What is a Home Appraisal?

You’ve found your dream home, and now it’s time to make it your own. One of the first things you’ll want to check off your final closing list is the home appraisal. So, what exactly is that?

The home appraisal is essentially a value assessment of the home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately. If you’re buying your home using a mortgage, your bank will require the home appraisal. This is different from a home inspection — an appraisal protects the financial interests of the lender, and while a home inspection protects the buyer from potential maintenance or repair issues.   

During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. Their assessment will factor in a variety of things, including the home’s floor plan, functionality, condition, location, school district, fixtures, lot size, and more. Adjustments will generally be made if the home was recently renovated, or exterior upgrades like a deck or pool were put in place. The appraiser will also compare the home to several similar homes in the area — known as comps — that sold within the last six months.

Unlike a home inspection, an appraisal only looks at the surface value of the property. The appraiser will note any obvious damage, such as a badly dilapidated roof, but won’t conduct the same thorough tests you’ll get from a home inspector. The final appraisal report must include a street map showing the property and the comps, photographs of the interior and exterior, an explanation on how the square footage was calculated, market sales data, public land records, and more.

After the appraisal report is complete, the lender uses the information to ensure that the property is worth the amount they are investing. This is a safeguard for the lender, as the home acts as collateral for the mortgage. If a buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed. 

As a buyer, the most important thing to note is that home appraisals protect the bank, not the homeowner. You’ll still need to schedule a home inspection to be sure that your home is in good condition and won’t require any unexpected repairs. 

Are you ready to close on your dream home? Give us a call! 

What Every First-Time Homebuyer Should Know

Buying a home can be an incredibly intimidating process, especially if you’re a first-time buyer. But fear not! Here are some simple tips to keep in mind to make your first home-buying experience run smoothly. 

Start saving early. 

Most people will tell you that a 20% down payment is standard, but some lending programs will allow you to put down as little as 3%. This doesn’t always mean you’re saving money, however. A low down payment often results in higher costs in the future. Even if you are able to negotiate a small down payment, that can still be a lot of money. For example, a 10% payment on a $200,000 home is still $20,000.  

Know your mortgage options.

There are a lot of factors to consider when you’re applying for your first mortgage, and a lot of opportunity for less-than-scrupulous lenders to take advantage. Make sure you do your research and work with a mortgage expert so you know you’re getting the best deal. 

Get a pre-approval letter.

You can pre-qualify for a mortgage, which means you can get a basic idea of how much a lender is willing to approve based on factors like your income, credit history, and down payment. As you get closer to finalizing your home purchase, make sure you get a pre-approval letter in writing. This will help you look more serious to sellers, and help protect you from last minute approval changes that could cost you.   

Budget for additional expenses.

It can be hard to see past the asking price of your dream home, but don’t forget there are other expenses to consider. Closing costs, title insurance, moving costs, or necessary updates and repairs can add up quickly. It’s helpful to have a little extra set aside to cover these final costs so you don’t find yourself going over budget. 

Trust the experts.

You may have seen every episode of House Hunters, but that doesn’t always translate to real world knowledge. Work with a realtor and a closing attorney you trust (hey, we know a guy!) to make sure everything runs smoothly and is cost-effective. 

Becoming a homeowner for the first time is an exciting experience, and one you’ll remember forever. Make sure you’re ready to take the leap, and know that there are plenty of people ready to help you open the door to your dream home!