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When you get qualified for a mortgage, you get approved for your unique situation: your income, your debt, and your credit. Also, lenders check that the property is a good fit for you, which is done through an appraisal.

Who Does the Appraisal?

When an appraisal is done, an unknown, third-party, qualified professional is brought in to examine the property. The buyer and lender do not have the ability to choose the appraiser. This person will go to the property and look at the amenities of the property, and then compare that to all the properties that have sold in the area to determine a fair market value for your home.

Is the Appraised Value Acceptable?

A lender will look at the appraised value of the home, and compare that value to your contract price, whether you have bought the home or are doing a refinance. After the appraisal, the lender needs to check that the appraised value is acceptable, and also determine the condition of the home to see whether any improvements need to be made. In some cases, such as with FHA renovation loans, a list of things might need to be fixed before closing. When the appraisal comes back from the appraiser, it will list the value of the home as well as anything that needs to be repaired.

Renegotiating Value

In some cases, buyers may have paid a certain amount for the home, and the appraisal comes back for a lower value. When this happens, there is a process to go back and have a review appraiser verify that the right comps were used, and the assumptions in the original appraisal are correct. Often, this is enough to get things turned around. In rare cases, certain things need to be renegotiated with the appraiser to get the appraisal where it needs to be. A good lender will have the skills to negotiate with the appraiser when needed and will know your options through the appraisal process to help you qualify for your loan.

If you have any questions about the home appraisal process, contact Pete Thompson, your Chicago area mortgage guy, at (630) 481-7188 or visit www.PeterThompson.team.

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