You're now on your way to a mortgage loan approval! Just a few things you need before a final decision can be made.
Lets start with the appraisal of the property. This is a crucial part of any mortgage loan. This must be completed by a State Licensed/Certified Real Estate appraiser. The appraisal must be ordered by the lender to be acceptable in most cases. If you have an appraiser you know and trust, certainly give that information to either your loan officer or your mortgage processor but let them be the ones to place the order. If you don't know of anyone specifically that you would like to use, it's probably best to go with whomever your lender recommends. Most lenders have an approved appraiser list and will use someone from that list.
The appraiser will visually inspect the property, measure it and take photographs of the property inside and out. Please don't confuse the appraiser with a home inspector even if the appraiser may make comments about the condition of the property. They are there to determine the market value of the property not the structural soundness. Typically an appraiser will only note obvious defects as they relate to the marketability of the property.
After the inspection is completed the appraiser will research comparable sales. These are often call "comps". Some of the guidelines for this depend on the lender, property type and location but here are a few basics. The appraiser looks for recent (within the last 3-6 months) sales of similar properties that sold near the subject property. In urban areas they could be looking within blocks, suburban areas 1-2 miles and rural areas 5-10 miles. Once the appraiser finds several sales, usually 3-5, they will make adjustments for differences between those "comps" and the subject property and arrive at a fair market value for the home.
**See my next post about the title report**