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~Colleen~
my loves...
Member since 5/05 9129 total posts
Name:
guess
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Mortgaging for More than you Need
Let's say you're approved for $450k but you're buying the house for $425k...can you take out a mortgage for $450k (b/c you want to do renovations or whatnot right away)?
Message edited 2/9/2006 1:00:08 PM.
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Posted 2/9/06 10:15 AM  |
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wilandnet
LIF Infant
Member since 9/05 224 total posts
Name:
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Re: Motrgaging for More than you Need
I am not sure of the details of this, but I am pretty sure it can be done. I know someone who did this, and recall them telling me that the house had to appraise at the amount you were looking for. So in your example, the house you are buying for $425k would need to appraise at $450k or higher for you to be able to get $450k.
Again, I am not sure exactly on the details of how this works, hopefully someone else on this board can provide further clarification.
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| Posted 2/9/06 10:59 AM |
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BrunetteMom
LIF Adult
Member since 8/05 1480 total posts
Name:
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Re: Motrgaging for More than you Need
You can do a sellers concession. That's how you would do it.
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| Posted 2/9/06 11:09 AM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: Motrgaging for More than you Need
Posted by Colleen9304
Let's say you're approved for $450k but you're buying the house for $425k...can you take out a mortgage for $450k (b/c you want to do renovations or whatnot right away)?
The house will most likely not appraise for that high so the bank will say no.
Even if they say yes... they will rape you on a 100% LTV interest rate.
Why would you want to do this anyways? Do you have any idea how much extra interest you will pay over the life of the loan? You are talking tens of THOUSANDS extra!
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| Posted 2/9/06 11:14 AM |
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~Colleen~
my loves...
Member since 5/05 9129 total posts
Name:
guess
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Re: Motrgaging for More than you Need
Posted by DjPiLL
Posted by Colleen9304
Let's say you're approved for $450k but you're buying the house for $425k...can you take out a mortgage for $450k (b/c you want to do renovations or whatnot right away)?
The house will most likely not appraise for that high so the bank will say no.
Even if they say yes... they will rape you on a 100% LTV interest rate.
Why would you want to do this anyways? Do you have any idea how much extra interest you will pay over the life of the loan? You are talking tens of THOUSANDS extra!
*I* don't want to do this  - someone mentioned this could be done but I wasn't sure he was right.
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| Posted 2/9/06 11:23 AM |
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BrunetteMom
LIF Adult
Member since 8/05 1480 total posts
Name:
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Re: Motrgaging for More than you Need
Posted by DjPiLL
Posted by Colleen9304
Let's say you're approved for $450k but you're buying the house for $425k...can you take out a mortgage for $450k (b/c you want to do renovations or whatnot right away)?
The house will most likely not appraise for that high so the bank will say no.
You know the house that she is looking to buy?
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| Posted 2/9/06 11:24 AM |
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schnapy
LIF Adolescent
Member since 9/05 766 total posts
Name:
Diana
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Re: Motrgaging for More than you Need
People take out Helocs
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| Posted 2/9/06 11:24 AM |
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~Colleen~
my loves...
Member since 5/05 9129 total posts
Name:
guess
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Re: Motrgaging for More than you Need
ETA: Thanks for everyone's responses! =)
It was a "what if" scenario based on a house that is going to auction and is starting WAY below market value so in all likelyhood, yes, it would appraise for more than it will be bought for.
Message edited 2/9/2006 11:27:44 AM.
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| Posted 2/9/06 11:27 AM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: Motrgaging for More than you Need
Posted by BrunetteMom
Posted by DjPiLL
Posted by Colleen9304
Let's say you're approved for $450k but you're buying the house for $425k...can you take out a mortgage for $450k (b/c you want to do renovations or whatnot right away)?
The house will most likely not appraise for that high so the bank will say no.
You know the house that she is looking to buy?
Due to the recent surge of home prices... the appraisal companies are having a hard enough time getting the houses to appraise at the current sales price. Ask Lisa on this board who is an appraiser and she will say the same thing.
If there are similar styled homes in the area that had recent sales comps of 425k or below... this house will NOT appraise for 450k.
Of course... there are houses out there that appraise for more than the sales price. It happens.
But 25k over the sales price? Thats asking for a lot of extra room IMO.
Plus like I said... doing this puts you at a 100% LTV mortgage which will guarantee you getting the HIGHEST interest rate that bank currently offers.
