MemberLong story short Fiance and i want to buy a house. Out of curiosity lets say that the house was up for $70,000 and it only appraises for $68,000 what happens then?
MemberYou would go back to the seller and renegotiate the price. A home appraisal should be a contingency in the contract in some form or another. We had a financing contingency in our contract and the bank required an appraisal before agreeing to loan us the money (part of the contingency). From my understanding the sellers usually agree to lower the price.
MemberYou can’t a mortgage loan approved for more than the house appraised for.
MemberSeveral things can happen……
The bank will not approve a loan for more than the appraisal value, so…
1. You guys can choose to make up the difference and pay an extra $2000 in cash
2. The seller can lower the price to the appraisal price
3. You and the seller can negotiate
4. You can walk away
Memberis this a VA loan by any chance? I know the VA won’t let you offer for more than what they appraise the home for.
MemberYou could just put down $2,000 outside of the loan if the seller’s wouldn’t come down on the house, which you should try hard to get them to do because that’s how much the house would be worth if you were to sell it.
MemberIt’s similar to making up the difference yourself – you could reduce your downpayment percent. Ie. If you were going to put $17500 down (25%) you could use $2000 for the difference, and your DP would be about 23% of the appraised value.
I don’t know what the lenders use as their cutoff though, I would guess they have some error built in.
MemberYou could also request another appraisal if you thought the first was low.
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