What is the main purpose of an appraisal in the mortgage process?

The main purpose of an appraisal in the mortgage process is to determine the fair market value of a property. This valuation is critical because it ensures that the lender does not loan more money than the property is worth. The appraisal provides an assessment based on various factors, including comparable property sales, the condition of the property, and market trends. This process protects both the buyer and the lender.

While finalizing a home sale, evaluating a buyer's creditworthiness, and inspecting the property for repairs are important aspects of the real estate transaction process, they do not capture the primary role of an appraisal. The focus on fair market value is essential because it helps ensure that both parties have a realistic understanding of the property’s worth and that the financial investment aligns with current market conditions.