Mortgage lenders request an appraisal for several reasons, but the main two are: 1) When you’re buying a new home; and 2) If you’re dipping into your home equity through a refinance on your existing mortgage.
An appraisal is an unbiased expert opinion on the value of your home carried out by a third-party appraiser. It helps lenders ensure the money they loan you is a smart investment based on a specific property.
The criteria considered in a home appraisal can vary based on the lender’s specific request, but typically includes an examination of the property’s physical and functional characteristics, a detailed comparison of the home to recent comparable nearby sales and an assessment of current market conditions affecting the property.
Standard appraisals include an examination of both the interior and the exterior of the home. There are rare instances, however, when an exterior-only inspection – called a drive-by – may be requested. A drive-by is typically used when there’s little question about the home’s value supporting the requested mortgage amount.
Appraisal costs vary based on several factors, such as the size of the property and the appraisal’s purpose. The typical price range is $300-500, and the prospective homebuyer (or homeowner, in the case of a refinance) often covers the cost.
Why can’t I see my appraisal report?
It’s often assumed that, since you’ve paid for the appraisal, you own the report. The reasoning makes sense but, unfortunately this isn’t the case in this situation.
Since the lender is the appraiser’s client, the appraisal report is prepared based on specific lender requirements. Lenders don’t like to provide an appraisal report to a prospective homeowner because you could then shop it around with other lenders – even though that appraisal couldn’t be directly used for any other financing purposes.
This means mortgage professionals aren’t authorized to share your report, either.
From time to time, the appraisal may not support the loan amount requested. Should this happen, we’ll always be available to discuss your options and advocate on your behalf, when required.
Have questions about appraisals or your mortgage in general? Answers are just a call or email away.