I just bought a house and my realtor told me, the bank needs to appraise the home, before they can complete the loan. What does this mean?
I just bought a house and my realtor told me, the bank needs to appraise the home, before they can complete the loan. What does this mean?
October 21st, 2009 at 1:42 pm
The bank hires an independent outside appraiser to do this. The appraiser will see what like homes in the area are selling for. The appraiser will check the overall condition for the house and he or she will submit the findings on paper and estimate the value of the house. This is a safeguard for the bank to make sure it doesn’t lend out more money (mortgage) than the house is worth.
October 21st, 2009 at 4:00 pm
The bank needs to know how much your house is worth. For example, if you are buying a car, you wouldn’t pay $40,000 for KIA which is worth $12,000. Same thing. Bank is giving you a loan let’s say for $80,000, your agreed price for the house was $100,000. The bank wants to make sure the house is not worth $70,000, because at that point, chances of you foreclose (give up the house without getting your downpayment back) is higher. And the bank is stuck with the house worth $70,000 with their $80,000 tied up in this house. BAD NEWS!! And also, the bank is not the one who is conducting the appraisals, it is a independent company or person who appraise properties.