A licensed appraiser's professional opinion of what a home is worth. Lenders require one to make sure the home supports the loan amount.
Also called: home appraisal, appraisal report, URAR
A state-licensed or certified professional who estimates property values. For mortgages, the lender orders the appraisal so the appraiser stays independent of the buyer and seller.
The value the appraiser puts on the home in the report. Lenders base the loan on the lower of this number and the purchase price.
Recently sold homes near the subject property that are similar in size, age, and features. Appraisers and agents use them to estimate value.
A contract term that lets the buyer renegotiate or cancel if the home appraises below the purchase price. It matters most when a lender bases the loan amount on the appraised value.
When the appraised value comes in below the contract price. The buyer may need to bring more cash, renegotiate, challenge the value, or use an appraisal contingency to exit.
The loan amount divided by the property's value or price, whichever is lower, as a percentage. Lower LTV means less risk for the lender and often better pricing; above 80% usually triggers mortgage insurance on conventional loans.