When people think about getting a mortgage, they usually focus on one thing:
"What's my interest rate?"
But in today's market, there's another factor that can have a very large impact on your financing...the home's appraised value. It's something many homeowners don't think about until they're already well into the mortgage process.
More Sales Doesn't Mean Higher Values
If you've been paying attention to the real estate industry this year, you’ve probably seen headlines saying the housing market is "slowly improving."
In many areas, that's true—more homes are selling than they were a few months ago.
But, when it comes to appraisal values, here's the important distinction: More sales does not automatically mean higher home values.
An appraiser doesn't determine value based on headlines or asking prices. They rely on recent comparable sales and market evidence to support their opinion of value.
If those comparable sales show prices have softened, that's the value lenders will use when making financing decisions.
Why This Matters
Whether you're:
- Buying a home
- Refinancing your mortgage
- Accessing equity
- Renewing and switching lenders
...an appraisal can directly affect your mortgage options.
If the appraised value comes in lower than expected, it may change:
- How much you can borrow
- Your available lender options
- Whether you need additional funds to complete your financing
This is why understanding your property's current market value is so important.
My Advice…Don’t Panic
One of the best pieces of advice shared by experienced appraisers is simple:
When you have a commitment from a lender, order the appraisal as early as possible.
Knowing the property's value early allows everyone to make informed decisions before the mortgage process is too far along.
It also reduces surprises and gives us more flexibility if adjustments need to be made.
How can your Broker help? Communication Makes a Difference
While mortgage brokers can't influence an appraiser's opinion, we can provide helpful information about the property.
Things like:
- Recent renovations
- Permitted additions
- Unique upgrades
- Relevant comparable sales
All help ensure the appraiser has the most complete picture available.
The Bottom Line
The goals are to ensure the lender feels their risk is mitigated as much as possible, especially when home values are down. As well as, to understand what the market can support today.
These are a couple of the reasons I spend so much time helping clients understand the process before they commit to financing.
Because a successful mortgage isn't just about finding a great rate.
It's about avoiding surprises.
If you're planning to buy, refinance, or renew your mortgage this year and you'd like to understand what your home's value could mean for your financing options, I'd be happy to help.
Sometimes the most valuable conversation happens before the application is ever submitted.