Mortgage

Home Appraisal An independent licensed appraiser's opinion of what your home is worth

Priya Shah By Priya Shah, Senior Mortgage Editor · Updated 2026-06-09
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A home appraisal is an independent licensed appraiser's opinion of a property's market value. Lenders require it to confirm the loan amount is supported by the home's collateral, protecting them from lending more than the property is worth. The appraiser inspects the home, evaluates its condition and features, and compares it to recent sales of similar properties in the area. A low appraisal can directly affect your loan amount or even kill the deal, because the lender won't finance more than the appraised value. When this happens, you may need to renegotiate the price, bring extra cash to closing, or dispute the appraisal. The cost and process can vary by state and lender, but the core purpose stays the same: making sure the property justifies the loan. An appraisal is typically ordered after your offer is accepted and during underwriting.
Also Known As
Property Appraisal Real Estate Appraisal Appraised Value Report Valuation
Used in Context
  1. After the seller accepted your offer, the lender ordered a home appraisal before approving your mortgage.
  2. The home appraisal came in below the contract price, so the buyer had to renegotiate or cover the gap in cash.
  3. When you compare mortgage offers through Dreamy Leads, expect a home appraisal as a standard step before final loan approval.
Related Terms
Mortgage LTV (Loan-to-Value) The percentage of a property's value financed by a mortgage — key to rates and PMI Mortgage Closing Costs The upfront fees you pay to finalize your mortgage at closing Mortgage Earnest Money A good-faith deposit that shows a home seller you're serious about buying Mortgage Amortization The schedule that shows how each loan payment splits between principal and interest over time
Frequently Asked Questions

Why do lenders require a home appraisal?

Lenders require a home appraisal to confirm the loan is supported by the home's value as collateral. Since the property secures the loan, the lender won't finance more than it's worth. The appraisal protects them, and you, from overpaying or overborrowing on a home that doesn't justify the price.

What happens if the appraisal comes in low?

A low appraisal can affect your loan amount or kill the deal, because the lender won't lend more than the appraised value. Your options typically include renegotiating the purchase price with the seller, bringing extra cash to closing to cover the gap, or formally disputing the appraisal.

Who chooses the appraiser?

The appraiser is independent and licensed, and is generally ordered by the lender rather than the buyer or seller. This independence helps ensure an unbiased opinion of market value. Rules and processes can vary by state and lender, but the appraiser should not have a stake in the transaction's outcome.

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