Do you know the difference between an appraisal and a home inspection?

Although we always recommend that you have a home inspection when buying a home, it not required as far as the mortgage goes. A home inspection is performed by a licensed home inspector that you hire. The purpose of a home inspection is to expose any deficiencies or issues with the property so you can be fully aware before you buy. When the inspector issues his report, you have an opportunity to negotiate repairs or credits with the seller or, if your contract of sale allows, backing out of the transaction entirely.

An appraisal, on the other hand, is used to determine the value of the asset which, in a mortgage transaction, is the property and structure(s). This is also performed by an independent licensed third party - the appraiser. The value as determined by the appraiser must equal or exceed the agreed upon sales price to proceed with the mortgage. If it does not and assuming you have a mortgage or appraisal contingency in your contract, you can cancel the transaction. Or you can renegotiate the purchase price with the seller.

If you're selling your home, preparing for the appraisal is important to keeping the transaction moving smoothly. Check out the guest post from one of our appraisal management companies about preparing for your appraisal. 

Check out some of Erin's other resources

• Erin's First Renovation Video - Process and Documentation
• Greenway's $100 Down Payment Mortgage with Renovation Financing
• Our 203k Loan Product Page
• Get Erin's Mobile App

Are you a first time home buyer?

Consider downloading our FREE homebuying guide specifically for those new to the process. It's packed with useful information, checklists and tip sheets to get you off on the right foot.

Are you ready to take the next step?

It's time to get pre-approved with Erin the Expert!