What is an "appraisal" and how is it used to calculate the value of my home?

What is an "appraisal" and how is it used to calculate the value of my home?

Ron Goodlin (Mortgage Banker and Broker, The Goodlin Group) gives expert video advice on: Generally how far do interest rates need to drop to make it worthwhile for me to refinance?; What can I do if I disagree with the banks appraisal of my home?; Are too good to be true loan offers usually too good to be true? and more...

An appraisal is carried out by a third-party individual who's really there to protect the bank. If the bank is going to lend you money, the appraiser is the lender's eyes that are going to go out there to your home and see what other properties in your area are selling for. It's called comparable sales. With that, they're going to go in, take pictures of your property, and measure the property. Then, they'll go back to their office and look at the comparables that have sold in the area. Based on the comparables, and whether your property has a view, a pool; whether it's upgraded, whether you've added square footage; they take all that into consideration and come up with a value for your property.