Is it legal for a bank to do a home loan for more than the house is originally appraised at?

Asked by Drgnldy76, Douglas, NE Tue Jun 9, 2009

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Annette Law…, Agent, Palm Harbor, FL
Mon Jul 7, 2014
LEGAL questions must be responded to by an attorney.
So, since I am not an attorney, I will not comment regarding the legalities of what a bank can and can not do. For that you must pay an attorney for guidance.

However, we do know if an enterprise it too big to fail they are too big to govern.

To provide insight regarding common practice requires more information such as the subject property, buyer classification, financial instrument. lender class, lender profile and of course the purchase contract as well as other buyer assets.

Please shed some light on why it is a problem for you when a bank is being generous towards someone who expressed a real motivation to purchase a home and has the wherewithal to meet their obligations?

Best of success,
Annette Lawrence, Broker/Associate
Palm Harbor, FL
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Mark, Home Buyer, Ashland, NE
Mon Jul 7, 2014
My husband and I have bought and sold many properties. We have found the appraised value is less important than what the buyer is worth. The banks first look at your value and then the value of the house. The mortgage is based upon what you can afford and that needs to be within reason of the appraised value. Most of the houses we have bought have a low and high value. Try to stay not more than mid range with your mortgage. We have found a good gauge is to check what the house would rent for with other properties in the area. You should be able to get a minimum of ten percent return per year of your total cost of house. So if your house cost is 240000, then you should be able to rent the place for 24000 per year or 2000.00 per month.
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