My question is whether the LTV is based on the appraisal amount or the purchase amount. So in other words, me and my fiance are going to put no down payment, will our LTV be considered 100% no matter what the appraisal comes out to be. I checked the auditor's website for the property and its market price that it appraised for LAST YEAR was almost 20k more than they are asking for.
2006-10-22 15:24:05 · 7 answers · asked by yesterdaysnewstoday 1 in Business & Finance ➔ Renting & Real Estate
Correct, it does not matter what the appraisal comes in at. Your lender is basing your risk on what percent you are putting into the transaction. Your LTV is based on the purchase price.
2006-10-24 15:51:30 · answer #1 · answered by Anonymous · 0⤊ 0⤋
From the lender's perspective, the LTV is based on the lower of the sales price or the appraised value. If the house appraises for more than the sales price, you did well, but the lender still considers that you are borrowing 100% LTV. Your PMI will be high. If it appraises for less than the sales price, the lender will only be willing to lend the appraised amount and you may have to put a down payment into the deal - unless it's an absolute gotta have it kind of property, most people won't pay more for a house than the appraised amount. Note also that the county appraisal (or audit) is NOT the fair market value.
2006-10-22 15:53:31 · answer #2 · answered by teran_realtor 7 · 2⤊ 0⤋
The LTV is based on the appraised value of the property. An appraisal made last year would be invalid; it is out of date. The lender would want an appraisal current within 30 days of loan closing. If the property now appraises out less than your purchase price and you are going for 100% financing, you may have to (1) negotiate with the seller to lower the price to the appraised value, or (2) make up the difference in cash. The bank will not lend you more than the 100%.
Your purchase contract should have a clause that states it is subject to an appraisal of at least X, otherwise you might find yourself having to put up a substantial down payment anyway if the property appraises considerable lower than the contract price. A mortgage contingency clause would also protect you.
2006-10-22 15:29:50 · answer #3 · answered by Kokopelli 7 · 0⤊ 2⤋
It's based on the lower of the appraised value or the purchase price.
2006-10-22 16:08:04 · answer #4 · answered by Bostonian In MO 7 · 1⤊ 0⤋
LTV equals the appraisal amount or the purchase price....whichever is lower.
2006-10-22 16:11:17 · answer #5 · answered by mikeyc06010 2 · 1⤊ 0⤋
Loan to value is the amount borrowed based on the appraised value of the home.
2006-10-22 15:28:14 · answer #6 · answered by D. Young 2 · 0⤊ 2⤋
which ever is lower, even if you bought a million dollar home for 100K, you could only get financing for the 100k
2006-10-22 22:05:10 · answer #7 · answered by cjkloanguy@yahoo.com 2 · 1⤊ 0⤋