Real Estate appraisals are important documents.  They are an estimate of how much a property is worth based on its age, size, and the ammenities it has in comparison to similar properties (in a close proximity) which have sold in the past year.

The value of the “subject property” is determined by making adjustments to each comparable as it relates to the comparable.  For instance if the subject property has a 2 stall garage and a comparable property has only a 1 stall garage then value is added to the subject property.  Conversely, if the subject property is 40 years old and a comparable is 3 years old, value may be subtracted from “subject” as it relates to that particular comparable.

The reason real estate appraisals are important documents is that the more valuable a property is the better the ratio’s becomes should the mortgage amount be less than the value.  An example would be:  a home valued at $400,000 with a mortgage of $350,000 is an 87.5% loan to value; however, if the same property appraised for $440,000 then the $350,000 mortgage would be 79% loan to value.  With a 79% loan to value ratio, much more attractive interest rates are available.  Also, a 79% loan to value is much easier for a decision engine to approve.

Comments or Questions regarding Real Estate Appraisals and mortgage products will be replied to promptly.