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The purpose of a home appraisal is to estimate a home's value. This is sometimes called "fair market value". Home appraisals are performed by trained professionals who provide an objective estimation of a property's worth.

Lenders request property appraisals when they are reviewing applications for a new mortgage or refinancing for an existing mortgage. They use the fair market value to calculate a loan-to-value ratio (LTV). This ratio helps lenders determine whether people are eligible for a loan, what interest rate they may offer on the loan, and more.

What happens during a property inspection?

An appraiser schedules a property inspection with the homeowner or agent. The appraiser inspects the inside and outside of the property, taking notes, measurements and photographs. Inspection can take an hour or longer, depending on property size and specific circumstances.

How long until the home appraisal report is ready?

After inspection, appraisers typically need 3 to 10 business days to draft a report. Co-op and condos can take longer if the appraiser needs building information from a board of directors or management company.

What's in the appraisal report?

The report includes an estimated home value. It also may include property details such as floor plans, square footage, photos and area maps with nearby "comparable" properties sold in the past 6 to 12 months. Rental units may include comparable rent schedules.

What if a property appraisal comes in higher or lower than expected?

The appraised value of a house can be higher or lower than its sale price. When this happens, it can change a borrower's loan-to-value ratio and may affect their eligibility to be approved for a loan.

A person's eligibility is typically not affected when the appraised value of a home is higher than its sale price. Their eligibility may change when the appraised value is lower than the sale price however. A change in value can also impact the loan terms offered. For example, the borrower may need to increase the down payment or negotiate with the seller to lower the home's sale price.

The appraised value of a home can also affect a person's eligibility for refinancing their mortgage. Different lenders have different standards for the loans they offer, and lenders consider many factors besides a home's value when they make their lending decisions.

What's the difference between the home appraisal and a home inspection?

An individual buying a home will often invest in a home inspection. This is different from a home appraisal inspection. An appraisal inspection estimates a home's value while a home inspection determines if a house needs repairs and how much those repairs may cost. Home inspections can reveal major issues such as a wet basement, roof leak, HVAC concerns, mold, and radon. Home inspections should be conducted by an expert.

If you are working with Freedom Mortgage on a loan to purchase or refinance a house, and have questions about your home appraisal, please contact the professional managing your application. You can also call our Customer Service department at 855-690-5900.

If you would like to speak to one of our Loan Advisors about buying or refinancing a home, please visit our Get Started page or call us at 877-220-5533.

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