What Is a Home Appraisal and Why Do I Need One?
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
First-Time Buyer Guide: How Appraisals Protect You (and Your Lender)
Before you close on a home, your lender wants to know: is this place really worth the price?
That’s where the appraisal comes in. It’s not just a box to check—it’s a critical step that protects your investment and helps ensure you’re making a smart financial move.
1. A Licensed Appraiser Evaluates the Home’s Value
An appraisal is a professional, third-party assessment of a home’s market value, done by a licensed appraiser. They’ll compare the property to similar recently sold homes nearby, consider upgrades or issues, and determine what the home is truly worth in today’s market. This keeps things fair, honest, and unbiased.
Before your appraisal, get a sense of what your home might be worth. Get a Free Home Evaluation to see comparable sales in the area and prepare yourself for the appraiser’s likely assessment.
2. Your Lender Requires It to Approve the Loan
Your mortgage lender doesn’t just hand out money—they need to be sure the home is worth the amount you’re borrowing. If you’re buying a home for $350,000, but it only appraises for $330,000, the lender won’t finance the full price. The appraisal protects the lender—and you—from overpaying.
Understanding how much you’re borrowing versus the home’s value is crucial. Calculate your Conventional Purchase Loan Payment now to see how different loan amounts affect your monthly payment and what happens if the appraisal comes in low.
3. A Low Appraisal Means You May Need to Renegotiate
If the appraisal comes in lower than your offer, you have a few options:
- Renegotiate the price with the seller
- Cover the difference with cash
Walk away if your offer included an appraisal contingency
That’s why it’s so important to structure your offer with smart protections—and to work with a lender and agent who have your back.
If you need flexibility when dealing with appraisal issues, FHA’s low down payment can help you preserve cash. Calculate your FHA Purchase Loan Payment now to see how 3.5% down leaves you with more reserves to cover an appraisal gap if needed.
Veterans have extra flexibility when appraisals come in low. Calculate your VA Purchase Loan Payment now to see how zero down payment financing gives you more options to negotiate or cover the difference without depleting your savings.
Want Help Navigating Your Home Appraisal Like a Pro?
At Stairway Mortgage, we make sure you don’t just buy a home—you buy it at the right value. Smart leverage starts here.
📘 Download our homebuyer guides about the appraisal process.
📊 Check Current Rates and understand financing options.
🏠 Get a Free Home Evaluation before your official appraisal.
🧮 Run the numbers with our Conventional Purchase Calculator.
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