Appraisal Waivers & Your Down Payment
Filed under: Real Estate Market
How can you sign an appraisal waiver on an offer and still have the same out-of-pocket costs? Today, I want to talk about appraisal waivers in relation to your down payment.
Are you putting down 10%, 15%, 20% or more on your house purchase? You might be in a situation where you need to waive the appraisal (or partially waive it) – how can you do this and still manage your out-of-pocket costs.
One Potential Solution
Here’s an idea: Let’s say you are putting down 20%, but you know that you will need to do an appraisal waiver and it will cost you $25,000 – $30,000. Instead, you could do a 10% financing. Yes, you would have a bit of mortgage insurance. But you wouldn’t have any additional out of pocket costs and you are still getting the same loan amount essentially. But your appraisal is just a little lower than the purchase price.
In the future, as the home rises in value, you can petition to have the mortgage insurance released from the lender. This process is pretty simple to do. But it accomplishes a few different things.
It gives the seller peace of mind because you are giving them a guarantee of the price, regardless of the appraised value. And you’re not coming out of pocket with any additional funds. It will cost you a little more in the interim and your monthly payment. But rest assured that in the future you can remove that mortgage insurance and move on down the road.
Need Help with Your Mortgage?
I hope you find this information useful! If you or someone you know need help with your mortgage or home purchase, then my team is always here to assist. We specialize in Temecula real estate and want to help you find the right solutions for your needs. Call, text, or email me at (951) 473-0390 or [email protected].