Texas asked:
We are trying to purchase a new construction home for 98,900 with 1000,already paid as ernest money that will go toward our down payment. our loan is for 101,000. with our %5 ( 4000 plus the 1000) and we are alos having the mortage co. pay the closing cost. Now my question is are wqe going to have to pay MORE down? to get this house. It was appraised for 100,000. Now how does this work as far as the closing cost? this is keeping me up tonight,we will find out tomorrow, but I would like to have an idea NOW..Please help !!
Bill
We are trying to purchase a new construction home for 98,900 with 1000,already paid as ernest money that will go toward our down payment. our loan is for 101,000. with our %5 ( 4000 plus the 1000) and we are alos having the mortage co. pay the closing cost. Now my question is are wqe going to have to pay MORE down? to get this house. It was appraised for 100,000. Now how does this work as far as the closing cost? this is keeping me up tonight,we will find out tomorrow, but I would like to have an idea NOW..Please help !!
Bill
Stacey
There is definitely something wrong there; the mortgage company is financing the closing costs into the loan. The value that the mortgage company uses to calculate your LTV (Loan to Value= lower of the purchase price or appraisal divided by the loan amount) is the lower of the purchase price or the appraised value. Since the purchase price is 98,900 then that would be the actual value not the appraisal value. If you are going to put 5k down with no closing costs that means that you should have a loan amount of 93,955.00; not 101k. I am sorry to say my friend but something is not right there; you are getting taken. The math just doesn’t make sense; how can you buy something for 98,900 and put 5k down and have a higher loan amount? That’s just not possible. The monies that you are paying are all going towards fees and not to lower the balance. They are giving you 102% ffinancing; which I am sure if giving you an even worst rate. You need to speak to other lenders; you are getting a bad deal from what it sounds like. If you need more help on this let me know.. email me
Ron
The immediate answer to your question is that they will not loan you 101,000 for a house worth 100,000 unless they do greater than 100% financing which will cost you big bucks in this environment.
That said, there does seem to be a money gap. $98,900 – 5000 down is 93,900 and closing costs should be 3-5 thousand on that size hous, not 7,100 (which when added to 93,900 gets you to 101,000). Get them to shave some of the closing costs and you’ll be good to go!
good luck!