Question:
“I want to buy a home in the $400,000 range, but I know there’s heavy competition and multiple offers on many homes. I think I read in one of your newsletters that you suggest one way to make your offer more attractive is to waive the appraisal contingency. Will a lender let you do that? I don’t really care what an appraiser says anyway because that’s just one guy’s opinion. I think you said that too.”
Answer:
Yes, your lender will let you pay over the appraised value. Here’s how that would work…
Let’s say you agree to buy a home for $420,000 with a 90% loan and 10% payment. If it were to appraise at $400,000, the bank will only lend 90% of that $400,000, or $360,000.
That means you’ll need to put down 10% of the $400,000 ($40,000), plus 100% of the $20,000 over the appraisal.
$40,000 + $20,000 = $60,000 (you probably figured that out already!)
Before agreeing to waive the appraisal contingency, be sure you have sufficient funds in the bank to cover the anticipated difference.
If your money is a bit tight or you want to play it safe, you could be specific and say something like, “Contingent on home appraising for a minimum of $400,000.”
Good luck!
