Last Updated on December 14, 2021 by Eric
If you need to obtain a loan to purchase a home, you will be required to get a home appraisal before the loan is approved. But, what is an appraisal, and why is it necessary? Let’s discuss this commonly misunderstood real estate term.
What Is An Appraisal?
An appraisal is performed to determine the value of the property you are purchasing. It is done by a licensed professional who is a neutral party to the transaction. The appraiser should be familiar with Lake Keowee and the surrounding area and aware of the real estate trends.
The appraiser will come out to the property to check on the home’s condition. They will look out for safety issues like making sure the windows all open and close, that there are no uncovered electrical outlets, peeling paint, or holes in the roof. They also look at any upgrades on the home that could increase value.
Once they have visited the property, the appraiser will then investigate the recent sales in the area. They will look for homes that are similar in size and amenities to the home you are purchasing to see how much they sold for. Once they have all the information they need, they will determine how much the home is worth and send a detailed report back to your lender.
Why Is An Appraisal Necessary?
The main reason for getting an appraisal is that the lender says you have to. The bank will not approve a loan for more than the home is worth, so if the appraisal comes in below the agreed-upon purchase price, you will need to either renegotiate the price with the seller or come in with extra cash to make up the difference.
While many homebuyers see the appraisal as an unnecessary expense that could potentially cause delays in the escrow process, it really is beneficial to make sure you are not overpaying for your home. If something were to happen and you decided you needed to give up lake life and move away from the Lake Keowee area in the next couple of years, you’ll need equity in the home. If you overpay for the home when you buy it, that cuts into how much you will make once you sell the home.
How Long Is An Appraisal Good For?
Each loan type has slightly different appraisal requirements. How long an appraisal sticks with a home depends on the type of loan the buyer is getting. If the buyer is getting an FHA loan, the appraisal lasts for 90 days, but other loan types have shorter periods. You can contest an appraisal if you feel that the value is too low, but you’ll need to do a lot of homework to get the appraiser to change their value.
If you have any other questions about appraisals or anything else related to your Lake Keowee home search, please feel free to contact us.
