August 23, 2021
If you’re a homebuyer, the appraisal is one of the most important milestones in the entire mortgage process. A home appraisal is defined as a fair and impartial estimate of how much a home is worth, and is generally required in order to close on your home. Needless to say, a lot hinges on the appraisal.
There’s much more you should know about this step, so we’ve outlined the most important questions — and their answers — of what the home appraisal process is all about.
1. What is the purpose of a home appraisal?
The appraisal is used to determine the current market value of a particular house, determined by its condition, location, and features. Additionally, the appraisal helps the mortgage lender ensure they are lending an accurate amount based on what the home is worth.
2. Why do I need an appraisal?
Because most mortgage lenders, including Premium Mortgage Corporation, require one! As mentioned above, to meet underwriting requirements, it’s critical to make sure the appraised value of the home for which the loan will be secured is enough to back the loan amount set by the lender.
3. Who appraises the home?
An appraiser is an independent, impartial professional who has taken comprehensive and continuous training in valuation methods and techniques. Each is licensed or certified by the state(s) in which they work. They should follow state regulations and industry standards and may also be certified by, for example, the Uniform Standards of Professional Appraisal Practice (USAP). This Congress-adopted group maintains ethical and performance standards for United States appraisers.
4. What exactly do appraisers look for?
The appraisal examines the condition of all things generally part of, or attached to, the home. Translation: They’re not interested in the style of furniture or size of your shrubs. Generally, the focus of the appraisal is on:
- General features: Age, square footage, lot size, number of bedrooms and bathrooms, and floor plan functionality.
- Interior: Walls, flooring, windows and doors, the amount and quality of appliances, and plumbing and lighting.
- Exterior: Structural integrity of the foundation and roof, decks and porches, garage, and permanent amenities (like a pool or sprinkler system).
- Location: Nearby schools, a comparison of recently sold homes, public utilities, and zoning classification will also likely be considered here.
5. How is the appraisal paid for?
Typically, the appraisal fee is included in the mortgage closing costs paid by the homebuyer, unless stated otherwise by the lender. For example, at Premium Mortgage Corporation, we accept the appraisal payment either upfront with your mortgage application or we roll it into your closing costs.
6. How long does the appraisal take?
When the appraiser is at the property, it usually takes one to two hours to complete. And once done, the appraiser writes up the written report of findings and sends it to the lender, who will then share it with the appropriate parties. This usually takes five to seven business days.
As you can see, the appraisal plays a significant role in the mortgage process, and it also provides you with a lot of handy information about your soon-to-be home. So, if you have any questions about appraisals or other steps in the home buying journey, give one of our loan officers a call today!