28 February 2011
Home Loans and the meaning of Appraisal
When one applies for a home loan considering mortgaging their previous home then an appraiser is sent by the lending institution or bank. They are termed as appraisers and they calculate according to certain factors and come up with a price that indicates the market value of your home. Why is an appraisal required?
When one has to apply for a home loan against property then we do not know the total value of our home. How will the bank decide if we are qualified to get a home loan? All this is possible when the lending institution or bank sends an appraiser to assess the market price of the property to be offered as mortgage. The home owner can also privately call upon services of an appraiser to get the estimated price of the home for selling purposes or buying a bigger house. The appraiser calculates the total area of the house and rate for area per square feet in that area. They compare prices in that area and homes available are at which rate. They have to consider the maintenance dues, bills and any repairs needed in the house. If all payments are up to date and the borrower has no dues remaining. They then come up with an estimated value for your house. The appraisal is a formal written estimate given by the appraiser.
This home appraisal benefits both the lender as well as the borrower. The person applying for a loan gets an rough estimate of the value of their property and thus comes to know how much loan they can apply for. The lending institution also on appraisal of the house understands the market value of the property and how much amount they can offer as loan.