When you decide to pay for a home, you think that it should worth his price, right? Sure, it could be true, but it’s not really so.
When a lender provide loans to others, wants to be sure that the value of home sold is enough to repay the loan. Lenders no more trust in people, and learned the hard way that they have to consider any risk before deciding how much to lend for a property. Lenders learned that they don’t just have to worry about the present, but they need to worry of the future, as well.
Image Credit: Brishroyer
Today lenders check the housing values and trends where the property is. Several things might alter the value of your property. For instance, if your property overlooks a park, beach, if you live in a tract and everyone pretty much has the same floor plan, if your street has a view on the center city, and a convenience store, and so on. In these case, you get an higher value because your view increase your home worth more. This fact could create problems for you, if your positon is not privileged.
Other factors can increase your appraised value, for instance, if you have made certain home improvements. Most experts say that taking care of any maintenance should be top priority. Renovating an old kitchen, adding a new room because you needs, can improve the value of your property. Also, If you live in mansion territory you can add a beautiful park, with decor in stonework.
In general, your home will be valued two ways. The first estimated cost including the value of the lot, the second including the improvements to the property, and minus any depreciation.
Often, the home appraisal for the home you buy don’t have exactly the price you paid for it. There are unscrupulous appraiser that can give incorrect value to homeowners and lenders. Today, the mention of the appraiser being required to be completely separated from the borrower and lender.
For this purpose, today’s Home Valuation Code of Conduct (HVCC) says that appraisers are engaged by appraisal management companies that have no relationship to anyone who stands to gain financially from the transaction.
So, I reccomend you to ask questions constantly and keep your eyes open during the house buying process.
