Obtaining Property Appraisal for Mortgage Loan.

Appraisals can have great impact on how well the mortgage process progresses for both purchases
and refinances. What a borrower does not want to see in either case is a property appraising for less
than its estimated market value. And, this does happen occasionally.

Just how does appraisal value affect the mortgage process? Well, let's look at a couple of scenarios.
First, let's say you were purchasing a home at an accepted offer of $200,000. You have a fully executed
sales contract that both you and the seller signed. You're buying this home with a zero down, interest only
loan... currently, a very popular mortgage program. Of course, this means the lender is providing funding
for 100% of the purchase price, or $200,000.

Now, the appraisal is performed and it comes back at $195,000. Immediately there's a problem, because
the lender is not going to provide $200,000 worth of financing on a property valued at $195,000. For all
intents and purposes, the deal as it was originally struck is dead. There are a few options available at this
point. The easiest one being the seller adjusts his price and accepts $195,000. But, this doesn't always
happen, and sometimes the borrower needs to find another property.

Looking at the same situation, but in this example the property appraises for $205,000... how does this
affect the loan? Well, if in any other area, your loan is only marginally qualifying, it might help for property
to be valued more than the loan amount. But basically, a slightly higher appraisal would have little or no
effect on your final approval for a purchase mortgage.

In this second scenario, let's look at how appraisal value might affect a refinance loan. Let's say you
purchased your home 2 years ago for $185,000. You want to refinance for a better rate and term. The
appraisal comes back at $220,000. Assuming you have an adequate credit score and the new payment fits
your DTI, you may have the option of getting cash out in an amount that would be the difference between
what you owe on the property and its $220,000 appraisal. This amount would likely be in the range of
$30,000-$35,000.

Now, here are a few of the finer details about obtaining an appraisal. Your loan consultant will order the
appraisal when the process reaches that point. Some lenders will only accept appraisals from an approved
list they maintain. Also, in some real estate markets around the country, appraisers are working a week or
more in advance. So, the longest part of the mortgage process may be scheduling and waiting for the
finished appraisal.

Traditionally, for a purchase mortgage, buyers pay for appraisals, and they do this in advance of, or at the time
the appraisal is being performed. Appraisal fees can be somehwat dependent on the value of the property,
but a good rule of thumb for moderately priced homes is a fee in the area of $300-$375. Buyers, and home
owners refinancing, have a right to receive a copy of the appraisal, and will sign a disclosure to that effect.

A field appraisal is almost always one of the conditions or stipulations which must be satisfied to gain
final approval. Next, some insight into the rest of the issue of satisfying conditions is provided.