Appraised Value Higher than Contract Price? Irrelevant

We are financing a condo purchase in Newport Beach and the appraisal came in $13,000 over the contract price. This was a big surprise, given the strength of the current market.

The buyer, of course, wanted to know if he could use the higher appraised value to push his loan-to-value ratio down to 75% and therefore get a better rate. The answer, unfortunately, is “no.”

This is just a reminder that, for loan-to-value purposes, lenders always correlate to the lower of the appraised value or contract price. An appraisal that comes in over the contract price does not affect financing options at all.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646