Mortgage Appraisals
Mortgage Appraisals
When it comes to real estate transactions, most mortgage lenders require an appraisal. Many lenders have preferred appraisal companies, such as North Capital Appraisals Ltd., that they collaborate with when ordering appraisals. If a loan amount exceeds the market value of a home, it poses a risk for the bank as they may be unable to recover their investment if the buyer defaults on the mortgage.
Appraisal for a Sale
When purchasing a home or investment property, it is common to conduct an appraisal.
The lender or mortgage broker typically requests the appraisal to ensure that the sale price is well supported. This process provides assurance to the lender regarding loan- to-value ratios, property condition, marketability, and any major issues. In a sale situation, the listing realtor facilitates access to the property, and the appraiser performs an inspection of the interior and exterior. The completed appraisal report is then sent directly to the lender for review. If the appraisal indicates a higher value, the lender approves the mortgage based on the agreed loan-to value.
Appraisal for Refinance
When a homeowner is refinancing their property, it becomes crucial to conduct an appraisal. The purpose of this appraisal is to determine the maximum borrowing amount for the homeowner. A higher appraised value allows the homeowner to borrow more money through a mortgage. The appraisal plays a significant role in assessing the borrowing capacity of the homeowner during the refinancing process.