How Do Banks View This?
I am curious to know if banks view buying a property for say $20,000 under the appraised value the same as putting down $20,000 on the property..
For instance if I bought a house that was valued at $100,000 and I got it for $80,000 would the difference be equivelant to putting 20% down.
I guess what I am getting at, if I had a deal as described above would most banks allow me to borrow enough to cover the 80K with nothing out of my pocket. Sorry for rambling..
NO
You "may" find a local bank that works with investors that will loan on appraised value but almost all will base their loans on purchase price. A good way to get into a deal like this is on a Contract for Deed. I have bought 5 this way and depending on where the appraisal came in got in for 0 or very little cash.
Is a 'contract for deed' like putting the house up as collateral?
thanks
Nick
the short answer is no. The longer answer is yes. Once you take possession the equity is yours for the taking, if you find the right lender. You'll have to refinance or take out an equity loan to get your equity out.FNMA and fhlmc allow you to use the new appraised value immediately, where other lenders may have you wait 6 months to a year.
"most' lenders want to see you put money into the deal so that you have something loose and are not a likely to leave them "holding the bag" sort of speaking....kenmax