Successfully applying for a mortgage is no small feat. As many of our South Florida readers may have seen in previous posts here, applying for a mortgage can involve quite a bit of paperwork, from providing a potential lender with all kinds of personal information to income verification. Of course, this part only comes into play after an oftentimes exhaustive effort to get the lowest interest rate and monthly mortgage payment.
But, there is an important part of getting a mortgage that some people may not think about until it is too late -- the value of the property. Unless an individual is pre-approved for a mortgage, they may go through all of the usual steps of buying a home, like making an offer, only to find that the agreed upon selling price is higher than what the property is worth.
Before a lender enters into a mortgage agreement with a borrower, a process known as an "appraisal" will need to occur. This allows the lender to make sure that the property that the borrower wants to purchase is actually worth what the buyer has agreed to pay the seller. And, if it is not, that could throw the whole real estate transaction off the rails.
Mortgages are some of the most complex financial transactions that an individual will ever be a part of. And this is not an area of finance that most people deal with on a day-to-day basis. All of the complexities of mortgages can make it crucial for South Florida residents to ensure that they are getting the right information in order to make the best decisions.
Source: thetruthaboutmortgage.com, "Appraisals and Appraised Value," Accessed May 29, 2016