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STEP 3: Get a Home Appraisal A fter you've made an offer on a home and signed a sales contract, most lenders will want to check out what you're buying with their loan proceeds— and size it up for themselves with a home appraisal. This means a home appraiser will assess the market value of the house using comparable homes, or comps, much like you and your real estate agent did when deciding how much to offer on the home. Most times, the appraiser's price will end up approximately the same as your own— in which case all is good. If the appraisal comes in higher than what you're paying, you're getting a good deal. For example, if you're paying $700,000 for a home and the appraiser concludes it's worth $710,000, you've instantly gained $10,000 in home equity. However, if the loan appraisal comes in lower than what you've agreed to pay for the home, that can be trouble, because lenders will loan you only as much money as the assessment says it's worth, or up to a percentage of the assessment. That means you'll have to pay the difference between the maximum loan amount and the purchase price plus closing costs—or persuade the seller to lower the sales price to what the lender thinks is fair. Another option is to challenge the loan appraisal by either filing an appeal or ordering a second loan appraisal. In most cases this all works out—and if it doesn't, keep in mind your lender is essentially keeping you from overpaying for a dud. STEP 4: Clear the Property Title and Close the Deal W hen you buy a home, you "take title" of the property—meaning you become the rightful owner. And your lender wants proof. As such, they'll ask for a title search, which involves paying a title company to search public records for any heirs insisting the property is theirs, liens (from contractors who worked on the home but were never paid), or other problems. Hopefully all goes well, but in case not, this extra step could save you from a seriously scary situation where you're fighting for ownership, or responsible for paying back old liens yourself. Once the title is cleared, you can close the deal. That's where buyer, seller, lender representative, and any others involved in this process meet to sign all of the paperwork, transfer all money owed, pass along the keys, and move on with their lives! Sure, the whole mortgage process may sound time-consuming and complicated, but rest assured its purpose is to protect all parties, including you, from making costly mistakes.