March 20, 2018
What to Know About Home Appraisals & Inspections
Though home appraisals and inspections occasionally create obstacles when buying a home, both are an important part of the mortgage process. After all, buying a home is a big investment, so it’s essential to do your research and get to know the house you’re buying. First and foremost, home appraisals and inspections are two completely different things. Here’s what you need to know:
An appraisal is an unbiased professional opinion of a home’s value, which is a vital component of buying/selling a home and in refinancing transactions. Appraisals help buyers avoid overpaying for homes and assures the lender that they are not handing the borrower more money than the home is worth. Because the lender usually requires the appraisal, he or she will typically arrange the appraisal in the closing process.
Factors that may impact the property value include:
- Prices of recently sold properties in the neighborhood.
- Square footage of the property’s living area.
- The number of bedrooms and bathrooms.
- The home’s features and improvements, both positive and negative.
- The condition of the home.
- The supply of homes for sale in your area, which affects price trends in the area.
- The size of the lot and home.
- Zoning, including flood zoning.
- Safety and soundness of the property – repairs, such as holes in the roof, or cracked windows, or termite damage or hazards, such as radon, hazardous waste on the property, etc.
If the appraiser prices the property at or above the contract price, the transaction proceeds as usual. However, if the appraiser prices the property lower than the contract price, it can delay the transaction.
As mentioned above, an appraisal is primarily focused on the value of the home, while an inspection provides the buyer with an in-depth look at the condition of the home, its installed systems, any needed repairs and potential hazards. Though they are not a requirement, inspections are intended to protect the buyer and are a worthwhile investment. Inspections are usually completed prior to the appraisal being ordered by the mortgage company to make sure that there are no functional issues with the construction of the house.
Are you interested in learning more about the mortgage, appraisal or inspection process? Contact a Method Mortgage loan officer today. When it comes to buying a home, you need a helpful roadmap, and we’re here to lead you to the smartest way home.