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    When you’re shopping for a home, don’t be surprised when your Realtor and Loan Officer tell you that you’ll need to pay for an appraisal. Not to be confused with a professional home inspection, an appraisal determines the value of a home, while an inspection determines the condition of the home. When you’re shopping for a home, don’t be surprised when your Realtor and Loan Officer tell you that you’ll need to pay for an appraisal. Not to be confused with a professional home inspection, an appraisal determines the value of a home, while an inspection determines the condition of the home.

    Unlike most other purchases we make, buying a big-ticket item like a home brings a serious emotional component to the transaction. In fact, even calling it a transaction can feel foreign to the buyer and seller. Regardless of whether this is your first home or fifth home, there are elements of the mortgage loan process that can be confusing, even upsetting, so it’s important to understand the terms and stay educated on what your options are so you can be confident in your decision to buy or pass on a property. Read on to learn more.

    The Appraisal

    When you’re buying a home or refinancing a mortgage, the lender will request an objective appraisal report be conducted by an impartial state-licensed professional home appraiser. The current cost runs from $300—600 for a single-family home.

    The professional appraiser assesses the home’s potential value through a personal visit and an analysis of the local market. While the appraiser will account for obvious structural defects, he or she won’t inspect specific systems or appliances.

    Once the appraisal is complete, you will receive a report detailing the results. This report lets you know that you’re paying the right price for the property based on current market conditions. If the appraised value comes in lower than expected, the seller may lower the asking price or make up the difference in cash. In the case of a refinance, a lower appraisal reduces the amount you’ll need to borrow.

    Should you disagree with the appraiser’s findings you can arrange a second appraisal (again, at your expense) or submit a list of comparable sales for review by the underwriter.

    The Home Inspection

    A home inspection, while being a great idea, is not required. You can choose to forgo a home inspection — the cost of which falls generally between $200-300 — but you might find the condition of the home will cost you much more than you bargained for.

    Depending on the age of the home, you may want to bring in an electrician or plumber in addition to a general home inspector. Knowing what to look for is important and can help you prepare for the inspection, and there are a few key things to look for:

    Structural Integrity:

    • Is the foundation level?
    • Are there cracks in the walls, broken or missing floor tiles?
    • Are retaining walls intact and is there any sign of water in the basement?
    • Are there any drafty windows and doors? These can be expensive to replace.

    Electrical:

    • Have any the fuse box or circuit breakers been updated?
    • Note the number of outlets and check to see if GFCI outlets have been added to the kitchen and bathrooms.

    Plumbing:

    • Check all exposed pipes to see if any are leaking or have been replaced.

    Heating:

    • Check both furnace and water heaters for any signs of leaking oil.

    Roof:

    • Find out how old the roof is and be sure that it is included as part of your home inspection.

    Radon:

    • Radon is an odorless gas that arises from underground and can be found in both old and new homes. Radon kits can be purchased at most hardware stores.

    Both the appraiser and the inspector play an important role in evaluating your prospective home, and can ideally help you feel confident in your decision to buy the home, or to walk away and continue your search.

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