Mortgage Glossary
Appraisal
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
An appraisal is a licensed appraiser's independent estimate of a property's market value, required by nearly every mortgage lender before funding.
What Appraisal means
The appraiser inspects the home and compares it to recently sold properties to set a value. Lenders use the lower of the appraised value or purchase price to calculate your loan amount and loan-to-value ratio.
Florida example
If you agree to pay $400,000 for a Palm Beach County home but it appraises at $385,000, the lender bases financing on $385,000. You'd need to renegotiate, cover the $15,000 gap in cash, or walk away under an appraisal contingency.
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