VA home loan 100% financed paying closing costs.
No VA funding fee (30%) disabled
So I’m in the process of getting the mortgage approved.
Appraisal comes back (mind you its a VA appraisal) and says house is worth $6,000 less than what we’re buying it for.
Now I know the VA can be assholes about this stuff but I know for a fact this house is worth what we’re paying for it if not more. I’m told we need to come up with the 6k or the house goes back on the market.
I asked for an appeal and they denied it. I heard the appraiser was in the house for 5 mins and left. My realtor says with a conventional loan the appraisal should be a lot higher.
My biggest fear is when we sell the property we’re going to lose money because the same thing is going to happen to the next buyer. Anyone have any insight on this type of issue?
Sounds like this is a way for the bank to get a down payment out of you reducing their risk on the deal. I bet if you put down 10% on the house it would of magically appraised for what you bought it for.
The seller of the house probably does not want to find another buyer. I would suggest asking them to pay it since after all you lender does not believe it is worth it and then offer to pay 50% (3k) if they say no and see if that wors. My guess is at 100% financing through the VA you will have the same issue with any house so see what you can do to make this one work. My VA loan was a PITA as well.
Good luck and I hope it works out for you.
Thanks for serving
My appraisal was conventional and the value came in at less than 5% of what we contracted for. Thought that was odd. Also called my loft bedroom, bath, and office area a “finished attic” and my first floor a “finished basement” even though it’s above grade. We feel he seriously undervalued the home and property and the comparables listed were a joke. If you’re just starting this, be ready for more frustration and aggravation with what’s to come.
without seeing the appraisal there is no way to know if the results are credible…but simply being under the contract price by $6k is hardly evidence that it is a bad appraisal. price and value are not the same thing. also the type of financing product has zero impact on the value. the definition of value used by the VA is basically the same as used through the conventional financing world…your realtor is just fluffing you up
i agree, i think your overvaluing the house based on the realtors information
fyi i was thinking about selling my house, my old realtor "appraised it at $125-130,000. decided to get a professional appraiser to see if it was worth our time to sell it (didnt want to be upside down) appraisal came in at $110,000
your $6k is only to make up the difference between the appraised value and the selling price…the seller will get that $6k not the bank. at most it would represent some amount of equity which would marginally reduce the risk for the bank as now the property wouldn’t be 100% leveraged…or in this case 103.5% since you are financing the closing costs as well.
the $6k means very little in any case. the VA loan guarantees 25% of the loan value for the bank holding the loan. so if the borrower defaults the VA cuts the bank a check for 25% of the value of the loan…so on a 100% loan the debt to value is 75/25 on day 1 as far as the bank is concerned because they have a government guarantee on the other 25%…that is a better deal for the bank than a 20% down payment because they also get to charge interest on that 25% over the life of the loan.
if you feel confident that the original appraisal is not up to snuff, i’m pretty sure you can pay to have a second appraisal completed to challenge the results of the first. of course you always run the risk that the second appraisal will be even lower than the first…which can only hurt your cause.
i’d recommend going to the seller and saying that as per your sales agreement which was almost certainly contingent upon getting financing with whatever terms, that you are not able to get those terms and you have an appraisal saying the property is worth $xxx,xxx which you would be more than happy to buy the house for if they would be willing to renegotiate.
Thanks guys appreciate the feedback. Forgot to mention I’m paying all closing costs just financing the house at 100%, also getting a 5k grant for closing costs from penfed for being a vet; not a bad deal. I actually renegotiated with the sellers to reduce the price of the house by another $2k a few days ago but agreed to it yesterday. I couldn’t get more out of them seeing they already came down another $2k before the appraisal because of an issue with the roof. I was hoping to have some extra cash to spend on some goodies for the house but the main thing is we’re getting the house.
sorry i misread your original post…thought you were saying you had wrapped the closing costs into the loan.
not to get too far into price…but what kind of percentage of the selling price does the $6k represent? if it is something less than 5% that is probably within the range of values represented by the appraisal…unless the appraiser is already pushing the value toward to the top of the range of comparables. if it is pretty close, it might be worth the few hundred bucks for a new appraisal to save the 6 grand if you need cash up front to do some things.
I forgot to mention about the closing costs in the original post. 2.7% now with only owing 4k after renegotiating with the sellers. Well I was even thinking about changing lenders but the fact will still remain the VA has to do the appraisal so more than likely the value will stay the same no matter who i use. They had trouble finding comparable properties because the majority of the houses they tried to use were right on the water and pull a premium; ours is across the street from the water. My wife and I will just pay the 4k, just wondered if we’re paying too much for the house.
even if you changed lenders i believe the VA case number will stick with the property so the original appraisal will as well.
paying the money up front will certainly be the path of least resistance and getting a second appraisal to challenge the first will definitely extend your closing date by a few weeks or more.
