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Rates as
Low as 3.9% |
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Lowest
closing cost Guaranteed |
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60 Seconds
Approval |
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Appraisal
Basics
Appraisal
Methods
When To Order an
Appraisal
Appraisal To
Establish Home Market Price
Appraisal To Obtain A
Loan
Helping The Appraiser
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Appraisal To Obtain A
Loan
Usually, individuals applying for a
home loan are only interested in
obtaining the home loan or home equity
loan and unfortunately are not worried
about the prudence of buying the property at the
agreed price. In fact, many purchasers will try to
encourage appraisers to increase the appraised
value so that they can purchase the home
regardless of its value.
The majority of
real estate appraisals are requested by
mortgage companies to validate
the property's purchase price for loan purposes.
Except for periods of very low interest
rates when everyone is
refinancing, most loans are for
the purchase of real estate and ordered after a
sale price is negotiated. Purchasers mistakenly
assume that mortgage companies
are looking after their interests in the purchase
transaction.
The law states that if the
mortgage company orders the
appraisal, the appraiser is responsible only to
the mortgage company. We expect
mortgage companies to be prudent
and they should be, but being prudent is
protecting their interest, not necessarily the
purchaser's. The mortgage
company's position:
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It has two sources of repayment: the purchaser's
income and the property.
. The
responsibility to repay the loan is not based
upon the property's value, so the purchaser is
obligated to pay the note even
if the property value declines to zero.
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The loan may be insured or guaranteed by a
government agency.
. The government does not
promise to pay the purchaser's debt if the
property value is wrong.
. If the loan is
greater than 80% of the value, a portion of the
loan may be insured by a private
mortgage insurer.
. There
is no decrease in risk for the purchaser
regardless of the loan-to-value ratio. The
investment by the purchaser is
the same, a mixture of personal cash and a loan
that must be repaid.
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