A licensed appraiser visits the home, looks at its size, condition and features, and compares it with similar homes that sold nearby. The result is a written report with an opinion of value that the lender relies on.
Why it matters
The lender sizes the loan on the lower of the price and the appraised value. If the appraisal comes in under the price you agreed, you may need to renegotiate, bring more money to closing or rethink the purchase.
Where you meet it
On a purchase it is ordered after your offer is accepted. On a refinance or a HELOC it tells the lender how much equity you really have. Some loans can skip it, which the lender decides case by case.
Planning to buy?
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