Can an Appraisal Affect Your Ability to Obtain a Mortgage?
The fact that lenders put so much weight on the appraisal process should give you more reason to do your initial research market more carefully and thoroughly – looking at comps (comparable sales) in the area is a must in any real estate transaction.
For a lender to loan money on a property, that property must be appraised at a value that falls between a certain percentage of the sales price. The reasoning is fairly simple: a bank won’t lend $150,000 on a home that’s only worth $120,000 because the odds that it will recoup its total investment should you allow the property to be foreclosed would be slim.