Are you buying a new home, refinancing your existing mortgage, or taking out a second mortgage? There’s one crucial step you can’t skip: the home appraisal.
A home appraisal plays a vital role in the mortgage process. It gives lenders—and you—a clear, unbiased picture of what your property is actually worth. But what exactly is a home appraisal, and why does it matter so much?

What Is a Home Appraisal?

A home appraisal is a professional estimate of your property’s market value, conducted by a licensed appraiser. It considers factors like the condition of your home, its size, location, recent comparable sales, and any upgrades or renovations.
The appraisal helps lenders determine how much money they’re willing to lend you—and protects them (and you) from lending or borrowing more than the property is worth.

Why Home Appraisals Matter in the Mortgage Process

Helps Determine How Much You Can Borrow

Lenders base their loan amounts on a percentage of your home’s appraised value, not necessarily its purchase price or your expectations. For example, if your home is appraised at $800,000, and a lender offers loans up to 80% of that value, your maximum loan would be $640,000.

Protects You from Overpaying or Overborrowing

An appraisal prevents you from overpaying for a home (in the case of a purchase) or borrowing too much against your home’s value. It adds a level of financial safety—for both you and the lender.

Required for Most Mortgage Products

Whether you’re refinancing or applying for a second mortgage, lenders almost always require an updated appraisal to verify your home’s current market value. This ensures the loan is appropriately secured by real estate.

Impacts Loan-to-Value (LTV) Ratio

Your Loan-to-Value ratio is one of the key factors in determining your interest rate and loan approval. A higher appraisal can lead to a lower LTV, which means better rates and more borrowing power.

When Is a Home Appraisal Needed?

• Buying a new home
• Refinancing your mortgage
• Applying for a home equity loan or second mortgage
• Switching lenders
• Renewing a mortgage in certain cases

What Affects the Appraised Value?

Appraisers consider:

• Square footage and layout
• Condition and age of the home
• Location and neighborhood
• Recent sale prices of similar properties
• Upgrades, renovations, or damage
• Exterior features like lot size, garage, pool, etc.

Pro Tip: Small upgrades like fresh paint, landscaping, or minor repairs can have a positive impact on your appraised value.

Home appraisals may seem like just another checkbox in the mortgage process, but they serve a critical purpose. They protect your investment, help ensure you’re not overpaying, and make sure lenders can offer the right loan amount with confidence.

Need a Mortgage? Cannect Makes It Simple.

At Cannect, we guide you through every step of the mortgage process—including the appraisal. Whether you’re buying, refinancing, or looking into a second mortgage, we help you understand your options and maximize your home’s value, without the red tape or pressure.

Let’s talk. We’ll help you unlock your home’s full potential.