An appraisal is a valuation tool used by mortgage lenders to verify a property's worth for prospective financing. The mortgage industry relies upon a qualified independent real estate appraiser to guide them in their financing decisions. But is this the only reason to get an appraisal? Many homeowners, assessor's offices, attorneys, buyers and sellers utilize appraisal for a variety of needs:
Private Mortgage Insurance or PMI is the supplemental insurance that many lenders have to purchase when the amount being loaned is more than 80% of the value of the home (LTV loan to value). This additional payment is often folded into the monthly mortgage payment and is quickly forgotten. After a rise in values and/or payment to principal goes below this 80% level PMI is no longer required. United States Congress passed a law in 1998 (the Homeowners Protection Act of 1998) that requires lenders to remove the PMI payments when the loan-to-value ratio conditions have been met. An appraisal is required to determine the property's value. The costs of these services are recovered in just a few months of not paying the PMI.
Property Tax Assessments
Challenging the tax assessment has become a necessity in many parts of the country. Unfortunately, most people go into these challenges unarmed. They may pull some information from the Internet to support their claims, but have no real basis for their claims.
A real estate appraiser can provide the accurate answers to the question of value. While it may not be economical to commission a full appraisal to save a few hundred off your tax bill, often an appraiser can do a limited appraisal for much less, yet with the same conclusions and integrity. An appraisal from a qualified appraiser would be a step in the right direction in any dispute with your local tax assessor.
In times of loss, it is often difficult to think of the various steps that must be taken to resolve any outstanding monies of the deceased. An appraisal is required to establish fair market values of any real estate properties in the estate for tax filings and any presentation to multiple heirs. The aid of an appraisal is a necessity to dispose of the estate properly
In unfortunate circumstances, such as divorce, appraisals are required so that both parties involved receive a fair and impartial value so that they can concentrate on more important aspects of this difficult time. An appraisal by a qualified independent professional third party is often required by state law to settle the divorce.
Feasibility - Land Utilization Studies
Often appraisers are required when townships are planning certain uses of land, rezoning, implementation of housing developments, traffic infrastructure, cost benefit analysis and a whole host of various projects. The appraiser’s responsibility to deliver an accurate appraisal report is a necessary response to the question of fair market value.