Apply For a Mortgage
After you choose a lender, you need to apply. This involves filling out an application form and paying an application fee and an appraisal fee. The lender then reviews your application. They do a credit check, and verify your employment, salary and assets.
They’ll also evaluate the property. This is known as the appraisal.
The appraisal, similar to the CMA, is done by a licensed real estate appraiser.
The appraiser determines value primarily through a cost analysis and a sales comparison. The cost analysis determines what it would cost to build a similar house. The sales comparison involves comparing the subject property to at least three similar ones, known as “comps.” Comps are properties that:
- Are similar in style, square footage, number of bedrooms and bathrooms, age and other characteristics;
- Are in close proximity to the subject property; and
- Sold in the last six months.
The appraiser takes data from the comps and makes adjustments, as no two houses are exactly alike, in order to arrive at a final value estimate. This will determine the amount available for the mortgage.
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