Q: We were looking to buy a home and stopped when the interest rates rose, making the homes we looked at unaffordable. Now that the prices have softened a bit, we found a home that fit our new budget and went under contract. Now our lender told us that the house appraised about $15,000 less than the purchase price. What happens now? —Diane
A: After you apply for a mortgage loan, the home you are buying will be appraised by your new lender to make sure it is worth what you are paying for it.
Lenders do this to ensure your new loan is adequately collateralized and the value will be there if they need to enforce their mortgage by foreclosing. Your lender will choose a licensed real estate appraiser to determine what the home is worth in the current market.
