Qualifying the Property

It is not enough for the borrower to qualify; the property itself must also meet the lender's standards. Because the property serves as collateral for the loan, the lender needs assurance that it is worth the purchase price. This is primarily accomplished through a professional appraisal. If the appraisal comes in lower than the loan amount, the lender will generally not fund the loan unless the difference is covered in cash or the price is renegotiated. Additionally, the lender will check the title to ensure there are no legal issues, such as undisclosed liens, that could threaten their security interest.