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Churchill Mortgage By Churchill Mortgage • May 3, 2018

Home Appraisals: What's Your Property Worth?

Whether you’re purchasing a new home or refinancing, your home appraisal is an important (and necessary) part of your mortgage process. So, what exactly is an appraisal? It’s an estimate of how much your home (or potential new home) is worth in today’s real estate market.

Background information:

The Home Valuation Code of Conduct (HVCC) went into effect in May 2009 and prohibits lenders from having direct contact with appraisers. As a result, most lenders today work with a third-party appraisal management company within the geographic area of the home being appraised.

Appraisal Blog Fast Facts 2

How home appraisals work:

Appraisals typically cover all aspects of the house and are very detailed. Here’s a few of the main things that appraisers are looking for when they look at the home:

  • Property Size—How big the lot is, the square footage of the house, how many rooms are in the house, etc.
  • Inside the House—The kinds of fixtures in the home (lights, faucets, appliances), what materials were used inside the property, and what quality the house is in. Make sure the house is clean!
  • Outside of the House—The overall condition of the house, it’s foundation, and what the home is made of (brick, siding, etc.) Make sure the lawn is mowed and the weeds are pulled!
  • Home Improvements—Any large changes that have been made to the home such as a kitchen upgrade or bathroom remodel.
  • Any Extras—Additional improvements to the house that may add up like a security system, a pool, a large deck, etc.

If you’re refinancing your home, here’s a few pointers to keep in mind before you have your home inspected:

  • Make a list of all the improvements that have been made to the home within the last 5 years. This won’t include your regular maintenance to your home, just updates or upgrade information.
  • Do not discuss the value (or expected value) of your home with your appraiser—that could lead to bias during the appraisal process. The appraiser will look at closed transactions and pending sales in the area for comparable sales information.
  • Make sure the appraiser has access to your attic, crawl space, and basement, if applicable. Your entire home will be assessed and photographed. If you home is on a well or septic, you may need to share that information as well.
  • The price of your home appraisal greatly depends on your location and the type of property, and is usually paid by the seller of the home.

After your appraisal is completed, you’ll get a Final Report of Value which lets you know the appraised value of the home. This information is important and helps guide you through one of the biggest financial decisions of your lifetime.

QUICK TIP: An appraisal is not the same as a home inspection. If you’re buying a home, you’ll need to hire an experienced home inspector to alert you of any potential problems (leaky roof, moisture in the crawl space, a questionable air conditioner, or bad plumbing) and repairs that need to be made.

What happens if the appraisal comes back lower than the purchase price?

This can cause some problems with your mortgage and your contract. Unless the seller agrees to lower the price of the home, you’ll have to come up with a larger down payment to get the same mortgage and interest rate.

Don’t get stressed out about this process! If you have questions about the appraisal process for your home loan or would just like to speak to one of our Home Loan Specialist, click here.