Purchasing a home can be a long process with several essential steps. You might have looked at a number of homes prior to choosing the best one. Next you submitted a purchase offer. After one or more counter-offers, the purchase offer was accepted, and you might have just purchased your new home.
Several steps are still required, which need to take place to meet conditions listed in your purchase agreement. The initial step is obtaining the appraisal. More often than not, the mortgage lender is only going to loan approximately 80% – 90% of the value of the loan. The buyer has to provide the balance which is the down payment. Under some circumstances, certain loans may be given at 100% of the appraised value.
A licensed real estate appraiser will perform the service, produce a report and give it to the lender. The appraiser will appraise the property with certain criteria to determine the value. This value is simply the appraiser’s opinion on the property’s worth, but it holds a lot of weight in getting your loan. If the appraisal comes in less than the purchase price, you will have to make some decisions. There is a good chance the lender will still loan money to you, but not the amount you were hoping for. Although you can still purchase the property, you will have to find a way to come up with the rest of the funds. If the appraisal is at, or above the purchase price you can easily move onto the next step. The title search of the property and home inspection is next up on the list of conditions to be met.
The appraisal of the property is a key condition needing to be met in your purchase agreement. It quite possible can be the deal breaker or deal maker based on the end results. Nevertheless, after the property appraises, you are one step closer to your new home.