An appraisal is a professional assessment of a property’s fair market value at a specific point in time. When you finance a home through LBC Mortgage, the lender typically orders an appraisal to ensure the property is worth at least the amount being financed. Because the home serves as collateral for the mortgage, confirming its value helps protect both the lender and the borrower from overpaying or overleveraging the asset.
The appraisal process involves a licensed appraiser reviewing recent comparable sales, evaluating the property’s condition, square footage, layout, upgrades, and overall market trends. The appraiser may visit the property in person or conduct a hybrid or desktop appraisal depending on program guidelines. The final appraisal report establishes a value conclusion that underwriters use to calculate the loan-to-value (LTV) ratio, which directly affects loan approval, interest rates, and required down payment.
If the appraised value meets or exceeds the purchase price, the transaction typically proceeds as planned. If the value comes in lower than expected, the borrower may need to renegotiate the price, increase the down payment, or explore alternative loan structures. In refinance transactions, the appraisal confirms available equity and determines whether the borrower qualifies for the desired loan amount. By providing an objective valuation, the appraisal ensures the mortgage aligns with current market conditions rather than assumptions or listing prices.