Congratulations, you have found a home to buy. From the days of saving for a deposit, look for those Real estate market Homeownership is almost in sight for your dream home. So whether you are a seasoned buyer or one First time buyeryou will need to schedule a home valuation before you can get final approval for your mortgage.
You may be wondering what a home valuation is and how much does a home valuation cost? Before starting the final steps in the buying process, do some research on the different types of home reviews and what factors can change the price of a home review.
What is a home valuation?
A home appraisal is a requirement for most mortgages whether you are lives in Houston, TX or looking for Buy a home in Philadelphia, PA. It determines the value of a home and your lender uses the home valuation to produce a valuation report. The report will help lenders decide on an appropriate amount to loan out to a potential buyer for the purchase of that property. State-certified specialists carry out appraisals to protect both buyers and lenders from excessive real estate valuations.
Who chooses the home appraiser?
Your Mortgage lender will often recommend from a list of preferred reviewers chosen for their track record of reliable, high integrity professionals. As a buyer, you have to pay the valuation costs, which are usually added to your closing costs. However, your lender should let you know how much the evaluation will cost at the beginning of the pre-qualification process so you know exactly what to expect.
How much does a home valuation cost?
A typical home valuation can range from $ 200 to $ 450. However, the cost of your home appraisal will depend on the type of appraisal you need. Here are the four types of home reviews you might come across:
1) Uniform Residential Appraisal Report (URAR)
This is the most common type of home valuation, and lenders usually require a URAR before they approve your mortgage.
During a URAR, a trained and certified appraiser carefully examines the inside and outside of the house. The home valuation process takes two to four hours – and costs between $ 300 and $ 400. At the end of the valuation, you will receive a detailed report from the appraiser detailing the value of your home. This is the most comprehensive and therefore the most expensive type of home valuation.
Note: The remaining three types of assessments are generally not considered sufficient to qualify for a traditional loan. However, there are reasons you might want one of these reviews.
2) Usage restriction, short report or drive-by assessment:
As would be expected, this type of assessment provides less information than other types. Therefore, this home valuation cost is generally cheaper, ranging from $ 100 to $ 150. However, lenders generally do not accept this type of rating for mortgage approval. More likely, homeowners and real estate agents can use it to determine a home’s list price. With this type of home appraisal, a trained and certified appraiser only evaluates the outside of the home and relies on the owner to provide information about the condition of the home and other details in the home.
3) Comparative Market Analysis (CMA):
Real estate agents use a CMA to rate a home, taking into account factors such as nearby home values, school district ratings, and the general condition of the home for their analysis. CMAs provide a fair estimate of the value of a home when setting a list price. While this report is used as a tool for sellers rather than buyers, you can always ask your real estate agent for a CMA if you are ready to buy. It is important to note that lenders do not regard a CMA as a valid rating for determining credit value.
4) Online reviews:
Numerous online sites offer home reviews directly to buyers who want to know how much their house is worth. An online home valuation can be free or costly, depending on how much information you ask for. Lenders do not accept this type of home valuation as a valid valuation.
Factors Affecting Home Valuation Costs
Before doing a home valuation, you should understand the four important factors that can affect the cost of your home valuation.
Type of property
The type of property you want to buy will affect the cost of your home valuation. For example, a valuation for a two-bedroom home is cheaper than one with multiple bedrooms, a finished basement, and an attic. In addition, if you plan Set up your house as a rental property In order to generate income, the appraiser needs a rental survey and an income statement, which can add to costs.
The value of the house
The general value of the home affects the cost of the valuation. As a rule of thumb, the bigger the house, the more expensive the valuation. A larger house will take more time to evaluate and will result in a more detailed report. As a general point of reference, properties priced at $ 500,000 or less typically result in valuation costs at the lower end of the range.
The location of the house
How far does the appraiser have to travel to carry out the assessment? Driving times and mileage are now taken into account. So, expect to pay more for your home valuation if the home is out of town.
Type of mortgage you are applying for
Depending on the type of mortgage you applied for, this can result in a more expensive home valuation. For example, mortgages that involve a federal agency like the Federal Housing Administration (FHA) require an assessment that includes additional safety inspections, resulting in higher costs.
If you are planning to obtain a mortgage loan for the purchase of your new home, an assessment is most likely a non-negotiable requirement from your lender. Check with your lender in advance what to expect from the home valuation cost so you can be sure that this amount will be paid as part of the home closure process. The better prepared you are during your home buying journey, the more likely you are to feel comfortable and ready to become a homeowner.