Why would somebody want to waste this kind of cash?
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| Posted 2/9/06 12:05 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: Motrgaging for More than you Need
Posted by Colleen9304
It was a "what if" scenario based on a house that is going to auction and is starting WAY below market value so in all likelyhood, yes, it would appraise for more than it will be bought for.
If you are getting it for well below market value... then its possible to do a sellers consession.
But if its going to auction... who is acting as the seller? If its a bank or if its related to some sort of foreclosure... you probably won't be able to get a sellers consession.
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| Posted 2/9/06 12:08 PM |
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~Colleen~
my loves...
Member since 5/05 9129 total posts
Name:
guess
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Re: Motrgaging for More than you Need
Posted by DjPiLL
Posted by Colleen9304
It was a "what if" scenario based on a house that is going to auction and is starting WAY below market value so in all likelyhood, yes, it would appraise for more than it will be bought for.
If you are getting it for well below market value... then its possible to do a sellers consession.
But if its going to auction... who is acting as the seller? If its a bank or if its related to some sort of foreclosure... you probably won't be able to get a sellers consession.
It's an auction house - acting on behalf of the seller.
We're not doing anything - it was just an interesting scenario that someone posed and I was curious if it was true or not.
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| Posted 2/9/06 12:16 PM |
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CathyB
Member since 5/05 19403 total posts
Name:
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Re: Motrgaging for More than you Need
We took our mortgage out for $20k over what we needed to pay the sellers. We used that for all the closing costs, moving costs, etc. Our house appraised for more than what we were buying it for, we put 20% down.
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| Posted 2/9/06 12:22 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: Motrgaging for More than you Need
Posted by sarahsmommy
We took our mortgage out for $20k over what we needed to pay the sellers. We used that for all the closing costs, moving costs, etc. Our house appraised for more than what we were buying it for, we put 20% down.
Whats the point of doing this if you already had cash in the bank to put down? 
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| Posted 2/9/06 12:45 PM |
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KAAM
LIF Adult
Member since 5/05 1247 total posts
Name:
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Re: Mortgaging for More than you Need
Posted by DjPiLL
Posted by sarahsmommy
We took our mortgage out for $20k over what we needed to pay the sellers. We used that for all the closing costs, moving costs, etc. Our house appraised for more than what we were buying it for, we put 20% down.
Whats the point of doing this if you already had cash in the bank to put down?
If you have $$ to put down, but what you are buying needs work, how do you get the $$ to do the renovations necessary??
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| Posted 2/9/06 2:29 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: Mortgaging for More than you Need
Posted by Amy
If you have $$ to put down, but what you are buying needs work, how do you get the $$ to do the renovations necessary??
Home Equity line of Credit
0% CC offer
Buy a cheaper house. 
I can understand the need to do improvements. But if you are putting down 20%... but you need to do a sellers concession... thats like saying you have home improvements for over 25% of the purchase price. Thats a lot of cash.
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| Posted 2/9/06 3:20 PM |
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CathyB
Member since 5/05 19403 total posts
Name:
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Re: Mortgaging for More than you Need
Posted by DjPiLL
Posted by sarahsmommy
We took our mortgage out for $20k over what we needed to pay the sellers. We used that for all the closing costs, moving costs, etc. Our house appraised for more than what we were buying it for, we put 20% down.
Whats the point of doing this if you already had cash in the bank to put down?
My husband is in finance and graduated from Wharton, so when he ran the numbers and it worked out in our advantage I trusted him. Every situation is different, and you have to do what works for you. When we were buying 2 years ago, putting 20% down made a huge difference in our interest rate, and made it worth taking out a slightly larger loan.
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| Posted 2/9/06 4:29 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: Mortgaging for More than you Need
Posted by sarahsmommy
putting 20% down made a huge difference in our interest rate
Ok thats what i was figuring because why go through the trouble of the sellers concession... just put less down.
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| Posted 2/10/06 2:08 PM |
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CathyB
Member since 5/05 19403 total posts
Name:
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Re: Mortgaging for More than you Need
Posted by DjPiLL
Posted by sarahsmommy
putting 20% down made a huge difference in our interest rate
Ok thats what i was figuring because why go through the trouble of the sellers concession... just put less down.
We didn't have a seller's consession. Just put 20% down and took out slightly larger mortgage than needed.
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| Posted 2/10/06 4:21 PM |
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