Every mortgage needs some consideration of value. Your downpayment and the type of property you are buying will determine when an appraisal is needed.
Despite contrary belief, a bank or a lender does not always pay for an appraisal. Although, this doesn’t apply in every situation – here is an idea of when an appraisal will be required.
If you put down less than 20%, a mortgage insurer will have their own valuation system. If it fails, then they will order an appraisal at their cost. The lender, the mortgage broker, and the client do not get to see this report or know information about it. If a property fails the valuation and there is a concern surrounding the property such as conditions, a private sale, or a foreclosure then a lender may require you to pay for an appraisal as part of your conditions.
If you put more than 20% down, an appraisal will be always be required. Some lenders have valuation systems that they will charge a fee for, but these are usually exclusive to bigger centers and only for owner-occupied properties. In this situation, it would always be a client cost. Sometimes lenders will order an appraisal for you and not charge you upfront, but they will add this expense to their closing costs. This often makes it seem that you don’t need to pay the appraisal cost but in reality, it’s still billed to you.