What a home appraisal is

An appraisal is a written opinion of how much a property is worth, made by an independent appraiser. When you borrow money to buy or refinance a home, the lender may need a new appraisal and may have you pay for it. The lender can also check the value in other ways.

What the report shows

The report describes what makes the property valuable, and it may show how the home compares with others in the neighborhood. Appraisers follow set rules to reach a value, and the judgment is the appraiser's, not the lender's.

Getting a copy

The lender usually sends a copy of each appraisal and other estimate of value soon after the appraisal is done. If it hasn't arrived before closing, ask the lender for it.

When the appraisal comes in below the price

A low appraisal suggests the price was above the home's market value. Buyers often use the lower value to ask the seller to reduce the price.

Where the appraisal comes up again

• On the Loan Estimate and Closing Disclosure. Both forms have an appraisal line on their last pages. Reading a mortgage loan estimate walks through the rest of the estimate.
• Ending private mortgage insurance. A borrower asking to cancel private mortgage insurance may need to show, with an appraisal for example, that the home's value hasn't dropped below its original value.
• After a refinance. The home's original value for mortgage insurance becomes the appraised value at the time of the refinance.

An annotated example

What to do next

Ask the lender for a copy of the appraisal if it hasn't arrived, and check the appraised value against the price you agreed to pay. Keep the report with the home's records.