Home equity?
Your correct, your brother is wrong.
Hard to explain based on your question,but, if you put say 10% down towards the homes purchase, your applying 10% to the Principal or Equity. You then have 10% equity in the home.
I don't know where your brother figures that you cash out the equity at closing / purchasing the home.
You find more explainations on http://equity-line-s.blogspot.com/
haha, no.
Equity is the amount of value there is beyond what you owe. If you get a killer deal it might be worth more than you pay, but you cant caash that out at closing- you'd have to get an equity loan (aka pay that back). Aside from that, banks prefer you to have at least 20% equity-- so a 5% buffer isn't enough to draw from without paying high rates.
What your brother mean is ,that the house you are thinking to buy cost less, then appraised value. This is a equity you are buying, but in today's mortgage situation it is very hard ,rather impossible to get cash back on the closing, because lenders not allowing this kind of transactions. The only way to get the money on the closing is to agree to buy this house for higher price and get the difference from the seller after the closing, because he will get the check.
A home is only worth what the appraisal says it is.....It may be worth say $200K, but with the bad market it can only sell for.....$160K......that does NOT mean you have $40K in equity....
Equity is the result from owing less than the house appraises at. Remember, it can appraise high....but if there are no buyers...no equity. Your brother is dreaming.
A home is only worth what someone will pay for it. Unless you are buying from a family member and getting a gift of equity then the sale price or appraised value whichever is less will be the value used to calculate it. But either way you will not get money back at closing.
It's great that you will have instant equity but you CANNOT get cash back at closing. This is because the lender will use the LOWER of the sales price or appraised value to determine your loan to value.
Sorry to disappoint you, but again, you cannot get cash back at closing.
CW
having equity means that it is worth more than you paid for it and you can sell it immediately and make money (equity). unless you are talking about an auction or other unusual situation, the market sets the price of a home. so when you buy it at a market price, there is no equity in it or it would have sold for less. be careful. prices are still falling.
If the house appraises for more than purchase price, yes, technically you should be able to borrow 90% of the equity - a lot of lenders have cracked down on this due to so many folks getting 100% loans and then cashing out the equity and walking away, so I would check with your lender-
Unfortunately, NO. Not at least in the sense that I think you mean.
There are ways to get cash back at closing but it's more complicated and it involves multiple buyers and some creative investor techniques (that are legal if done properly)
But, in the context of buying a house that someone thinks is worth $X and you're going to pick it up at $Y and you would get the spread(the difference) of $D, then NO. If the home truly had built in equity then you would have to refinance the home and find a lender that had no seasoning requirements for a cash out transaction.
Please note, a house is only worth what a market will bear. The house is not worth what you think it is worth or even what an appraiser thinks it is worth. These are BOTH opinions.
Yes, the appraiser's opinion matters 10 fold over what you think because that opionion is what a lender is willing to accept in terms of financing.
However, If you have an appraisal for $X and put it on the market it may not sell for that. It could sell for more or less depending on market conditions.
What ever someone is willing to pay for your home, that's the true market value at that moment in time.
SIDE NOTE: A good way to find out what it is truly worth is to run a non-obligatory auction. The price will get bid up to watch the market will bear. Then if you comfortable with it, then accept the offer, if not pull it off the market.
There would have to be extenuating circumstances for a property to be sold with equity still left in it (as quantified by a recent appraisal).
For instance, if you bought a home directly from the previous owner in foreclosure and they had half the mortgage paid off, but they lost their jobs, ruined their credit, and thus can't refi, so they have no choice to sell. If you were lucky enought to get to them and say offer to split the remaining equity (buy their house for what is owed and only pay them for half of the remaining equity, then you could have, a 25% equity position.) Yes people do this. Again, another conversation.
Anyways, depending on if this purchase would be for an investment or for you personal residence then there are other things to consider, I would find your local real estate investors club and ask them.
Good Luck
0 ความคิดเห็น:
แสดงความคิดเห็น