Mortgage Basics: Information for First Time Home Buyers

What is an appraisal and how is it calculated?

An appraisal is a determination of property value made by an independent, professional appraiser based on the recent sales prices of comparable homes in the area. Appraisers are required to insure that the home is worth what you're paying for it thereby protecting the lender should they have to repossess and resell the home. Appraisals also protect you from paying more than a home is worth.