An appraisal report is a written professional opinion of the value of the home you are purchasing and an evaluation of the condition. It is a requirement for all mortgaged purchases because the bank uses the stated value to determine the appropriated loan amount. A lender will not lend more than the value of the home.
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| Photo courtesy of Zillow Blog |
The report is also used to determine common loan ratios, such as loan to value. The bank also looks to see that the home passes your loan's stated minimum property condition requirements.
Your loan officer "hires" the appraiser. The appraiser must be a third party, independent of the outcome of the transaction. The cost of the appraisal is then charged to you in your closing costs.
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