There are many steps involved in the process of purchasing or refinancing a home. The home appraisal is one of these steps. The process itself can appear to be short and therefore inconsequential, but in reality, a home appraisal is critical to ensure a fair home sale for all parties involved. Understanding this process and its benefits can help you feel more secure in the home buying process. If you need additional information and resources, you can turn to one of many professionals, such as a title company or real estate agent, to provide you with extra support for your individual situation.
What is a Home Appraisal?
A home appraisal is an unbiased, professional determination of a home’s value. They are commonly used when a house is being sold or a mortgage is being refinanced. The appraisal uses a property’s condition, location, and special features to determine whether the asking price is reasonable or to ensure that a lender is not allowing more money than necessary to be borrowed.
Lenders typically arrange for appraisals, during which a licensed or certified appraiser completes a visual inspection of the home’s interior and exterior, and notes any special features that add to its value or necessary repairs that could detract from it. The appraiser then submits a report, which includes comparable sales in the neighborhood, photographs of the property, and other relevant information.
A home inspection, while similar to an appraisal, is a separate step in the home buying process. While an inspection also involves a visual review of the home’s condition by a professional, its purpose differs. Inspections aim to educate the buyer about the home’s condition, rather than its value. The inspector will note areas that are currently damaged or have the potential to be damaged in the future, allowing buyers to make a more educated decision about whether they are willing to make a purchase.
Benefits of a Home Appraisal
While lenders stand to benefit the most from a home appraisal, buyers can also use them to their advantage. If you’re required to purchase private mortgage insurance, an appraisal can help you remove this expense. In most instances, insurance is included in your monthly mortgage payment until the principal balance of your loan reaches 78 percent of the original value. With an appraisal, you may be able to show that your balance has reached that threshold and remove the expense of mortgage insurance early.
The appraisal can also help you negotiate a lower price on the home. If the home you’d like to purchase is valued at a lower price than the offer, you may be able to use the report as proof that the buyer should accept a lower offer based on the appraiser’s professional opinion.
Finally, the appraisal can ensure that you are receiving a fair mortgage from your lender. The lender will not want to provide more money than allowed to help you purchase your home and can use the appraisal as evidence for lending less money. However, in the event that the appraisal determines the home is worth more money than anticipated, your lender may be inclined to give home buyers access to more money in order to close the sale. Rather than being forced to walk away from an underpriced property when the price increases, an appraisal can help those willing to take on larger mortgages nevertheless afford the home of their dreams.
Title insurance can add an extra layer of protection during the home purchasing and appraisal processes. When you purchase title insurance, a title company conducts thorough research into the background of the title for your property. The company will identify any issues with the title, such as liens, undisclosed heirs, or unpaid taxes, and help resolve them before the house is purchased. This helps avoid future disputes over the property’s ownership, which can often be expensive. Title insurance also protects you if any similar concerns emerge after the purchase of your new property has been closed.
Working with Mathis Title Company
Contact Robin Mathis at Mathis Title Company at 703-865-7880 for more information about the home appraisal process and how title insurance can provide you with more comprehensive home buyer protection. Mathis has years of experience in the legal and real estate industries, giving her a unique perspective and in-depth knowledge that helps support her clients through the home buying process.