First time home buyers may believe that a mortgage pre-approval and funding are the primary items to that are needed to get the title to a house. While both functions are extremely important, other items are also necessary to complete a successful purchase transaction. Perennial Funding provides helpful support and insight into the home buying process.
What is a Real Estate Appraisal?
A real estate appraisal is a report that establishes the market value for land, residential properties and for commercial properties.
Prior to funding a home loan, mortgage lenders generally require a Uniform Residential Appraisal Report from a state-licensed real estate appraiser.
The home value within the report is based on a comparison of nearby properties that are similar in size, style and condition to the subject property (home that borrower is buying).
Who Orders a Real Estate Appraisal for a Purchase or a Refinance Transaction?
A mortgage lender will typically order an appraisal for purchase or refinance transactions. Although, a real estate appraisal might be ordered by a homeowner for other reasons, such as for a divorce proceeding or to determine the value of an estate.
Is a Home Buyer Required to Pay for a Real Estate Appraisal?
A lender-ordered real estate appraisal is generally paid for by the home buyer. On a Good Faith Estimate and a HUD-1 Settle Statement, the charge for an appraisal is usually displayed among other items that reflect the home buyer’s closing costs.
However, in certain cases, the home seller, mortgage lender or the home builder might agree to pay for the cost for the appraisal.
Who is the Beneficiary of a Residential Real Estate Appraisal?
In cases where the home buyer pays for the appraisal report, the borrower would be entitled to receive a copy, upon request.
For the mortgage lender a real estate secured property serves a collateral for the home loan. Prior to funding a mortgage loan, the lender will ensure that the property is valued at an amount that equals or exceeds the amount of the home loan.
Although, a home buyer might have a hunch about the value for homes in certain neighborhoods, a real estate report from a state-licensed appraiser provides an unbiased reflection of a property’s true market value.
Home buyers may visit a variety of informational website sites that provide online valuations for real property. However, some of the reported values could be as much as 30 percent incorrect, or greater.
Working with a knowledgeable and a courteous mortgage professional is the best way to get details about obtaining a home loan.
Perennial Funding provides real estate financing resources and tips for first time home buyers. Contact us today for more information about applying for a mortgage loan.