For Example, you are buying the home at $138,00. It is appraised at $130,000. Your loan requires that you put 5% down OF THE APPRAISED VALUE. So you need to bring in cash the 5% of $130,000, or $6500 plus the $8,000 for a total of 14, 500. That doesn't talk about other closing costs but that's the minimum that must be brought in.
Hope that helps?
The key phrase is "urban myth" The key word in that phrase is "myth"
If it is appraised at $130,000 that may already be close to the market value. Might be a little low, or a little high,
And gee, no. It can't be both "out of pocket" AND financed.
Lending is usually done, as mentioned by another agent below, by using whatever is lower - the purchase price or appraisal.
This means that your loan should be 95% LTV of $130,000 or $123,500.
Best of luck,
Beachfront Realty, Inc.
FHA will not allow a new appraisal, but other loan programs will require a new appraisal, and will then use the new appraised value to determine the loan amount.
If you do a conventional loan and if the house appraises you will not have that problem, but HUD will not throw in a free termite clearance.
But the extra $8,000 you are willing to put into the transaction goes directly into HUD's pocket, to answer your question. And right now the government can use all the money it can get, LOL.
This must be some special house to be willing to pay $8,000 over market value for it. I would even question the value that HUD assigns as those appraisals tend to be high.
HUD has an FHA appraisal completed on their properties, so they (and the Buyer ) know what the value is for an FHA loan and that the property will qualify for an FHA loan ( that is the insurable, insurable with repair or uninsurable language in the listing) If the Buyer offers over the amount of the appraisal the Buyer has to pay the difference between the appraised amount and the offered amount, plus 3.5% downpayment based on the appraised amount, plus closing costs, PMI and any other fees or expenses.
HUD usually doesn't like to see over appraised value offers, but want to see the best net for the value.
My question to you would be why are you willing to pay almost 6% over appraised value?
So if the home appraised at $130k. The max loan on it for FHA would be $125,450. If you offered $138k. Your loan amount would still be the same but you would just have to bring in an additional $8k.
If you are doing a conventional loan then it would be based off of the new appraisal.
I would talk to your lender and Realtor again to get clarification.
Hope this helps.
Hope this helps.