An appraisal is necessary to ensure there is adequate collateral in a home. Your lender will require the appraisal prior to clearing your loan to close. At what point does the lender order the appraisal, though?
Keep reading to find out.
Ordering the Appraisal
The loan process is a very fragile process. You must follow the appropriate steps in order for everything to work out as you planned. Typically, the loan process is as follows:
- Pre-approval – This is the first step in determining how much loan you can afford and what terms a lender will give you. We recommend that you do this step before you even start shopping for a home.
- Receiving the Loan Estimate – Once a lender pre-approves you for a loan, they must send you a Loan Estimate. This document shows you the total cost of the loan, the interest rate offered, the term offered, and the closing costs you’ll pay.
- Processing the Loan – Once you choose a lender and decide to move forward, the lender will process your loan. Typically, you have approximately 10 days after receiving the Loan Estimate to choose a lender and move forward. If you wait, the terms offered may no longer be valid.
- Underwriting the Loan – Once you have a home selected and a purchase contract signed, the lender will start the underwriting process. A part of this process is ordering the appraisal. The lender needs proof of the home’s value, proof of your income and assets, and proof that you are gainfully employed before they can order the closing documents.
- Closing the Loan – Once the underwriter has a complete package and everything passes the appraiser’s requirements, he can order the closing documents and you can become a homeowner.
How Long Does the Appraisal Take?
Each appraiser has their own turnaround times for an appraisal. In general, you can expect to wait about a week. This gives the appraiser enough time to work out a time with the seller, come see the home, and write the report. Typically, appraisers allow up to three business days to churn out the report once they view the property. Of course, each appraiser may work on their own timeline, so you should ask any appraiser you consider using about their timeline.
How Long Does the Underwriter Take Once They Have the Appraisal?
The time it takes the underwriter to review the appraisal depends on its complexity. It also depends on how close the value came in to the purchase price of the home. If the appraisal is way off, the underwriter may have to order a Reconsideration of Value or the underwriter may ask the staff appraiser to review the report to determine its validity.
If the appraisal comes in at or higher than the purchase price and the underwriter thinks everything looks okay, it may only take a matter of a few days to get through the process. Of course, the more available you are for questions and/or concerns, the faster the underwriter can turn the file around.
Who Gets to See the Appraisal?
By law, the appraiser must only send a copy of the appraisal to the lender. Even though the buyer pays for the report, the lender has first priority. Buyers are able to request a copy of the appraisal in writing if it’s not the lender’s policy to just provide a copy at the closing.
The seller isn’t entitled to a copy of the appraisal, though. If the seller wants a copy, they must request it from the buyer. Some lenders require the sellers to make the request in writing in order to make it official, so always check with your lender first.
The appraisal is usually ordered early enough in the loan process that the lender won’t waste their time if the appraised value isn’t high enough. Of course, no lender will order an appraisal until there is an official purchase contract on the home as the appraisal can cost as much as $500 and is the borrower’s responsibility to pay.