When someone talks about “collateral” on your home loan they’re talking about the property, the house itself, the reason for all this hullabaloo.
Since the collateral (the house and the land it’s on) is what is used to secure your home loan (like a car is the collateral securing your auto loan) it’s valuation through this appraisal report is critical to completing the loan process.
The appraisal is a lengthy report that tells the lender what the home you’re purchasing is worth and ALL of the minutiae required to back up that value. This is a significant and vital item in your file and can take up to 10 days or more to process and be returned to the lender. This time frame varies depending on the part of the country you’re in, how many appraisers serve your immediate area, and their workload. There have been times in the past where I’ve experienced 30 day appraisal turnaround times, so just know that this can happen.
Since this is a vital part of the mortgage process, and we cannot close your loan without one, it would behoove you to check with your agent or loan officer to see how long appraisals in your area take so you and your agents can set a realistic expectation for a closing date with the seller. Also understand that the lender does not directly employ the appraisers that will inspect your home. That’s illegal as the appraiser is tasked with providing an unbiased opinion of value. With that said, understand that your lender has limited capacity to dictate the date the appraiser inspects the home and gets the report back to us. We request a due date upon ordering, so the appraisers know when we need it back, but life happens, even for them, and there are times at which the appraisal can be delayed through no fault of the lender.
A word of caution about the appraisal report
I would be VERY careful about your real estate agent sending this report to the seller’s real estate agent. I’ve seen many a deal lost because the sellers pulled out of a contract because they saw that they could sell their home for a significantly higher price. Really, the only time your agent should send this report, or any part of the report, to the seller’s agent is if the value came in lower than the sales price (so the sales price can be negotiated) or if there are repairs that the appraiser is requiring be completed before closing (so the sellers know what they need to fix).
The appraisal is usually the final, major, item needed in the loan process and, generally, when that is received, you’re in the home stretch of the process.
So, the goal of a file is to have everything else in and ready when we get the appraisal in so we can submit your file to the underwriter for final review upon receipt of the appraisal. This is also the time that lender will request the closing department prepare the Closing Disclosure for the file. One thing that delays a lender’s ability to request a Closing Disclosure is a lack of homeowner’s insurance. So let’s have a frank conversation about that.
A good lender is going to do as much as they possibly can, on the back end, to get supporting documentation for your file so you don’t have to bother yourself with it. There are limitations to what lenders can get for you and homeowner’s insurance encapsulates all of the stuff that we cannot do for you.