.
  • Attempt to renegotiate the purchase price of the house based on the appraisal.
  • Void the purchase agreement and recoup any earnest money deposited.

The bottom line is that the role of the appraiser is to help the mortgage company make a decision of the loan based on the appraiser's opinion of value.