If you are thinking of applying for a home loan, or would simply like to refinance and have access to some of that built-up equity, it is important to understand the appraisal process when buying or refinancing a property. Banks and other lending institutions have a set process for appraising properties, and with that in mind, here is a brief overview of how lenders evaluate a property.
What Is A Property Appraisal?
A property appraisal is a professional evaluation of the current value of a property, and the lender will wish to value any property that a borrower is planning to buy or refinance, as this is one way to protect their investment. In the event the sale price of a property is less than the amount borrowed, if the borrower defaulted on the payments, then the lender would not be able to sell the property and recover their investment.
Who Pays For The Appraisal?
Unfortunately, it is the buyer who pays for the appraisal, and in some cases, the buyer also has to arrange for the appraisal. The results would normally be sent directly to the lender, although the buyer can ask for a copy. If you are looking for the best home loan deal, check out Mint Equity award winning mortgage brokers in Sydney. They can always find the mortgage that best meets their client’s needs.
Determining A Property’s Value
The appraisal might contain information about similar properties near the location that have recently been sold, and the appraiser would compare the property with others using size, facilities and condition.
What If The Appraisal Is Lower Than The Selling Price?
If the appraisal comes out lower than the selling price, the lender will likely only be prepared to lend you the appraised amount, and the best solution would be to approach the seller and ask them to review the sale price. In the event they are not prepared to do that, you can always walk away from the deal. Another option would be to increase the amount of deposit, which would cover the difference, and you can dispute the appraisal, but that does not generally produce the desired outcome.
It is very important to approach an independent mortgage broker when looking for a home loan, as the independent broker is not tied to any lender and can therefore approach many lenders, which should result in a home loan that suits your lifestyle. The broker would likely arrange the appraisal on the lender’s behalf, and should the outcome be in line with the asking price, chances are the lender will lend you the full amount.
By approaching a reputable independent mortgage broker at the very outset, you are in good hands, and their services are free to the borrower, as they receive a small commission from the lender. There are many different kinds of home loans, and without the help of a professional, you might choose one that is less than suitable, which could mean you end up paying more than you need.
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