Higher Appraisal - LTV Question

4 Replies

So I was wondering... a few weeks ago I received the appraisal back for a Kansas City turnkey property I'm currently buying. I purchased it for 118K with 20% down and the appraisal came back at 127K - yay!! So in the eyes of the lenders does that bring down my LTV since theoretically it's now valued higher than what I'm originally buying if for? Or is LTV always tied to the purchase price? I wondered this because if I were to be doing a refinance, wouldn't the bank be using the value from the appraisal?

It depends on whether they're willing to lend to you at appraised value or the cost you have into the property. Most banks require a "seasoning" period before they'd be willing to lend at appraised value. You should ask your bank what they're willing to do. 

@Andrew Syrios Hmmm.. so you're saying some lenders may actually consider lending more if the appraised value was higher than the purchase price? What would be the benefit of that? Only thing I can think of is possibly use some of that extra money to cover closing costs or perhaps use it to improve the property? In any case I will ask my lender but probably too late now since I'm closing this Friday. Thanks for the nugget. Definitely good to know for when I purchase my next property.

Off topic: I see you comment often on the threads and so I recognize your name. Today, during my drive to and back from work, I happened to be on the 121st and 122nd episode of the BP podcast. So I caught your guest appearance on ep 121 with you and your brother. It was a great episode - informative and really funny! :)