$ back at Closing, too good to be true?

Hello everyone,

If i were to find a property selling for 250,000 and the bank appraised it for 270,000…would I be able to get a convential loan on the 270 or 250. I recently heard/read that the bank loans you what they appraise the property for, but it just seems too good to be true. Cause that means, in this example, I would get 20k in my pocket back at closing.

Someone please help. Everyone has been great on this board and a thank everyone for their contributions, they are priceless to me!


A conventional loan would be based on the lower of the appraised value and purchase price, so the $250k in this case.

If you happen to be fixing up the property you can get a hard money loan for 80% future value.

zachj is right.

Conforming lenders will only loan on the lowest figure of the two. The purchase price or the appraised price.

The beauty of this loan scenario is of course the immediate equity that you have in the property.

If your initial loan does not have a prepayment penalty, you could turn around and refinance it in a few months. (there are still lenders who do not have seasoning issues)

You can get cash back at closing if it is for sale by owner.

Hello, I agree with Mdhaas and zachj. Traditional lending is always your first choice. HML your last choice. But, in your case, a HML would be a good start. Then, refi with a traditional lender later.