What is a home appraisal and why should I review it?

An appraisal is a written document that states an opinion of how much a property is worth. The CFPB describes it as an independent assessment. It can explain what makes the property valuable and how it compares with nearby properties. Fannie Mae describes the report as an estimated value determined by a licensed third-party appraiser. Lenders often require and order an appraisal so the estimated value supports the loan amount.

When you borrow to buy or refinance, the lender may need a new appraisal and may require you to pay the cost of preparing it. The lender may also use other methods to check value. Review the report so you understand the value being used, the property features the appraiser noted, and the nearby sales used as comparisons. If something in the report looks wrong or incomplete, ask the lender how to raise that question.