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How does a bank use an appraisal or evaluation?

A bank compares the value from the appraisal or evaluation to the requested loan amount to determine whether the value of a property securing a loan provides adequate collateral protection for the bank. This helps to limit the bank’s losses if the borrower defaults on the loan. The value of a property may influence the cost of your mortgage, including the interest rate, down payment, and other fees or charges.

Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on should not be construed as legal advice or a legal opinion of the OCC.

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