As a buyer, the appraisal is essential to whether you will be approved for the mortgage amount that you've requested. The house that you purchase provides the collateral you need to borrow the money. If the home isn't valued at the same amount or higher than what you intend to borrow, you could run into problems receiving approval.
Is It Possible to Undo a Bad Home Appraisal?
What can you do if you believe the home appraisal is inaccurate? The first thing you should do is speak to your real estate agent about your concerns. The agent will evaluate the appraisal and look into recent sales of similar homes. If the agent believes that your apprehensiveness is valid, he or she can speak to the lender about filing a dispute with the appraisal office.
What Other Options Exist?
If you are having difficulty getting a mortgage for the amount that you want due to a low appraisal number, you can make a larger down payment to reduce the overall loan value. Alternatively, you can take out private mortgage insurance (PMI) on the behalf of the lender. PMI is designed to protect the bank or creditor loaning you the money in the event that you default on the mortgage.
Before your application for a mortgage is fully approved, an appraisal of the home must take place. This process determines the estimated value of the house that you either intend to purchase or to sell. If the valuation falls below the asking price, it could pose difficulties for the seller or for the prospective buyer. If you believe that an error has been made during the appraisal process, you should speak to your real estate agent about your options for dealing with it.