An independent professional assessment of a property's market value, required by lenders to confirm the home is worth the loan amount.
Full Definition
A mortgage appraisal is conducted by a licensed or certified appraiser who physically inspects the property and compares it to recent sales of similar properties (comparables or 'comps') in the area. The appraiser produces a formal report stating the property's estimated market value. If the appraised value is lower than the purchase price, the lender will only finance based on the appraised value — the buyer must cover the gap in cash or renegotiate the price. Appraisals protect lenders from over-lending on overpriced properties. The buyer typically pays for the appraisal ($300–$700+) and it's ordered after the purchase contract is signed.
Related Terms
Whether you're buying a home or building a mortgage career, Lend Loft has the tools, training, and licensed support to get you there.