My realtor has explained it but I just need this dumbed down. When I offer $5,000 in appraisal gap coverage, what does that mean? Does it automatically mean I’ll pay that, or in what specific situations will I pay it?
Maybe I just don’t get what “appraise” means but the whole idea is kind of confusing.
In: 2
Appraise means for the bank to have an independent person who’s an expert in determining value of real estate tell the bank what the house is worth. If the house will be used as collateral for money they’re lending, they want to make sure it’s worth what you say it is.
Let’s say you are buying a house and the bank requires 10% down. Home was priced at $200k and you bid $210k with 10% down, or $21k. If bank appraiser says it’s worth $210, you’re golden. If they say it’s worth $200k, then you would need to come up with an additional $9k so that bank loan still equals 90% of their value ($180k loan, with you now having to put down $30k instead of $21k).
My realtor has explained it but I just need this dumbed down. When I offer $5,000 in appraisal gap coverage, what does that mean? Does it automatically mean I’ll pay that, or in what specific situations will I pay it?
Maybe I just don’t get what “appraise” means but the whole idea is kind of confusing.
In: 2
Appraise means for the bank to have an independent person who’s an expert in determining value of real estate tell the bank what the house is worth. If the house will be used as collateral for money they’re lending, they want to make sure it’s worth what you say it is.
Let’s say you are buying a house and the bank requires 10% down. Home was priced at $200k and you bid $210k with 10% down, or $21k. If bank appraiser says it’s worth $210, you’re golden. If they say it’s worth $200k, then you would need to come up with an additional $9k so that bank loan still equals 90% of their value ($180k loan, with you now having to put down $30k instead of $21k).
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