WASHINGTON, D.C. – May 20, 2015 – (RealEstateRama) — An appraisal is an integral part of the home buying process, assuring both the mortgage lender and future homeowner that the property is worth the agreed price. However, some appraisal reports may point out that the home’s value falls short of the set purchase price. This could leave home purchases in limbo if first-time home buyers and house hunters don’t know what to do next.
Despite a low appraisal affecting their plan, home buyers still have options to get the house they want.
Problem: Appraiser didn’t get the correct value
Solution: Challenge the appraisal. In case the appraiser said the value of the home does not match the price, home buyers can talk with their mortgage lender and real estate agent to look at factors that may have been missed, Zillow recommended. The location of the neighborhood, the condition of the home and comparable property sales nearby all influence the price of the home. Lenders will want to look at these elements again when disputing low appraisals.
Problem: Home buyers won’t qualify for the loan after low appraisal
Solution: Fill in lending gaps with down payment. When lenders are unable to give the amount home buyers are looking for because the appraisal fell short, homeowners have to look at other ways to pay for the full cost of the home. Potential homeowners could raise their down payment, such as from 15 percent of the purchase price to 20 percent, if they are at risk for paying private mortgage insurance, according to Zillow.
Problem: Sale price and appraisal value does not match
Solution: Lower the purchase price. According to Home Buying Institute, potential homeowners could renegotiate with the sellers to decrease the sale price to align with the home values around the neighborhood.
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