Appraisal

Your lender has an appraiser inspect the home and prepare an appraisal, which is a report estimating how much the house is worth. Your lender wants to make sure the house is priced right -- they don't want to loan you $180,000 to buy a house that's worth only $135,000. The appraiser bases his/her appraisal on the amount that similar houses in the same area have sold for, and the potential rental income if the house is a duplex.