What is appraised value

Appraised value:

The appraised value is basically what the bank thinks your home is worth. This can include everything from what neighborhood you live in, to how many fixtures you have in your kitchen. The appraised value tends to be unbiased, because the bank is not looking to bargain with you. They need an accurate assessment. It is very very rare that the appraised value of a home is the same as the market value. Why is this? Essentially the appraised value of your home is determined in order to justify the rate of the mortgage loan. This price is based on historical data and previous sales comparisons. That means sales of similar homes in the past six months. You may encounter some problems if there is a large gap between the appraised value of the home and purchase price being offered. For instance if a buyer decides that they absolutely must have a home and they are willing to pay for it, they mat be in for shock when they discover what the down payment is. If the purchase price is much higher they bank may determine that the apprised value of the home is not enough to cover the requested mortgage they will often raise the down payment. This situation may not emotionally deter the buyer, but, coming up with an extra 2 or 3% of the purchase can translate into thousands of dollars. And as we all know coming up with cold hard cash like that can be a real problem. Therefore, be aware of what similar appraised vales of home in your area are. This will lessen the shock of the purchase. Also, if you can afford the initial down payment you will end up paying less for the home in the long run, providing the bank gives you the mortgage rate that you wish. In this housing market that is quite possible.