The next step is another one that requires patience.  The Appraisal.

An appraisal is a valuation of property by the estimate of an authorized person.  In other words it is an opinion of the value of a property.  Why is it important to you?  Because it is important to your lender.

Lenders require a home appraisal before issuing you a mortgage because they want to protect their investment.  The property itself is the collateral for your mortgage loan.  If you are purchasing a property for $150,000, the lender wants to know that this property is indeed worth $150,000.

When you get the report:

If the appraisal is at or above the purchase price, head to the next step.  You are well on your way to owning this property.

If the appraisal is below the purchase price, there is a problem.

Sales price minus appraised value is known as the appraisal gap.

The lender will only give the buyer (you) a loan for the appraised price.  So how can this problem be solved?

The buyer and the seller negotiate a new sales price.

The buyer covers the appraisal gap in cash at closing.

The buyer can appeal the appraisal.

The buyer has the right to walk away (financing contingency).

Reading all that can make you anxious.  I suggest putting it out of your mind, especially since you may have to think about it for 10 days or more!

Trust the process.

On to Step 15: Start Packing and Hire Movers

Back to 20 Steps to Buying a Home