Mortgage loan approval?
When applying for a mortgage loan, and you are approved for 150k and the house you want to purchase is 130k, can they still loan you the balance of 20k (for like painting or furnishing the house) or will the only give you the amount of the house? And if you, do they issue you a check for the difference?
Does it make a difference if its a pre-approval loan?
- hamsterbabiesLv 51 decade agoFavorite Answer
It doesn't matter how much was approved. The home needs to be appraised to see how much the home is actually worth. Because if the home is worth $135k - there is NO way a bank will give you up to $150k. It would not make good business sense - because your collateral would be worth less than the money given to you.
You will get the amount required to purchase the property. If there is a difference in equity, talk to the loan officer about a second mortgage.
- 65% waterLv 61 decade ago
You may be approved for 150 K, but that doesn't mean they will give you that much for any house at all. That means that if the house you want is appraised at say 180K the bank will give you the 150K and you give a downpayment of 30K. The bank is never going to loan more than a certain percentage of the value of the house. The bank isn't loaning you money to furnish or paint.
- 1 decade ago
The loan approval is based on 2 factors 1) The value of the property and 2) your FICO score.
Any of the 2 is greater you get loan based on it. So if you are approved for 150k loan then they have done their homework. Your taxes and loan approval is not based on your purchase price or market price but based on the goverments own valuation technique. And yes your mortgage loan can also cover your expenses to repair and renovation.
- Anonymous4 years ago
no just do not place it in as income but know this that you will need to write a letter of explanation as to why your taxes differ from what you say you are making if self employed part time for over 2 years. Or claim the income but make sure the loan officer only figures the home based on salary and not total income I am a mortgage banker in TN & KY
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- 1 decade ago
All of those other answers are fairly valid. When I was buying I was approved for 60K more than I bought. Please make sure you budget first so that you do not over extend yourself. And keep in mind due to increasing taxes and insurance (if escrowed), your mortgage payment on a fixed rate can and will increase. It is not necessarily as drastic as the adjustable rate mortgages. But that is something to keep in mind. Also, do not over extend yourself in case your car or something gets totaled and you find yourself buying another vehicle with a higher payment than the first. Good luck.
- Ed AtunLv 71 decade ago
The bank will loan you 97% of the purchase price that you and the owner agree to pay for the house. Otherwise everyone would buy a house that was $100,000 cheaper than they qualify for and walk away with $100,000 cash.
- chatsplasLv 71 decade ago
Generally they will only loan you a % of the purchase price of the home, not of the home's value, and particularly in this market with home prices declining. You might be eligible for a home equity loan after closing.
However, DON'T overextend yourself. Most common mistake of first time buyers and that's a major reason so many are losing their homes in foreclosure. Deal with this debt before incurring MORE.Source(s): real estate attorney
- Anonymous1 decade ago
No!!! The lender will not lend more than the sale price of the house. Getting approved for a certain amount doesn't mean a blank check.
- 1 decade ago
NO. And most likely they will also require you to put a down payment of 10% or more down on the $130000 loan. Most banks I looked into for my loan i just got required this.
- ClarkWorldLv 41 decade ago
Nope, you would have to apply for a separate construction loan. I am sure there might be more ways to do this, I asked my mortgage broker and that was what he told me.