What is the primary purpose of an appraisal in the mortgage lending process?

The primary purpose of an appraisal in the mortgage lending process is to assess the property's market value. This valuation is critical for lenders, as it helps them determine how much they can lend to a borrower based on the property’s worth. The appraisal acts as a safeguard for both the lender and the borrower, ensuring that the loan amount is appropriate for the property being financed.

By accurately assessing the market value, the appraisal helps mitigate the risk of lending too much on a property that may not retain its value over time. This process also ensures that the borrower is not overpaying for the property relative to similar properties in the market. In essence, achieving a fair market value through an appraisal aligns the interests of both parties involved in the transaction.