< Back to JVM's Blog

Lenders ALWAYS Correlate to Lower of Contract Price or Appraisal

One of our borrowers has been in contract to purchase new construction in Oakland for almost 9 months. His plan was to put down 10%. Now that the property is ready, however, the property could easily be appraised for $100,000 over the contract price.

The buyer and his agent were ecstatic b/c he now has enough equity to avoid MI (score is too low for 80/10/10), right? Wrong.

No matter what we can appraise the property for now, all lenders will correlate to the lower of the appraised value or contract price.

Even if we appraised the property for $900,000, all of the financing will have to be based on the $600,000 contract price. There are no exceptions. Our buyer is still at 90% LTV for at least six months, when we can re-appraise and refinance.

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