Understanding the Appraisal Process for Buying or Refinancing a Home

Posted by  on May 03, 2010
In order for a lender to approve the amount of money you are looking to borrow for your home, whether it is for the purchase of a new home or the refinancing of your current home, it must appraise for at least the amount you are going to borrow. This is one of the key points in the loan approval process.

The home appraiser is a licensed individual usually hired by your lender to give an accurate assessment of its current value. You can choose to obtain your own home inspector. However, it is often one more thing to worry about in the home buying or refinancing process. A home appraiser is licensed by the state to which you reside. An appraiser’s license is issued your State’s Division of Commerce. The appraiser is usually not affiliated with your lender; however, your lender will usually have an appraiser in your area that they typically use.

The amount of time it takes for an appraiser to make an accurate appraisal of a property depends largely on the appraiser. It can take anywhere from a day to a week to complete the process.

There are a variety of issues that factor in to the appraisal process. One of the most important factors in the appraisal process is the prices of other similar houses in that neighborhood. An example would be if your neighbor has a 3,000 square foot home with 3 bedrooms and 2 bathrooms and just sold for $200,000; you can expect your home to approve for a similar amount if your home is 3,000 square feet with 3 bedrooms and 2 bathrooms in similar condition.

Square footage of the home is very important in the home appraisal. The square footage is usually measured without the appraiser even entering the home. This can be researched by contacting the home builder or simply measuring the exterior of the home.

Other factors such as the functional layout of the home come into play as well. If the previous owners decided to add a bath tub in the middle of the attic to in some way increase its value they may only be hurting the value of the home. Key factors such as the amount of full and half bathrooms in the home are factored into the appraisal. Additionally, the total number of bedrooms factor into the total home appraisal.

Obviously, the overall condition of the home plays a large part in the appraisal process. However, do not confuse the home appraiser’s duty with that of a home inspector. A home inspection may be carried out by licensed home inspector not an appraiser.

You might be surprised what generally does not contribute to the appraisal of the home. Items such as a swimming pool, a new roof, or a fancy landscaped yard do not weigh highly on the overall appraisal.


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