An appraisal is used to show the lender the value of your home and to secure financing for borrowers.

An appraisal is required on almost all real estate transactions. The lender usually requires an appraisal to be done to make sure the home is worth the amount that is being financed. The more money you are financing compared to the value of the home, the higher the risk the loan is to the lender. Therefore, the lender wants to protect their investment and have an appraisal done on the property.

There are different types of appraisals depending on the lenders requirements, and the intended use of the property. For example an appraiser may request a drive by appraisal where only an exterior inspection is needed, a full appraisal where the interior of the home is also looked at. If you are planning to use the home as an investment property the lender may also require the inspector to examine rental rates for similar homes in the area.

 

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