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My wife and I are planning on building a new home...we need $140,000 to build. The appraisal on our blue prints to build came back at $153,000. Our bank is saying they will loan us $122,400 but that we need a down payment of $30,600 to bridge the gap between $122,400 to the $153,000.
This does not sound right to me?
Our loan will still only be for $140,000 so shouldn't the down payment be $17,600?
Our loan officer said high appraisals are bad, and if we had a lower appraisal, then we would have a lower down payment?
If your Loan Officer can't explain LTV, you need to get a new loan officer. Would an appraisal of $100,000 be good so they give you a loan of $80,000 you'd need a down payment of $20,000 plus you need to come up with an additional $40,000 to bridge the gap to the $140,000 you said that you needed; total cash needed 60k?
With the proposed mortgage loan, you are encumbering both the to-be-built home and the land/lot it is being built on. The appraised value, $153,000, includes both the home and land.
Do you already own the land, e.g., is this a construction to permanent loan that you are requesting?
My wife and I are planning on building a new home...we need $140,000 to build. The appraisal on our blue prints to build came back at $153,000. Our bank is saying they will loan us $122,400 but that we need a down payment of $30,600 to bridge the gap between $122,400 to the $153,000.
This does not sound right to me?
Our loan will still only be for $140,000 so shouldn't the down payment be $17,600?
Our loan officer said high appraisals are bad, and if we had a lower appraisal, then we would have a lower down payment?
I've never heard it work this way??
Thanks
Steve
Sounds like the appraised value based on plans and specs came back at $153k. This includes the land. The bank will lend up to 80% of the appraised value. 80% of $153k is $122,400. You would need to bring $17,600 to bridge the gap between the $140k build cost and the $122.4 loan amount + closing costs + anything you still owe on the land.
Sounds like the appraised value based on plans and specs came back at $153k. This includes the land. The bank will lend up to 80% of the appraised value. 80% of $153k is $122,400. You would need to bring $17,600 to bridge the gap between the $140k build cost and the $122.4 loan amount + closing costs + anything you still owe on the land.
It's a 20% difference - conforming loan standards is 20%, or you pay mortgage insurance. That's where they are getting the figure that they are presenting to you.
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