Mortgage question

[amdforever2]

Let's say a house is listed at $90,000 and I want to buy it. If I can get it appraised at $140,000, is there anything to stop me from 100% financing the $140,000 and paying the seller their $90,000 and pocketing the rest for improvements?

 

[gooseman]

I don't know for sure the answer to your question because I've only recently bought my first house but I'm guessing the mortgage company or the bank would not loan you that much money on it if they were only asking 90 K.

 

[Carbo]

If the house is listed at $90K, it won't appraise for $140K. And even if somehow it did, the lender will still only lend up to the amount of the agreed to purchase price, not the appraised price.

 

[Mark R]

As part of your mortgage application, the bank will hire a surveyor/valuer and have them appraise the property. They will only approve your loan if their appriasal equals or exceeds the value of your loan.

This is done by an independent valuer, and has nothing to do with the list price or final sale price. In most cases, if there aren't any major problems and the final offer price was fair - they'll simply say the property was worth the price you are prepared to pay.

 

[IronWing]

All the above is true, however if you work with the lender you might secure a larger loan provided that 1) you are a good risk and 2) you agree to use the additional funds to make improvements on the mortgaged property within an agreed timeframe.

 

[CrimsonChaos]

If your scenario is true, you should have $50,000 of equity in the house as soon as it's bought. A bank may be willing to finance a HELOC if you meet the other qualifications.