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Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. If you are a military veteran, you may qualify for a loan from the U.
The VA also requires its own kind of appraisal to ensure the house is in good condition. VA appraisal fees are determined by the government and cannot exceed specific amounts for certain properties.
The first step should be to talk with the appraiser to ask why the assessment resulted in a lower number than expected. The home appraiser will have documentation to back up their decision, so it should be easy to understand how they came to their result. Ideally, any related home value documents should have been given to the appraiser when they started the process to avoid this problem. Documented evidence can help improve a low appraisal. If the appeal does not work, you can also request a new appraisal.
In some cases, a bank may be willing to coordinate a new appraisal, or you may need to hire an appraiser on your own. The risk of a private appraisal is that a lender may not recognize its validity. It may help to provide it to the original appraiser to see if they can reassess, though.
On the other hand, you may prefer a higher appraisal value as a buyer in order to qualify for your loan. You can ask the seller to take out a second mortgage to cover the difference between the low appraisal and the purchase price. They may agree to a balloon payment after the equity rises enough for you to do a cash-out refinance.
Home appraisals are almost always required in all 50 states when purchasing, selling, or refinancing a house. Overpaying for a house means you lose equity and pay interest on a larger loan than necessary. As a seller, a home appraisal helps prove that your property is worth the selling price. A refinanced loan replaces the original loan, but since time has passed since the original loan was approved, the bank will need to reassess the property.
A lender will request an appraisal to get an updated home estimate of the value of your home. If your property value has increased, you may be able to cash out part of the original loan, but you may not be approved for a new loan if the value has decreased.
A home equity loan is a loan on top of the mortgage loan rather than a refinanced loan. Some loans require significant collateral against the loan. Business loans are one example of this. If you need to put your home up for collateral to secure another kind of loan, the lender will need a home appraisal to estimate what your home the collateral is worth. Property taxes are based on the fair market value of your home in your specific area. In a booming housing market, property taxes usually increase across the board.
A professional appraisal is done by a licensed third-party appraiser who assesses the interior and exterior of the property, researches similar homes in the area and gives a final report. Be sure to spruce up your home to make it look more appealing to an appraiser. If an appraisal comes in low, buyers and sellers both have options. A buyer can renegotiate the sales price, and a seller can lower the home price or request another appraisal.
While a client or seller can request a new report, that does not mean that a new report will be ordered or issued upon that request. Appraisals are beneficial for everyone involved in the home buying process: For buyers, a home appraisal ensures they are paying the current fair market value. For sellers, an appraisal helps them price their home competitively.
For mortgage lenders, an appraisal provides proof that a home is valued at the proper level to approve a mortgage. Ready to apply for a mortgage or a refinance of your current mortgage?
Hanna Kielar is an Associate Section Editor for Rocket Mortgage focused on personal finance, recruiting and personal loans. She has a B. Refinancing - 6-minute read. Miranda Crace - October 26, Want to increase the value of your home before you sell? Our guide will help you get your property ready for resale. Emma Tomsich - September 10, Curb appeal can make a big difference when it comes to selling your home.
Hanna Kielar 7-minute read September 15, Share:. What Is A Home Appraisal? Home Appraisal Vs. Home Inspection An appraisal differs from a home inspection.
Other Types Of Appraisals Depending on your lender and your circumstances, your lender may require one of the following types of appraisals. Hybrid appraisal: Hybrid appraisals allow appraisers to use information from a third-party source to complete an appraisal without ever physically visiting a house.
Desktop appraisal: As technology has been embraced by the real estate industry during the pandemic, desktop appraisals have also increased in popularity.
A desktop appraisal is much like a hybrid appraisal, except there is no third party involved. The appraiser uses information available online — property records, floor plans and comparable listings , for example — to gather what they need to make an appraisal. Drive-by appraisal: Lenders may be satisfied with a drive-by appraisal for many prospective homeowners. Great news! Share Share on Social Media. Erin Gobler March 9, 6 Min Read. Getty Images. Editorial Independence We want to help you make more informed decisions.
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