Mortgage is a loan which is secured by real property. Mortgage is security interest on real property. When the time comes to issue a mortgage loan the value of property matters a lot. This is because the lender has to make sure if he can lend you the money or not. He will only lend the money if the value of your property is worth the amount you are issuing from him. During this process many things are left understood by the people.
They get confused between appraised value and estimated value. In order to understand the mortgage process its important that a person should understand few basic things regarding their property and its value.
People are often confused by the term used as Estimated Value. While issuing mortgage loan your lender may ask you the estimated value of your property. Estimated value is the value which is actually the real value of your property. It is the estimate of what the actual property is. It is an obvious and understood question. There are many websites which can help you in finding the proper estimated value of your property. This can be done very easily. You just have to type your house details and your country and you will get the estimated value of your property.
As you move further during the process of issuing mortgage loan. The next question would be about appraised value. The bank will require with an appraisal of your property before you issue the loan. Appraisal value is the upfront part of the closing costs of the loan. The lenders company will take pictures of the property and will prepare notes relating your property. They will also measure the area and check if all the documents given by the borrower are real and proper.
After this information they assess the appraised value of your property. They will look the data for the sale which is comparable with the property. They have to compare your home with the homes which are similar to it to look if they are sold within six months of time. They go through this analysis and once its completed they assign an appraised value and this is the value which now the bank will be the used for loan. An appraiser may also list an after-improved-value if your home will be needing any repairs. Repairing includes painting, flooring or any other safety issues.
Once you understand both these terms, issuing a mortgage loan can become easy.