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Old 02-24-2008, 03:23 AM
 
Location: Cary, NC
2,408 posts, read 7,008,976 times
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Default if the house doesn't appraise for the selling price

And the seller won't lower the price ... does the buyer need to bring more money to the table to get the loan? Just to keep discussion simple, so if a house's contracted price is 100k, the buyer wants a 80 ltv loan (put 20k down), but the house only appraises for 90k, does this mean the bank is only willing to loan 72k (80% of the 90k) and the buyer needs to put down 28k? Is that the way it works?
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Old 02-24-2008, 04:10 AM
 
Location: NE Florida
17,713 posts, read 20,466,994 times
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You are going to get some great responses by the Mortgage guru's
My question would be, why would you pay more for a house than it is worth ie the appraisal
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Old 02-24-2008, 04:39 AM
 
Location: Cary, NC
2,408 posts, read 7,008,976 times
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At this point, it's theoretical question, Karla.

Just a curiosity as I see houses that are much higher than the comps might show, I was wondering how people get financing for those type of properties.
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Old 02-24-2008, 04:48 AM
 
Location: NE Florida
17,713 posts, read 20,466,994 times
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jinxor
lol whew I am glad to hear it is a theoretical question
I to have wondered the same thing

I look forward to hearing from our mortgage gurus
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Old 02-24-2008, 06:20 AM
 
Location: Back Home In TN…YAY:):)
15,653 posts, read 15,022,877 times
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We sold a house in FL 2 1/2 years ago. The house didn't appraise, partly b/c we sold it furnished and with a boat. The buyer had to come up with the extra money for his downpayment.

Also during that time people still thought the houses would appreciate $100,000. per year.

Lisa
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Old 02-24-2008, 08:52 AM
 
Location: NC
1,264 posts, read 1,592,201 times
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Yes, the bank will go off the purchase price or the appraised value whichever is lower!
So, in this case they would lend on percentage of the appraised value, in which case you'd have two options. (if you still want the house)
1. bring more money to closing to make up the difference, (or see if the seller would be willing to contribute any of that difference to closing costs to make your job easier, if they've not contributed already)
2. raise your loan to value percentage to make up the difference that way.
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Old 02-24-2008, 09:41 AM
 
Location: In my playhouse.
1,047 posts, read 1,754,827 times
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Quote:
Originally Posted by Karla with a K View Post
You are going to get some great responses by the Mortgage guru's
My question would be, why would you pay more for a house than it is worth ie the appraisal
It could well be a situation like I have found myself. See "Deciding on a selling price" in the Real Estate Pro thread. I plan to follow the great advice I have received and locate a professional that deals with property like I own. Fortunately I don't have to sell and will rent the place out before I sell at the very low price given by a buyers appraiser. I was told the "average" person would not value my improvements/historic age of the house. I say an average person doesn't live here now and the next "not average" person is the one that will figure out how to pay the price I want - or a lot closer to it than the appraisal suggests.
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Old 02-25-2008, 07:44 AM
 
372 posts, read 539,118 times
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Assuming that you still want to buy a home for 11% more than what an independent appraiser says the property is worth...

You can either bring the additional cash to the table or borrow more and pay PMI until you get up to the 20% equity position... if your bank will allow you to.
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Old 02-28-2008, 12:11 AM
 
Location: Cary, NC
2,408 posts, read 7,008,976 times
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Quote:
Originally Posted by ChipL View Post
Yes, the bank will go off the purchase price or the appraised value whichever is lower!
So, in this case they would lend on percentage of the appraised value, in which case you'd have two options. (if you still want the house)
1. bring more money to closing to make up the difference, (or see if the seller would be willing to contribute any of that difference to closing costs to make your job easier, if they've not contributed already)
2. raise your loan to value percentage to make up the difference that way.
Thanks ChipL. I suspected as much, but appreciate the clarification. There is a maximum that the sellers can credit the buyer, right? They can only credit up to a certain percentage of the sale price or only credit closing costs? Or do the rules change depending on the lender?
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Old 02-28-2008, 04:47 AM
 
20,804 posts, read 29,215,249 times
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This was happening in the Minneapolis/St. Paul area about 7-10 years ago, people were buying homes for $10-100,000 more then asking and these homes were not appraising for those inflated prices either. Buyers had to put down the normal 20% or whatever AND the additional over asking. It was just crazy and NOW those people are trying to sell these homes and they still aren't appraising for what they paid and they blame it on the housing market. I personally blame it on stupidity but that is just me.
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