CHICAGO (1/26/11)--If you’re buying a house, it’s important to understand the role of a mortgage appraisal. Lenders use appraisals to make sure the collateral will support the loan they’re intending to make. Understanding this is just one piece of advice for consumers from the website of Appraisal Institute, based in Chicago (Jan. 12). The institute encourages consumers to:
* Make sure the lender hires a qualified appraiser--As the buyer, you want an appraiser with field experience in your market, and the knowledge and experience to handle the appraisal properly. Ask your lender for the appraiser’s qualifications and, specifically, if the appraiser is certified by a professional appraisal organization such as the American Society of Appraisers. * Go along during the inspection--You can accompany an appraiser during the appraisal inspection and offer information you consider important. Tell your lender you’d like to do this and confirm the appointment. Pay attention to whether an adequate inspection is performed and decide if the appraiser spent enough time at the property to note important features, improvements, or problems. * Get a copy of the report--Though the lender orders the appraisal to help assess collateral risk, you have a right to obtain a copy as well. Federal law requires that lenders provide delivery of the appraisal to consumers upon request within 30 days, whether credit is granted, denied, or the application is withdrawn. * Examine the report--Though a qualified appraiser is the best person to review an appraisal, you can review the appraisal as well. One common error is miscalculation of gross living area. Pay attention to whether adjacent homes add or detract from the value of the property, the property is equal to or lower in price than surrounding homes, specific rooms such as a bathroom or kitchen need remodeling, and the number of bedrooms and baths in the home are comparable to similar houses in the same price range. * Order a second appraisal--If problems arise from the first appraisal, obtain a second one. * File necessary complaints--Federal law requires lenders to report legitimate complaints with appropriate regulatory authorities. To contact the appropriate appraisal board, visit asc.gov.
To find out more about the appraisal process, and how it differs from a home inspection, read “Appraisers Home In on Value” in the Home & Family Finance Resource Center. And, visit your credit union for all your home loan needs.