Home Appraisals Can Affect Your Loan

Home Appraisals Can Affect Your Loan

Lenders require home appraisals to be done by a licensed professional to determine the home’s market value and ensure the buyer isn’t trying to borrow more money than the house is worth. Home appraisals are based on the current value of homes in the neighborhood, homes that are comparable in size, the housing market, and the age of the home.
If the home appraisal is lower than the purchase price of the home, most lenders will not grant the loan. This can be upsetting, but there are some solutions that may work depending on the rules of the lender.

The Homeowner Reduces the Selling Price

Some homeowners will be willing to lower the asking price of the home if they need to sell quickly.
If, however, the homeowners must sell the house for a higher amount, you may have no choice but to find another home.

A Higher Down Payment

Some lenders will grant you the loan if you agree to pay a larger down payment on the home and assume the financial risk. This is only an option if you can afford to pay a larger down payment. Do not risk your financial security in these cases; it’s just not worth it.

Dispute the Appraisal

Send a letter to your lender disputing the appraisal, or have another appraiser determine the value of the home. You will have to pay for the second appraisal, which may or may not yield the same results. Also, there is no guarantee that your lender will accept the second appraisal.