Home appraisals… Um, what?

July 30, 2017 | By | Add a Comment

property valueWhat’s a home appraisal? And why might I need one?

These days, when you’re arranging a new mortgage, it’s becoming very common for the mortgage lender to request an appraisal of the property.  People often ask if it’s the same thing as the home inspection.  It’s not. It’s also not the same thing as a realtor’s evaluation of the property.  What the lender wants is a market value evaluation by an accredited appraiser.  The appraiser is a third party, not someone connected with the bank or the mortgage broker. He or she provides the lender with a written opinion of the property’s value.

The appraisal is paid for by the client for most refinances, switches, conventional mortgages and only in exceptional situations, high-ratio mortgages. It’s required for refinances because you can only refinance up to 80% of your home’s appraised value. And for some purchases and switches, an appraisal is required because the property becomes the lender’s security.

An appraisal can differ from what your realtor estimates

Keep in mind that when a realtor gives you an evaluation of a property’s value, this shouldn’t be considered an appraisal for financing purposes. The hot housing markets in some parts of Ontario, especially the GTA, are seeing bidding wars with some buyers paying well over asking. The appraiser may determine that the property has a lower value, which could affect the buyer’s financing. As always, please get in touch at any time if you haver any of your questions.

For more info on purchasing a home, this post on Mortgage Conditions and Financing can help.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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About the Author (Author Profile)

I'm a Toronto Mortgage Broker. My focus is on saving people time and money in financing and re-financing their homes. Am passionate about helping people make informed choices, giving back, and helping to improve financial literacy in Canada.

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