What to do about a low appraisal?;  St. Louis Mortgage rate update

The sale price for a house is $200,000, but the appraisal comes back at $190,000. Should the borrower still try to purchase this property or just leave it be? This is not unusual circumstance common in today’s real estate market; appraisals are coming in conservatively.

What action should the borrower take when there is a mismatch between the seller’s asking price and the home’s appraised value? Remember, the maximum loan amount is based upon the lower of the sale price or the appraised value, whichever is less.

For the most part, the borrower has to weigh the options and make a decision.

  • Ask your lender, appraiser and real estate agent to review the comparable sales to make sure the most current sales were considered. Comparable sales that were either overlooked or recently closed could impact the appraiser’s opinion of value.
  • Has the seller simply overpriced the home? Asking the owner to reduce his or her price to match the market would be the next move. If the owner balks, you may have to summon up the discipline to walk away. Assuming your contract is typical and your purchase is contingent on financing, you would have the “out” you need to move on.
  • Pay or negotiate the difference. On the other hand, if this is your dream house and you plan to stay there a long time, then making up some or all of the difference out-of-pocket may be worth it to you.

Bottom line: Make sure you have a frank discussion with your lender and review your options before making a decision.

St. Louis MORTGAGE INTEREST RATES for June 27, 2012:

  • Conventional 30-Year Fixed 3.875%/ 4.050% APR
  • Conventional 15-Year Fixed 3.00%/ 3.182% APR
  • Conventional 5/1 ARM 2.750%/ 3.019% APR
  • FHA/VA 30 Year Fixed 3.750%/ 3.991% APR
  • Jumbo 5/1 ARM 2.875%/ 3.66% APR
  • Jumbo 15 yr Fixed 3.375%/ 3.630% APR
  • Jumbo 30 yr Fixed 4.750%/ 5.010% APR

*The above mortgage rates are based upon an 80% LTV, o/o single family with FICO scores of 720.

Paramount Mortgage is a locally owned Mortgage Banker celebrating our 41st year. Great rates and programs are secondary to what is most desired in a lender relationship: Integrity, Communication and Customer Satisfaction. Be to check out our website: www.paramountmortgage.com

For more information or if you have questions on mortgage rates you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.

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