 TITLE: What Happens if a Home Appraisal Comes In Low? CONTENT: How the Appraisal Process Works\n-------------------------------\nA home appraisal is an analysis that ascertains a home's market value. It is conducted by a professional appraiser who is chosen by the lender, but typically paid by you, the buyer. An appraisal considers the attributes and condition of the property and the sale prices of comparable properties, or \"comps,\" recently sold in the local housing market.\nMortgage lenders require appraisals as part of the approval process on all loans they issue. This protects lenders in case the borrower fails to repay the loan by providing reassurance that the loan amount can be recouped by foreclosing on the property—taking it back from the borrower and reselling it at market price. The appraised price is also used to determine the amount of equity you have in your home if you seek a home equity loan or home equity line of credit: You calculate your equity by subtracting the outstanding balance on your mortgage from the home's appraised value.\nThe maximum amount a lender will issue on a mortgage is typically the appraised value of the home minus your down payment. Conventional mortgage loans sometimes require a down payment of 20% of the purchase price but, depending on your credit and the type of loan, down payments of 10% or even less may be acceptable.\nIf the appraisal sets the home value at less than your offer amount, however, you won't get a loan that covers your offer price—even if you can put down 20% of the offer price and the lender has preapproved you for a loan that covers that amount. END