What requirement do lenders usually impose before approving a mortgage loan?

Lenders typically require an independent appraisal to assess the property's value as collateral for the loan because it provides an objective evaluation of the property's market value. This appraisal is crucial as it helps the lender determine how much money they are willing to lend based on the property's worth. If a borrower defaults on the loan, the lender risks losing money, so understanding the value of the collateral is essential for ensuring that the loan amount does not exceed the property's market value.

An independent appraisal is conducted by a licensed appraiser who uses various methods to assess the property, including analyzing comparable sales in the area, reviewing the property's condition, and considering other market factors. This process protects both the lender and the borrower, ensuring that the loan is secure and that the borrower is not over-leveraged.

While other factors may also contribute to the mortgage approval process, such as reviewing the buyer's financial history, these do not directly assess the value of the property being financed in the same way that an appraisal does.