Ron S asked:
I am buying a house from a relative for $200k. The property appraised for $270,000; they’re selling to me for $200k since I am a relative, and the property is paid off so it’s basically $200k in their pocket. Is it acceptable to get a loan for say $230,000 to retire some other debts? In a sense, I’d be immediately getting a “home equity loan” in the first mortgage.
Jack
I am buying a house from a relative for $200k. The property appraised for $270,000; they’re selling to me for $200k since I am a relative, and the property is paid off so it’s basically $200k in their pocket. Is it acceptable to get a loan for say $230,000 to retire some other debts? In a sense, I’d be immediately getting a “home equity loan” in the first mortgage.
Jack
Robert
In this mortgage market, it’s not going to happen. It is next to impossible to get a loan for more than the purchase price of the property involved. You COULD consider raising the purchase price of the house to $230K, and then having your relatives refund you the difference. However, doing so is mortgage fraud. I do not recommend it.
George
No mortgages are based on the lower of either the appraised value or the sales price.
Antonio
I would just close and take out a HELOC to pay off the other debts. Don’t do a flat amount, open a HELOC so you use only what is needed to pay off the debts.
Allan
No. the lender will value it at $200,000. they use lower of purchase price or appraisal.
I believe after 12 months (maybe 24 months) a lender will look at appraised value. You will need to order a new appraisal at that time.
Karl
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