Borealis Appraisals Ltd.
Mortgage Financing Appraisal
What is an appraisal for mortgage financing purposes?
An appraisal is an unbiased estimate of the value of a property conducted by a professional.
Home or investment property purchases that require financing typically require an appraisal for the lender’s mortgage underwriting process. The appraisal is often ordered and handled by the lender or mortgage broker, often using a third party Appraisal Management Company. The appraisal is sent directly to the broker or lender who ordered the appraisal and provides the lender with market support for the purchase price, confidence in the loan-to-value ratios, and confirmation of the saleable condition of the property.
This type of appraisal may also be required for refinancing purposes. Typically, the homeowner can borrow up to 80% of the appraised value of the property in the form of a conventional mortgage. The lender will require an appraisal to verify the market value of the property for risk mitigation.
How is the appraisal completed?
For this standard type of appraisal for first mortgage financing purposes, we work with the given site contact to arrange for a site visit at their convenience. During the site visit, the appraiser will conduct a full interior and exterior inspection that includes taking photos of all spaces, taking physical measurements, and taking notes about specs, condition, and utilities. We will always check for permission before photographing anything and do not include photographs of people or personal property in the appraisal report. If the house occupant declines permission for photographs to be taken, only notes and measurements will be taken. The appraiser may ask questions about the age of some of the major components of the home, such as the roof, furnace, and hot water heater.
After the inspection, the appraiser will compile the data about the property into a CUSPAP-compliant standard residential form report and compare the subject property with sales of similar comparable properties in a valuation method called The Direct Comparison Approach. Most often, the appraiser will also breakdown the depreciated cost of the improvements along with the estimated land value in a valuation method called The Cost Approach. Using the estimated values from these two methods, the appraiser reconciles the data and concludes the most reasonable Current Market Value of the property in the report.