Appraisals are an integral part of the home buying process, offering an unbiased professional opinion on a property’s worth. But what happens if the appraisal comes in lower than the offer you’ve made? At Priority 1 Lending, we want to ensure you’re well-equipped with knowledge to handle this situation.Verify my mortgage eligibility (Dec 1st, 2023)
Understanding the Appraisal Process
The appraisal happens after the seller accepts your offer, and it’s usually ordered by your mortgage lender to ensure the money lent aligns with the home’s actual value. If the appraised value comes back lower than the agreed offer price, this means the property isn't valued at the selling price, which could lead to some complications.
Potential Solutions if an Appraisal Comes in Lower than the OfferVerify my mortgage eligibility (Dec 1st, 2023)
- Negotiate a Lower Sale Price: You could negotiate with the seller to reduce the price of the home to match the appraised value. This would keep your financing on track and protect your investment.
- Challenge the Appraisal: If you believe there were errors in the appraisal, you can request a review of the appraisal or order a second one. Note, however, this could extend your timeline and there’s no guarantee the result will be different.
- Increase Your Down Payment: If you have the means, you could increase your down payment to cover the difference between the appraised value and the purchase price.
- Obtain a Different Type of Loan: If your mortgage type allows it, you could adjust your loan to cover the difference. This isn’t always an option and could potentially increase your mortgage payment.
- Cancel the Purchase Agreement: If the seller isn’t willing to lower the price, and the other options aren’t feasible for you, you may need to walk away from the purchase. Most purchase agreements include an appraisal contingency that allows you to back out if the appraisal comes in low.
Importance of Working with Experienced Professionals
Navigating the process of a low home appraisal can be challenging, but you don’t have to do it alone. Having experienced professionals, like the team at Priority 1 Lending, by your side can make a significant difference. We understand the complexities of the home buying process and are dedicated to providing support and guidance every step of the way.
The Bottom Line
While a low appraisal can be a hiccup in your home buying journey, there are solutions available. Understanding your options and working with an experienced mortgage company like Priority 1 Lending can help you navigate the situation with confidence. Contact us today, and let’s move closer to your dream of homeownership.Show me today's rates (Dec 1st, 2023)