Getting a loan for the appraised value, then paying less

rwanger · #1 03-28-2006, 01:54 PM

I read about this recently, but I can't find where I read it.

Could someone just quickly explain to me how you can pay no-money down in a scenario where the appraised value of a house is $100k, but the seller is willing to work with you on financing and only wants $80k for the house? You can get the loan for $100k, and then he gives you back $20k which acts as your down payment of 20%?

Thanks.

Mr. Now · #2 03-28-2006, 04:37 PM

This aint gonna happen in a flat to down market.

MatthewRyan · #3 03-28-2006, 05:26 PM

[ QUOTE ]
I read about this recently, but I can't find where I read it.

Could someone just quickly explain to me how you can pay no-money down in a scenario where the appraised value of a house is $100k, but the seller is willing to work with you on financing and only wants $80k for the house? You can get the loan for $100k, and then he gives you back $20k which acts as your down payment of 20%?

Thanks.

[/ QUOTE ]

In what situation does the seller only want $80,000 for a home worth $100,000?

rwanger · #4 03-29-2006, 12:28 AM

[ QUOTE ]

In what situation does the seller only want $80,000 for a home worth $100,000?

[/ QUOTE ]

Worth does not equate to appraisal. If it's appraised at $100k and no one will buy it, then it's not really worth $100k is it? Maybe he's in a hurry to sell because he wants the cash for another investment.

This obviously happens all the time. My question is about the logistics of the transaction regarding getting a loan for more than the seller is asking (ie. the appraised value)

notluck · #5 03-29-2006, 01:19 AM

I think what you are talking about is plain and simple Bank fruad.

--Alex

ThePost · #6 03-29-2006, 02:47 AM

I bought a new half duplex style condo last June (2005) and it's going to ready in May this year. (Construction timelines kept getting pushed back). But my point is a couple of my identical property neighbours have sold their properties for 30k over what I paid for mine back in June.

Point being: I inquired about a similar deal in hopes of saving some on the mortgage insurance, but it just wasn't going to happen. (And with the delay It turns out I can pay 25% anyways)

Mr. Now · #7 03-29-2006, 02:04 PM

Banks typically tighten appraisal measures and procedures considerably when real estate markets go flat and/or down.

TStoneMBD · #8 03-30-2006, 08:21 AM

you get a 100k home for the price of 80k. the bank gives you a loan of 80k with no money down because the LTV (loan to value is 80/20). if your credit is good you could buy a 100k house for 90k and do no money down or even better. there are creative ways to do things. pick up any real estate guru's book and hell hammer this [censored] into your head with a mallet. they love to spread these ideas around like wildfire.

ShineOn · #9 03-30-2006, 01:09 PM

Many banks will give you 80% of the lower of cost or appraised value for a home purchase.

wilsonkop · #10 03-31-2006, 10:32 AM

I think what you are looking for is called a "seller's assist". This allows you to roll closing costs into your mortgage. This will not be a problem if you have good credit and can get the home to appraise for more than the total loan. I.E. Home is 80K. You get a 10K seller's assist for a total loan of 90K. This is fine if the home will appraise for 90K or more. Of course you also need good credit or your interest rates will be jacked up.