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Old 08-25-2011, 03:26 PM
 
Location: Heart of Dixie
1,298 posts, read 1,727,178 times
Reputation: 1574

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Ok, so I recently had rental properties dropped in my lap(long story). It is all paid for, but in very dilapadated condition, I"ve decided to revitalize and capitalize on this gift from God.

My apprasial was yesterday, they said it would take a few days and then I'd be notified of closing...

Ok, so my question is this, why if I get 80% of appraisal, and I'm only asking for 75000k does my broker say it needs to appraise for at least 120k? I keep asking this question and she skirts around my question...I'm paying off ALL my personal debts, if that matters and expect to walk out of closing with at least 25k.

I'm not understand wht it needs to appraise for well over what adds up to the 80%??
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Old 08-25-2011, 03:33 PM
 
Location: The Triad (NC)
23,880 posts, read 51,372,564 times
Reputation: 23713
Quote:
Originally Posted by round4 View Post
I'm not understanding why it needs to appraise for well over what adds up to the 80%??
Because the first 20% between appraisal and loan belongs to the lender
(as security)

If you want a larger mortgage (to "cash out" or otherwise)...
well, that "value" or "equity" has to come from somewhere. Right?
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Old 08-25-2011, 03:40 PM
 
Location: Heart of Dixie
1,298 posts, read 1,727,178 times
Reputation: 1574
Quote:
Originally Posted by MrRational View Post
Because the 20% between appraisal ($X) and loan belongs to the lender
(as security)

If you want a larger mortgage (to "cash out" or otherwise)...
well, that "value" or "equity" has to come from somewhere. Right?
So, if it appraises for 100,000, I can expect what? 64k?
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Old 08-25-2011, 04:22 PM
 
Location: The Triad (NC)
23,880 posts, read 51,372,564 times
Reputation: 23713
Quote:
Originally Posted by round4 View Post
So, if it appraises for 100,000, I can expect what? 64k?
I can't speak to the specifics, but in broad strokes:
lets say the house appraises at $100,000
less the 1st 20% as security (x.80)
yields a maximum loan amount of $80,000

the guys who actually do loans might fill in the finer points
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Old 08-26-2011, 08:56 AM
 
Location: Heart of Dixie
1,298 posts, read 1,727,178 times
Reputation: 1574
Quote:
Originally Posted by MrRational View Post
I can't speak to the specifics, but in broad strokes:
lets say the house appraises at $100,000
less the 1st 20% as security (x.80)
yields a maximum loan amount of $80,000

the guys who actually do loans might fill in the finer points

And would you believe I work in Acounting and I'm blonde, don't let that fool ya tho.... I just didn't understand, now I do. Thank you so much. :
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Old 08-27-2011, 02:47 PM
 
640 posts, read 1,496,233 times
Reputation: 562
Quote:
Originally Posted by MrRational View Post
I can't speak to the specifics, but in broad strokes:
lets say the house appraises at $100,000
less the 1st 20% as security (x.80)
yields a maximum loan amount of $80,000

the guys who actually do loans might fill in the finer points
This still doesn't answer the OP's original question though....

She only wants $76K... that means the property should only need to appraise for $95K.... Why are they asking that it appraise for a minimum of $120K?

Round4, I would suggest taking a look at the Good Faith Estimate to see what all your closing costs are... What is your actual loan amount for? Are you rolling all of your closing costs into this refinance? This may be one of the reasons why they require a higher valuation.
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Old 08-27-2011, 03:07 PM
 
Location: Boca Raton, FL
4,617 posts, read 7,773,759 times
Reputation: 4937
Smile Cash out on an investment property

Since lenders are conservative on investment property and then add the cash out factor, most I deal with are not going over 75% but there could be some at 80%.

But, I'm in Florida.
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Old 08-27-2011, 04:30 PM
 
Location: MID ATLANTIC
7,120 posts, read 16,109,668 times
Reputation: 7075
Actually, Fannie Mae requires a 75% LTV on a cash out refi. Also, your credit must be in nosebleed territory, as well as, you need 6 months reserved for the payment on each home owned. I'm curious how your loan officer is going to approach your qualifications because you are not an experienced landlord. Typically inexperienced investors cannot benefit from the use of rent to offset PITI.
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Old 08-29-2011, 11:56 AM
 
Location: Heart of Dixie
1,298 posts, read 1,727,178 times
Reputation: 1574
Quote:
Originally Posted by SmartMoney View Post
Actually, Fannie Mae requires a 75% LTV on a cash out refi. Also, your credit must be in nosebleed territory, as well as, you need 6 months reserved for the payment on each home owned. I'm curious how your loan officer is going to approach your qualifications because you are not an experienced landlord. Typically inexperienced investors cannot benefit from the use of rent to offset PITI.
On paper I look experienced, I've had this property in my names since 2008... It was recently all handed over to me...(long story)..

My credit is excellent..like over 700. I'm not using any of the rent money to show repayment on this property, I make enough on my regular job. And reserves are not a problem either, it's just MY reserves, not my companies. I keep my finances and my rental properties seperate.
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Old 08-29-2011, 11:57 AM
 
Location: Heart of Dixie
1,298 posts, read 1,727,178 times
Reputation: 1574
And I am rolling over closing cost, and it's all in line with what others charge...waiting to hear from appraisal, Hopefully today.
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