This is part of an ongoing series in which we answer common questions among home buyers in Washington State. Today’s question: Is a home appraisal required for home buyers in Washington? This article will explain.
When you purchase a home in Washington, do you need an appraisal? The short answer: An appraisal is usually required when a borrower uses a mortgage loan to buy a house. Cash buyers usually aren’t required to get an appraisal, though they may choose to order one. A small percentage of home loans might qualify for an automated alternative to the traditional appraisal, which can expedite the process and save the buyer money.
Once you understand the basic purpose of a home appraisal, you’ll realize why they are almost always required for mortgage loans in Washington state.
The primary objective is to determine the current market value of the house – and also its resale potential. To accomplish this, the home appraiser will evaluate recent sales in the area that are similar to the home being purchased. The appraiser will also visit the “subject property” to see if it has any value-adding features that might put it above the comparable sales, in terms of value.
Mortgage lenders in Washington require home appraisals for most loans that are made, and for a couple of reasons.
Sometimes these requirements “trickle down” from secondary authorities such as Freddie Mac, Fannie Mae, and the Federal Housing Administration. Lenders also want to ensure that the home being purchased is worth the amount the buyer has agreed to pay.
For all of the reasons stated above, a home appraisal is usually required for Washington home buyers who use mortgage loans to finance their purchase. This is true for conventional and FHA loans alike.
There are some mortgage scenarios where a home appraisal might not be required.
For example, Freddie Mac said certain buyers could qualify for an automated appraisal option, which effectively skipped the standard in-person home appraisal. In some cases it saved borrowers money and expedite the closing process.
However, this can happen only if the relevant underwriting system permits it, and it typically applies to a limited share of loans. So while some home buyers in Washington might benefit from this alternative, the vast majority will still be required to have an appraisal.
To wrap up, it’s worth noting the difference between a home appraisal and a home inspection. Although people often mix them up, they are two separate processes. One focuses on the value of the property, while the other focuses on the condition of the house.
As we’ve written in a separate article, home inspections are usually not required for mortgage loans in Washington State. With that being said, buyers can certainly benefit from having a thorough property inspection before purchasing a house.
If you are looking to apply for a mortgage, we can help. Sammamish Mortgage has been helping Washington homebuyers with their financing needs since 1992. We offer a variety of mortgage programs to buyers across Washington, Oregon, Idaho, California, and Colorado. Please contact us if you have any mortgage related questions or if you would like to receive a rate quote.
A home appraisal is usually required when a buyer uses a mortgage loan to purchase a home in Washington State.
Cash buyers are not usually required to get an appraisal, but they can choose to have one performed.
Lenders require an appraisal to estimate the home’s current market value and help ensure the loan amount is supported by the property value.
A home appraiser reviews recent comparable sales, visits the property, and considers features that could affect value and resale potential.
Yes. Conventional loans in Washington usually require a home appraisal.
Yes. FHA loans in Washington usually require a home appraisal.
In some cases, a loan might qualify for an automated appraisal alternative through the underwriting system, which can replace the traditional on-site appraisal.
They apply to only a small percentage of loans, so most buyers still need a traditional appraisal.
A home appraisal estimates the property’s market value, while a home inspection evaluates the home’s physical condition, such as the roof, plumbing, foundation, and electrical system.
Home inspections are usually not required for mortgage loans in Washington State, but they can still be very beneficial for buyers.
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