An appraisal is a report made by a qualified, often licensed individual who sets forth an opinion or estimate of value regarding a customers property.

For Conventional mortgages and anything covered by the HUD-FHA Direct Endorsement Program, the lender obtains a complete copy of the report detailing the method and basis for the the appraised estimated value.

The term appraisal within the context of mortgages may also be applied to the process by which this estimated value is arrived at.

An appraisal helps the lender obtain an independent opinion of the value of the customer's property, and is used to calculate the transaction's Loan to Value ratio.

If a loan is VA or a HUD application being processed by HUD itself, lenders only receive an abbreviated statement of value with no substantiating information.

Appraisers use a variety of measures and factors to arrive at the estimated value of your property, including the selling prices of comparable properties in your area, the built up area, the condition of the property, etc.

The Appraisal is prepared in the name of the lender bank or the mortgage company that orders the report. Even though the mortgage applicant pays for the appraisal cost, the report does not belong to the him. Federal regulations entitle the home buyer a copy of the report.

Remember an appraisal is simply an opinion of value by a licensed appraiser. It is not a guaranteed value of a home. An appraised value does not mean that is what you should sell your home for. An appraisal however will give you an idea as to what your house is worth compared to other surrounding similar homes.

It is also important to have a recent appraisal of your home. The value of your home may change in relation to other homes in the area without any physical changes to your own residence.