gidget asked:
The house is appraised at $90,000. We are approved for it, however, the seller is only asking $85000 for it. I have no idea about mortgages! This is my first one and I’m wondering if we can borrow $90,000 (the value of the home) and pay the seller and keep the rest? Or can we just turn around and get a home equity loan?
I was just curious. Thank you for all the POSITIVE input and advice. We don’t NEED the $5000, but I just wondered if we could get it. As I said, I have NO idea how this process is going to go! That’s why I ASKED. I don’t appreciate some of the insulting responses. People are rude. But those of you who actually ANSWERED my question without being jerks about it, thank you so much. You’ve been very helpful. =)
JARRETT
The house is appraised at $90,000. We are approved for it, however, the seller is only asking $85000 for it. I have no idea about mortgages! This is my first one and I’m wondering if we can borrow $90,000 (the value of the home) and pay the seller and keep the rest? Or can we just turn around and get a home equity loan?
I was just curious. Thank you for all the POSITIVE input and advice. We don’t NEED the $5000, but I just wondered if we could get it. As I said, I have NO idea how this process is going to go! That’s why I ASKED. I don’t appreciate some of the insulting responses. People are rude. But those of you who actually ANSWERED my question without being jerks about it, thank you so much. You’ve been very helpful. =)
JARRETT
ANTON
just get a loan for the amount the house will cost. interest is crazy, on the 85, 000, you will pay about 150, 000 when its all said and done on a 30 year note. so get the extra 5, 000 somewhere else. DO NOT REFINANCE
GUILLERMO
well it depends on your credit…And your income…I no because I am a banker…It also depends on the bank you go to
LYLE
The mortgage company cuts a check for the purchase price. So, no you can’t keep the difference. And you can only get an equity loan if you have equity in your home.
ABEL
yes, you can keep the rest but you pay the interest for the full 90k. your mortgage will be higher as opposed to 85k. equity loan is something else. thats after you bought your house. equity is how much your current house value minus the amount your borrowed from the bank.
NOEL
You can get more than what the seller is asking for. A lot of times you can receive extra funds to help in paying your closing costs up front.
ARNOLD
The bank will only allow you to obtain a loan for the purchase price. Most banks also will only allow you to use the purchase price instead of “appraised value” when you’re trying to refinance the home within the first 6 months thus, eliminating any “equity” in the home within those first 6 months.
You probably don’t want to borrow immediately after purchasing the home. Especially when it is only $5,000. It doesn’t make any sense to do that……
HERBERT
You can offer the seller $90,000 and ask him to pay $5000 in closing costs. This needs to be part of the offer letter.
However, just because you’re approved for the full amount doesn’t mean it’s a good idea to take the whole thing. You should keep your mortgage payment as low as possible while at the same time being in a low risk mortgage (e.g. a 30 year fixed). A zero percent down loan is seldom a good deal. Interest rates are higher and you’ll have to pay PMI (mortgage insurance). So, what looks like a savings will cost you more in the long run.
KARL
what is this some sort of no money down deal
why would you want to pocket any money
you still have to make house payments
if anything you would want to put the $5000 into
paying down the note you owe
there are no shortcuts
even equity loans you have to repay
sounds to me like you will lose the home
before you begin to live in it
if this is your thinking on buyin or payin for a home
LARRY
I am doing the same thing right now (First time home buyer, hopefully in a month) and you can get a loan for more than the house costs, however, like someone ahead of me said.. it wouldn’t be smart to take out all $90,000 when the house is $85,000. You should take out 2% on that house costs which would be $1,800 to help pay for closing costs, fees, even minor repairs. If you credit is good enough to get a $90,000 look into a small personal loan that will have significantly lower interest rates! Good Luck, and Congratulations!
BYRON
Wow, those are some horrible answers.
Okay, here’s the skinny. If the agreed upon purchase price is $85k, then that’s what the bank uses for the value of the home, regardless of the appriased value. Appraisals on purchases are done to ensure that the purchase price is not more than the appraised value of the home. If you want to get $90k for it, there are a couple of programs that are in place to allow for it, but they are for home improvement only. You can’t just pocket the money. If you want to use the appraisal to refinance later, first make sure you don’t have a prepayment penalty, then you have to wait at least 6 months to make sure you’re on title, make sure the mortgage you’re paying reports to all bureaus, and make the property value increase believable to the bank. But, still, at that point you’ll just be lowering your MI rate, and the amount that it will go down won’t be enough to justify refinancing with all the costs involved. So, long story short, on a conventional loan there’s no way to do this legally.
LOREN
Most people here told you yes but the reality of it is that you most likely cannot. As togashiy said.
When signed the contract for $85K that is what the bank will lend you, not one dollar more (given that the appraisal supports that value of $85K)
BUT if you haven’t signed the contract and you are still negotiating, you can purchase the property for $90K and get a credit back from the seller of $5K (given that the appraisal supports that value of $90K)
My question to you is do you really want to pay property taxes based on $85K or $90K (property taxes are calculated differently in each state)
And to answer you last question about the home equity loan. Well you probably wont receive enough appreciation on your property to just turn after the purchase and get a equity loan for $5K and IT DOES NOT make any sense to refinance again right after you just purchase the house. No matter what anybody here says, it just does not make sense financially.