In New Jersey, each town uses different percentage of the market value as an assessed value. For example, West Windsor used 97% of the market value, whereas, Lawrence township uses only 52%.
A bank will have the property appraised and will (most likely) not issue a loan greater than the appraised value of the property, which may or may not be the same as assessed value or the sale price. Thanks.
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I noticed that you were really talking about assessed value and not appraised value which by now I'm sure you know can be a huge difference.
Assessed values are calculated using tax rates set by the municipalities and don't reflect actual value, just a range based on the averages using a rate. This topic can make your head spin trying to figure it out but is an important one if you ever wish to have your taxes reassessed to lower them.
If you want a little extra for what ever reason you can ask for cash out and that would be best.
The appraiser with whom your going to be financing the home with will send out a appraiser. Once they determine a value that is what the bank is willing to lend you for the home. Hopefully that answers your question.
Thanks Nick Christopher
I see that you clarified your question. The answer is ABSOLUTELY! Often, the assessed value is much less than the market value of the home. After you place an offer and it's accepted, the bank whom you're getting your loan through will send out an appraiser. That appraiser will review neighborhood comparables and other factors and come up with their opinion of value (the appraisal). That's what they'll lend you -and it is often much more than the township's assessed value.
I have a feeling that you are looking at the field in the listing for the "assessed value". That is the township's assessment of the value of the home at a certain point in time. In NJ that assessment date can be as far back as 10 years so it often is not accurate.
Now to answer your question in general: NO, a bank will not usually lend more than the appraised value of the home. It's just not good business to do so. You could pay the difference of the contract price and appraised price - but that's just not smart (unless the difference is miniscule, I'd never recommend that a client of mine do that -especially in this market).
That said, there is something called an FHA 203-k rehab loan which will give you additional money to fix up a property, but I believe the limit is 35k over the contract price. The property has to be able to appraise at total of the contract price + cost of repairs when all work is done. So, in a simplified example: If you're offering 50k on the a home and it needs 30k in repairs, as long as the value of the home will be equal to or greater than 80k when all repairs are done, it will be eligible for the FHA 203k. Of course there are other limits and guidelines to this program. If you need information on good mortgage loan officers, I can provide you with a few referrals. Give me a call or shoot me an email.
Realty Executives Brown & Pope