Sleepless in 916

[Anonymous]

We got prequaled on 2/10, found our house 2/15, put in our offer 2/17 which was accepted and went pending as of 2/18. Since this date we’ve submitted seems like every important document (bank statements, pay stubs. W-2’s, VA Eligibility, etc.) in our safe/files to our LO. Home inspection done 2/24. On 3/7 LO informed us that we have “FORMAL” loan approval. Sounded great to my wife and I, but appraisal was just done 3/8 and probably will not have findings for a few more days. After reading some of the forums on the Internet, Is our relief in hearing “formal approval” premature? My LO says , “he doesn’t forsee any issues, just waiting on appraisal to come back before we can order docs.” He and my realtor seem confident we will close by 3/18, but my wife and I are not as easy to say the least. Our luck hasn’t been on our side when it comes to Home buying or anything else for that matter! So we’re hoping for the best but, expecting the worst. Formal approval before appraisal results....what’ your take on this? Is this common/uncommon?

[CreditInspired]

Hi and welcome to MyFICO

It’s common. The home has to appraise at or above the contracted sales price.

If it appraises higher, WooHoo for you—you have instant equity. If it appraises lower, 3 scenarios come into play: the Seller is asked to reduce the price to the appraised value, the buyer is asked to pay the difference (bring more money to the table), or both buyer and seller can negotiate the difference.

Unfortunately, if it appraises lower and Seller won’t lower price or buyer won’t/can’t pay higher, the sale will fall through. But the market is strong and if the comps were good, you have nothing to worry about.

If the appraisal is the only thing the LO is waiting for, the outcome looks positive.

[Anonymous]

Thank you for your reply CreditInspired! Much appreciated. That’s good to hear from someone with your experience. It calms our nerves a bit, but I think we’ll feel on edge like this until the day we’ve signed and have keys in hand. God willing, in this case lender/underwriter willing, that’ll be sometime within the next 10 days.

[crnbread73]

Just did this myself.  Just closed on 3/8.  Same thing.  We had to what they called "Clear to Close" just waiting on appraisal.  Appraisal came back good and docs were prepared.  The only thing that would stop it at this point is if something popped up on your credit or the appraisal came in under.  Good luck!