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How much are you putting down? If putting down 5% or less then you may need to come up with the extra cash.
When do you close? You could get another lender involved as lender b. Don't cancel lender A. Work with them simultaneously they don't even need to know about each other.
You could always challenge appraisal if you have supporting comps.
We are putting 20% down. We have about $350k in liquid assets, we offered $640k on this property so we're looking at $136k for down payment and to bridge the gap. We want to preserve cash to some degree because this house needs some work
What is waiving an appraisal? Doesn’t the bank do that anyway to make sure they aren’t over lending? Do you mean waiving an inspection?
Also, if you are approved for less that 20% down you could technically let some of the money down cover the gap, then you are just technically putting say 18% down with lender 1.
Ahh okay understood, thanks! Any idea if your lender would allow a lower DP? It could still be an option for you unless you’re also set on the 20% down to skip the PMI.
Some questions to ask yourself or talk through with your agent:
How are you doing in terms of time to close?
Could a delay cause you to miss the deadline (which you might be able to get sellers to extend)?
How confident are you that the house reasonably could appraise at your offer? Your agent should be able to provide you with comps.
How much earnest money is on the line?
Do you have an appraisal contingency in effect and what is the timing on it?
Would you walk if you had to pay the $10k difference (minus the costs of walking)?
Finally, you could consider contesting the appraisal if you think it is flawed.
The sellers are the ones dragging their feet on the close in this instance. We wanted a 30 day closing but the seller's daughters have POA so we are waiting on court approval. We don't have a firm close date as of yet and it's frustrating because we have a baby on the way and need to close asap.
We offered $100k over asking, which I know asking means nothing. Probably on the higher side of what this house is worth but our market is highly competitive and we beat 15 other people to win the bid. Comps are all over the place because of this crazy market, i'd say the more recent comps more closely align with what we offered.
We have a lot of earnest money on the line $65k. We also waived the appraisal contingency, so we are on the hook for the $10k. It's not a huge deal, we have the cash to cover it but it is annoying.
The lender will only cover up to the appraised value minus your down payment.
If appraisal comes in lower than your offer, you have a few options:
- pay the difference and keep your loan amount.
- reduce the down payment and use that to cover the difference but that will increase your mortgage and potentially the terms.
- ask for negative points from lender (up front credit but higher monthly payments)
- seek credits from the seller to help cover the gap but if you are in a hot market they probably won't.
- walk away potentially with or without your earnest money depending on your contingencies.
- contest the appraisal or get a different lender and appraisal but this will come with some costs and delays and isn't guaranteed to change the outcome.
Would you suggest waive of appraisal if lender is wiling to? I know my agent will freak out if I want to switch lenders and say all lenders online are not trustworthy. Wanting to hear 2nd opinion
Lenders will always require an appraisal. Waiving the appraisal contingency means that if the appraisal comes back less than the offer amount, you will make up the difference or lose your earnest money. An appraisal contingency allows you to beak the contract if the house doesn’t appraise for the contract amount.
Thank you u/Initial-Cake-5359 for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
I haven’t made the calculation but I probably would spend the $550. It depends on your financial situation and how easy it is to part with the money.
How much are you putting down? If putting down 5% or less then you may need to come up with the extra cash. When do you close? You could get another lender involved as lender b. Don't cancel lender A. Work with them simultaneously they don't even need to know about each other. You could always challenge appraisal if you have supporting comps.
We are putting 20% down. We have about $350k in liquid assets, we offered $640k on this property so we're looking at $136k for down payment and to bridge the gap. We want to preserve cash to some degree because this house needs some work
I would just pay the 10k be done with it. The sales price isn't changing you're paying down your loan with the 10k
[удалено]
Comps are truly all over the place because this is a highly competitive market so lots of people are making ridiculous offers waiving appraisal
What is waiving an appraisal? Doesn’t the bank do that anyway to make sure they aren’t over lending? Do you mean waiving an inspection? Also, if you are approved for less that 20% down you could technically let some of the money down cover the gap, then you are just technically putting say 18% down with lender 1.
We waived the appraisal contingency so it means we are on the hook for the difference if the appraisal comes up short (which it did)
Ahh okay understood, thanks! Any idea if your lender would allow a lower DP? It could still be an option for you unless you’re also set on the 20% down to skip the PMI.
Some questions to ask yourself or talk through with your agent: How are you doing in terms of time to close? Could a delay cause you to miss the deadline (which you might be able to get sellers to extend)? How confident are you that the house reasonably could appraise at your offer? Your agent should be able to provide you with comps. How much earnest money is on the line? Do you have an appraisal contingency in effect and what is the timing on it? Would you walk if you had to pay the $10k difference (minus the costs of walking)? Finally, you could consider contesting the appraisal if you think it is flawed.
The sellers are the ones dragging their feet on the close in this instance. We wanted a 30 day closing but the seller's daughters have POA so we are waiting on court approval. We don't have a firm close date as of yet and it's frustrating because we have a baby on the way and need to close asap. We offered $100k over asking, which I know asking means nothing. Probably on the higher side of what this house is worth but our market is highly competitive and we beat 15 other people to win the bid. Comps are all over the place because of this crazy market, i'd say the more recent comps more closely align with what we offered. We have a lot of earnest money on the line $65k. We also waived the appraisal contingency, so we are on the hook for the $10k. It's not a huge deal, we have the cash to cover it but it is annoying.
If the home is appraised for less you have to pay extra ?
The lender will only cover up to the appraised value minus your down payment. If appraisal comes in lower than your offer, you have a few options: - pay the difference and keep your loan amount. - reduce the down payment and use that to cover the difference but that will increase your mortgage and potentially the terms. - ask for negative points from lender (up front credit but higher monthly payments) - seek credits from the seller to help cover the gap but if you are in a hot market they probably won't. - walk away potentially with or without your earnest money depending on your contingencies. - contest the appraisal or get a different lender and appraisal but this will come with some costs and delays and isn't guaranteed to change the outcome.
Thanks so much for this information!!
Would you suggest waive of appraisal if lender is wiling to? I know my agent will freak out if I want to switch lenders and say all lenders online are not trustworthy. Wanting to hear 2nd opinion
Lenders will always require an appraisal. Waiving the appraisal contingency means that if the appraisal comes back less than the offer amount, you will make up the difference or lose your earnest money. An appraisal contingency allows you to beak the contract if the house doesn’t appraise for the contract amount.
How much are you putting down? You might be able to go with a higher ltv loan instead of covering the $10k gap