Posted by BlueAngel on September 07, 2003 at 15:11:03:
Thanks James! Also I often hear investors refinance to cash out as tax-free money for next investment, so when I take out a 80% loan for example, the 80% is based on the FMV of house, not my purchase price, right?
I always thought it’s based on the FMV, until I saw this one from Q&A of a lender’s site.
Q: If my property’s appraised value is more than the purchase price can I use the difference towards my down payment?
A: Unfortunately, if you are purchasing a home, we’ll have to use the lower of the appraised value or the sales price to determine your down payment requirement. It’s still a great benefit for your financial situation if you are able to purchase a home for less than the appraised value, but our investors don’t allow us to use this “instant equity” when making our loan decision.
Now I’m rather confused.