Appraisal Strategies with Todd Barbour
Is a home worth the highest bid or what the appraiser says? The answer can get a little philosophical, but mortgage lender math goes with the lesser of the appraiser’s valuation or the contract price. These days, the appraisal is more often the lower number and we reduce the amount of money we’ll lend accordingly. So how are folks navigating the shortfall since the seller doesn’t lower the sales price? The best strategy mix varies by individual case, but we’re seeing:
Gift funds. Parents and extended family are bridging the gap with gift funds, especially for first time buyers.
401k loans. This use of retirement funds is allowable and doesn’t impact debt-to-income ratios.
Mortgage Insurance (MI). When there’s a large down payment, we can often keep the loan amount where it was (thereby not requiring additional down payment) by adding either monthly or upfront MI.
Dialogue with the lender is key, especially since there’s an “unallowable list”, too. Credit card advances, borrowed funds (another loan), and green cash from under the mattress are great examples of what won’t work.
Armed with a plan upfront and open lender communication, success can be had!
A Note from Shen:
Todd and his team are the lenders I work with most (and any chance I get!). They have helped save my clients multiple times, and are just all around the best! If you're looking to purchase or refinance, they are the ones you want on your team!
Get in touch with Todd at:
- Todd Barbour, Central Bank Mortgage
- [email protected], (919) 931-9584
