When you are in the process of buying a home, one of the steps that will have to take place is getting an appraisal. This process generally takes just an hour or two for the appraiser to do, yet it may take a week or so to get the report back from him or her. When you receive this report, it will tell you the value of the house, and here are a few things to understand about what this means when you are buying a house.

What the value is based on

The main thing to understand about an appraisal is that it is an unbiased opinion about the value of a house, and it comes from an expert in the field. The value an appraiser assigns to a house takes careful consideration and comparison, and it is strictly based on the current real estate market. The appraiser must measure a house and carefully look at it when performing an appraisal on it, and he or she will then compare it to homes that are similar in nature, size, and condition. Comparing it offers a way to show the value of a house in terms of the value of other homes. The homes the appraiser compares it to are homes that sold within the last few months.

The effects it has on your loan

Secondly, it is vital to understand that the appraisal can affect the loan you are getting. When you contact your lender to purchase a specific home, the lender will need to know how much you are offering to pay. The lender will then compare this amount to the amount of the appraisal. If the appraisal is equal to or higher than the amount you are offering to pay for the house, you should have no problems getting the loan. The problems that you can experience will only come into play if the appraisal amount is lower than the amount you offered to pay.

The bank may be hesitant to loan you the amount they agreed to originally to the buy this house, simply because the house is worth less than you thought. This can be a big risk to a bank, as the house would have less equity in it than what they thought it would have.

The appraisal is an important step in the closing process of a house, and it can help or hurt the deal. To learn more, talk to your real estate company.