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Why do I need an appraisal? |
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The requirement of an appraisal is a standard condition for any conventional mortgage (more than 20% down payment), as the mortgage won’t be insured. Basically, the lender just wants to make sure that you are paying fair market price for the property you are purchasing (ie: that you aren’t paying $290,000 for a home that’s only worth $250,000). From the lender’s perspective, they don’t want to lend $290,000 if all they can recuperate in event of default is $250,000 (not that you would default on your mortgage payments, but it’s a base that the lender wants to cover). Another reason for an appraisal is that lenders want to see that the property you are purchasing is, indeed, a quality property.
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