Do mortgage companies only loan what the property is appraised for?

nope... they loan on a discounted percentage of the appraisal....

Do mortgage companies only loan what the property is appraised for?

Mortgage companies will only loan you exactly what you need to purchase a home...

When a house is appraised, it gives you the value of the home, and a mortgage company will not lend you anything higher.

Say your home is $85,000 but it was appraised for $105,000

The mortgage company would still only lend you $85,000

You would have to pay the closing costs and other fees, unless you are able to get the seller to pay these fees which have to be written up in your contract!

If you are needing more money for your home, you have to get another loan through your bank or whereever.

Do mortgage companies only loan what the property is appraised for?

If you are looking at a purchase, you can only borrow for the purchase price of the home. If you already own your home and are looking at doing a second mortgage to take equity out of your home, some company's offer up to 125% of the appraised value of your home. Your rate will be higher 10-13% because this type of loan is a riskier loan for the lender. There will also be closing costs associated with the loan.

Do mortgage companies only loan what the property is appraised for?

No company will loan 125% value anymore. This is part of the problem that lead to the housing crisis, people borrowing more than they could afford and lenders doing it just to increase their profit in the short term.

Lenders all have their preferred appraisers who might get you a favorable appraisal...but the loans are normally below 100% of this value: meaning you need to put a down payment on the property. This ensures you are ready and are putting your own money into the property and thus less likely to default.

Do mortgage companies only loan what the property is appraised for?

Depends. Each morgage company is different and their lending limits are set by the factors that affect their business and thier feel for the market at that time.

If a company has excess funds then they expand thier lending terms to higher Loan to Value rates; if they have limited funds or a higher percentage of bad loans then they tighten their lending stadards and lower the Loan to Value ratings.

There USED to be companies that would loan up to 125% of appraised value but most of them have gone out of business and the morgage companies still operating have greatly tightened their standards so the current Loan to Value rates are about 80% of appraised value OR purchase price; whichever is lower.

So if you find a house appraised at 500K but can purchase it for 400K then most will loan up to 80% of purchase price only. And this depends on your income, credit score, and other factors.

After %26quot;seaoning%26quot; (which means that you own and make payments for 6 months) then they would look at refinancing for 80% of appraised value but I do not know of ANY morgage company in ANY area of the USA still doing 125% of appraised value degardless of purchase price right now.

People need to realize that morgage companies are simply put middlemen and they are in business to make a profit. The way they do this is to create loans and then resell the loans to Goverment agencys like Freedie Mac and Fannie Mae. So they make a % of the note and then take thier funds and create new loans. If the loans they are wwriting do not meet Freddie or Fannie standards then they can't resell the loans and are stuck with them. Any old notes that they have already sold but the loan goes bad; then they have to repurchase these notes and that is why the sub prime leanders went under so quick. They could not sell any loans to create income and were having to buy back lots of older loans that were in default.

There is always and must always be a profit margin for ANY business to operate so if you beleive that you can get a loan for 1% interest when the federal goverment is charging 4% interest then there MUST be a way for that lender to recover that loss AND to create a profit for it to be worth them writing the loan. Did somebody mention a %26quot;free lunch%26quot;??

Do mortgage companies only loan what the property is appraised for?

For the most part yes, but you will find some subprime (and these deals used to be easy to find, and now are very difficult to find) mortgages that would loan up to 125% of the appraised value, but that means that if you can't make the paymets, FORECLOSURE is your ONLY option, b/c you can't sell something with negative equity.