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
The bank will only loan you money up to the appraised value of the house. If the appraisal comes in lower than the amount you offered, then you can’t finance the whole offer amount through the mortgage, but you can offer to oay some or all of the gap in cash out of pocket. So, if you put in a $400k offer for example with a $5k appraisal gap and the bank appraises the porperty at $380k, then your offer would basically be valued at $385k, since you’ll finance $380k, and pay $5k above the appraised amount. If the appraisal comes in on the dot at $400k then you would just finance the entire offer amount and won’t need to pay the additional $5k.
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
The bank will only loan you money up to the appraised value of the house. If the appraisal comes in lower than the amount you offered, then you can’t finance the whole offer amount through the mortgage, but you can offer to oay some or all of the gap in cash out of pocket. So, if you put in a $400k offer for example with a $5k appraisal gap and the bank appraises the porperty at $380k, then your offer would basically be valued at $385k, since you’ll finance $380k, and pay $5k above the appraised amount. If the appraisal comes in on the dot at $400k then you would just finance the entire offer amount and won’t need to pay the additional $5k.
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