higher-than-expected appraisal

[Anonymous]

Hi, if the purchase price for a home is $365k, and the loan will be for $347k, and the appraisal comes back around $390, does that high than expecte appraisal play into the pricing or approval of the loan at all?

[ShanetheMortgageMan]

Because the appraised value came in higher, no, but feel confident that you are getting a good deal on your home ($25k under the value an appraiser gave, and appraisers are being conservative these days).  If the value came in lower, the lender uses the lower of the sales price or appraised value as the home's value - and in that situation you need to come up with the difference between the sales price & appaised value, plus put the required down payment amount on that lower appraised value figure.

[Anonymous]

Thanks! Because of the difference in appraisal and loan amount, would it be advantageous to finance some or all of the closing costs?

[ShanetheMortgageMan]

Welcome.  They don't let you finance closing costs unless it was a USDA loan, with a USDA loan you can use the difference between the sales price & appraised value (assuming the appraised value is higher than the sales price) to finance closing costs, but not with FHA, VA or conventional.

[Anonymous]

ok, thanks. Someone told me you can have the agreed upon purchase price adjusted upwards some, and then have the seller contribute up to 3% to the closing costs, that way the seller isn't truly out of any money? This sound accurate?

[ShanetheMortgageMan]

If you negotiated all of that when you were originally in negotiations, then yes that is possible.  But not after a purchase contract has been made, reviewed by the underwriter, the appraisal comes in higher, and you change the terms of the contract to take advantage of the appraisal.

[Anonymous]

wonderful, thanks!