Buying a new home is an exciting time for everyone involved. Whether the process is new to you, or you've purchased a home before, waiting until the day you can finally get your keys feels like a lifetime away. During this time, you will need to complete many essential items on your list of new home purchasing to-do’s. One of the most important items on your list, when you are buying a new home, is a home appraisal. Here's what you need to know about a home appraisal and how it affects your loan application process.
What Is a Home Appraisal?
In a home appraisal, a licensed professional determines the fair market value, of the home. Fair market value means how much the home should sell for, based on recent comparable sales in the area.
How Much Does It Cost?
Typically, an appraisal can cost anywhere between $300 - $1,500 depending on the size of the home and the condition of the property. The buyer is responsible for the cost of the appraisal unless you negotiate different terms with the seller.
How Long Does a Home Appraisal Take?
The average appraisal takes a week or two, depending on the appraiser's workload and availability to see the property. If the property is large, or the property is in poor condition, the home appraisal process will take longer than if the home is new, and the property is in good shape.
Reasons You Need an Appraisal.
The most common reason you'll need to get an appraisal is when you're buying a home, but you may need one for other reasons, including:
- Refinancing your home
- Applying for a home equity line of credit or HELOC
- Appealing a tax assessment
- Getting rid of PMI (Private Mortgage Insurance)
Factors that Impact the Appraisal Process.
The appraisal process is usually relatively smooth and uneventful, but any of these obstacles can slow the process down:
- The seller isn't cooperating and providing the appraiser with access to the home
- The appraiser can't find comparable sales within 1 mile of the property sold in the last six months
- The cost and value of recent upgrades or renovations are in question
Home Appraisal vs. Home Inspection.
The home appraisal determines the home's fair market value, and the home inspection looks at the home's function, determining if there is any damage or unnoticed issues that could affect your homeownership. An inspection isn't required to get a mortgage, but most lenders highly recommend it to ensure the home is in good condition and doesn't need significant repairs before buying it.
A home appraisal is an important step in the home buying process as it ensures a fair home sale value for all parties involved.
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