An independent assessment of a property's market value, typically required by lenders before approving a mortgage.
Lenders order appraisals to ensure the property is worth at least as much as the mortgage amount. The cost is $300-$600 and may be paid by the borrower or the lender depending on the product. If the appraisal comes in lower than the purchase price, the lender may reduce the approved mortgage amount, and you would need to make up the difference with a larger down payment. Appraisals are also required for most refinancing transactions.
Related terms: Loan-to-Value (LTV) Ratio | Mortgage Refinancing