Low Appraisal On Home Purchase
Solutions To Low Appraisal On Home Purchase:
If you apply for either a purchase home loan or a refinance mortgage loan, a home appraisal will be required. An appraisal is the value of a home. There are several approaches that an appraisal evaluates a subject property but the most commonly used and accepted by mortgage lender is the comparison approach appraisal. The appraiser needs to justify the subject property by using comparable properties similar to the subject property that has been sold and recorded in the county property records office. Comparable properties need to be near the subject property, usually within a one mile radius. If the comparable properties are further away than a mile radius, the appraiser can go further out but need to add or subtract adjustments. Positive adjustments include if the comparable property is in a worse geographical area than the subject property. Negative adjustments to the subject property will be calculated if the comparable property is superior than the subject property. An appraisal rebuttal can be requested if the mortgage loan borrower does not agree with the appraised value the appraiser calculated.
Low Appraisal On Home Purchase Transaction
In the event that the appraisal came in below the purchase price, most sellers will renegotiate the purchase price. However, if the seller is not willing to renegotiate the purchase price and the buyer still wants the property although the appraisal came in below the purchase price, the buyer can request an appraisal rebuttal. In the event if the appraisal rebuttal still comes in at the lower value, the buyer will qualify at the appraised value and not the purchase price. The buyer needs to come up with the difference between the purchased price and the appraised value. The loan to value is calculated off the appraised value. For example, If the buyer purchases a home for $110,000 but the home only appraises out at $100,000, and the lender requires a 10% down payment, the buyer needs to put down $20,000. The lender will go off the $100,000 appraised value.