Appraisal FAQs

Mortgage transactions typically involve an appraisal, as the home's value is a crucial factor in the mortgage loan process. However, there may be alternative options for assessing the property's value in certain situations, which your Loan Officer will review with you if they are available.

A general home inspection and an appraisal are two distinct processes that serve different purposes in the homebuying process.

A general home inspection is typically performed by a professional inspector who assesses the overall condition of the home, including its structural components, electrical systems, plumbing, HVAC systems, and other essential features. The inspector will provide a report detailing any issues or concerns they identify with the property. The purpose of a general home inspection is to inform the buyer of the property's condition and any potential repairs or maintenance needed.

An appraisal, on the other hand, is a valuation of the property's market value. An appraiser is a certified professional who assesses the home's worth based on several factors, including the property's location, size, condition, and comparable sales in the area. The purpose of an appraisal is to determine the fair market value of the property, which helps the lender decide how much to lend the buyer.

In summary, a general home inspection focuses on the condition of the property, while an appraisal focuses on the value of the property.

• Ensure your home is free from health hazards and safety violations
• Curb appeal is key, and first impressions of the home’s exterior can make a difference so make sure your yard is neat and well-kept.
• Inside the home, be sure to declutter and clean up all areas of the home. Remove visible dirt and messes from floors, sinks, toilets, and showers/tubs. Life can get messy as we all know, but when it’s picture day for your home it’s best to give it the best appearance possible.
• Make minor repairs when possible. Even small repairs can make a big difference. Leaky faucets, small holes in the wall and pet damage can all contribute to the overall condition of the home.
• Document all recent improvements made to your home and be ready to answer any questions from the appraiser regarding the date, cost, materials, etc.
• To avoid revisit fees, ensure the appraiser will be able to access all areas of your home during the inspection including attics and crawl spaces, as well as utilities like electricity, plumbing, and heat.

No. On a purchase transaction, the appraiser will contact the seller or realtor to coordinate access to the home for the appraisal inspection.

The value of your home directly impacts your Loan to Value (LTV) ratio. LTV is calculated by dividing the loan amount by the appraised value. For example, if you borrow $80,000 on a home valued at $100,000 your LTV is 80%. LTV is considered when determining factors such as your loan approval, loan program, interest rate, and mortgage insurance requirements.

On a purchase transaction the Loan to Value (LTV) ratio is calculated by dividing the loan amount by the lower of either the purchase price or the appraised value.

• If the appraised value is higher than the purchase price, it means you’ve agreed to pay the seller less than the home’s current market value. Your LTV is calculated by dividing the loan amount by the purchase price. For example, if you borrow $80,000 on a home with a purchase price of $100,000 your LTV is 80%.
• If the appraised value is less than the purchase price, it means the price of the home is more than the home’s current market value. In this scenario, the LTV is calculated by dividing the loan amount by the appraised value. In this example, if you borrow $80,000 on a home with a purchase price of $100,000 but the appraised value is determined to be $90,000, your LTV is 88.88%. This increase in the LTV can impact factors such as your loan approval, loan program, interest rate, and monthly mortgage insurance requirements.

Note: There are options to consider when the appraised value of the home is less than the purchase price. Your loan officer will discuss available options which can include restructuring your loan by increasing the loan amount or the amount of down payment. Or you can consider negotiating with the seller to lower the purchase price to be in alignment with the appraised value. Be sure to review your purchase agreement for any clauses or stipulations related to the appraised value of the home.

If you do not agree with the value or the information contained in the appraisal report, you have the option to submit a Customer Appraisal Dispute Request Form to the CCM Customer Appraisal Support Team. Below are examples of dispute requests that can be submitted for review.

• Reconsideration of Value Request – If it is determined that there is market evidence that supports a higher value, this information can be submitted to the appraiser for consideration. An example of market evidence is a recent sale, like the subject property, in the same or a nearby competing market area.
• Error Corrections Request – If it is determined that the appraisal report contains errors or omissions, the errors or omissions can be submitted to the appraiser for review and correction.
• Second Appraisal Request – If it is determined that the appraisal report is deficient, a new report can be considered.