Switching to FHA or 80/10/10 If Appraisal Comes In Low

We often have buyers make offers with no appraisal contingencies as a necessity in competitive situations. We remind those buyers that they have several options if their appraisal happens to come in low.

1. Simply bring in the shortfall. Buyers can stick with their original financing, but bring in the difference between the appraised value and the contract price. This option of course requires ample cash.

2. Switch to FHA financing. Buyers that were planning on putting 10% or 20% down, can switch to FHA financing with 3.5% down, making it much easier to come up with cash to cover the shortfall.

3. Switch to 80/10/10 (two loan) financing. This is an option for buyers who were planning on putting 15% or 20% down. It works for jumbo buyers as well as long as their price is under $1.1 million.

We have done these financing switches many times over the years in order to save transactions.

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646