Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Here's something I hadn't heard before, but I'm a first time buyer so maybe I'm confused.
Had a bid accepted on a house and I've been back and forth with the seller on money down - they want to see me put 10 percent down to make sure the deal will go through - I want to put down 5 because my mortgage broker says that's no problem. The seller isn't financing it, what does he care? I've offered to put 10 percent down payment in escrow in case it's needed, but I want to try and get the loan with 5 percent down. If i can't, I'll go with 10. Don't see what the big deal is if i prove I've got the 10 percent by putting it in escrow?
My broker is trying to tell me that she's heard that putting down a larger down payment (say 10 percent, rather than 5 percent) can lead to a more "favorable" house appraisal (as in the house will appraise for more money).
This makes no sense to me. I understand that if the house doesn't appraise for the selling price, somebody's gonna make up the difference (won't be me, I promise you that). But will a larger down payment make the bank appraise the house for more? I thought appraisals were based on market conditions, condition of house, features of house and comps for the last six months. Am I missing something?
Here's something I hadn't heard before, but I'm a first time buyer so maybe I'm confused.
Had a bid accepted on a house and I've been back and forth with the seller on money down - they want to see me put 10 percent down to make sure the deal will go through - I want to put down 5 because my mortgage broker says that's no problem. The seller isn't financing it, what does he care? I've offered to put 10 percent down payment in escrow in case it's needed, but I want to try and get the loan with 5 percent down. If i can't, I'll go with 10. Don't see what the big deal is if i prove I've got the 10 percent by putting it in escrow?
My broker is trying to tell me that she's heard that putting down a larger down payment (say 10 percent, rather than 5 percent) can lead to a more "favorable" house appraisal (as in the house will appraise for more money).
This makes no sense to me. I understand that if the house doesn't appraise for the selling price, somebody's gonna make up the difference (won't be me, I promise you that). But will a larger down payment make the bank appraise the house for more? I thought appraisals were based on market conditions, condition of house, features of house and comps for the last six months. Am I missing something?
No, of course that would not change the appraised value of the house. Market value is market value, no matter how much you put down.
Perhaps your broker is thinking of the more you put down, the higher your equity is.
yeah... I'm having some doubts about this lady. it made no sense. What about the issue with the down payment? If I agree to put the ten percent in escrow, but want to try and get the loan with 5 percent down first, what does the seller care. I can prove I have the money, right?
Personally i would never buy a house with only 5% down.
why not? Assuming you have the money, but choose to keep it somewhere else... If I need to sell the house, I have the same amount in "cash" instead of "equity" Only difference is, I have more options. Putting more down doesn't affect the profit you make in the house... only the equity amount when you sell it (dollar for dollar to the amount of the deposit).
If I didn't have the money and had to tap myself out to put 5 percent down, maybe you have a point. I'd just rather keep the money in the bank since the payment is comfortable.
Disregard rutgers, if you want to know why look at his post history.
Now, to answer you're question down payment shouldn't have any affect on appraised amount. Secondly, I can't say that I'd recommend putting down 10% earnest money. Do you have your own agent or did you use the sellers agent? I suggest calling your agents broker in charge (her manager) and having this discussion with her to find out why your agent is saying these things.
That is interesting, I need to learn more about this subject.
I do have to wonder with this HUGE problem with banks giving out loans with no downpayments to people who can't afford the homes, I would think it would be a better idea to put down as much as you can. BUT then again, I don't know much about this subject.
The size of the down payment shouldn't have any impact on the appraisal. However, a larger down payment may be useful in getting the loan funded if the appraisal comes in under the contact price but more than the loan amount.
gbone is right - the importance of the appraisal decreases with the size of the downpayment. But that's not until you get to 20% down. There isn't much difference between 5% and 10% except that it makes the seller feel better. A bigger escrow deposit might hold a buyer to the deal more than a smaller amount would.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
