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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127587  
Subject: Re: Downpayment question Date: 1/18/2003 9:15 PM
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Hi ACME,

Will the house now appraise at the price $8500 higher than what is in my contract?

Probably ;~)

If it appraises at this higher value, can I count that $8500 as equity towards reaching my 20% downpayment?

ONLY if you're doing the construction financing as well. If the builder's doing the construction financing, and you're just cashing the builder out at your contracted purchase price, you gotsta stick to the contract.

Or should I expect to be required to put 20% of the contract price down on my mortgage and simply have roughly $8500 in extra equity?

Yup.


I only ask because if I can count the $8500 in equity, I can keep about $6800 in extra cash... (For various reasons, I want to put 20% down even though I would easily be able to get an 80-10-10 or something along those lines.)

Woulda been nice, huhm?

Construction-financed folks get the benefits of the generated equity from adding value to the dirt, bricks & sticks (the contractors' sweat.) Contract-completed buyers get the equity (as in your case) down the road, but don't get extended leverage.

All in all... it's STILL a pretty cool win for you! Free value from the day of closing on!

Cheers!
Dave Donhoff
National Mortgage Broker/Banker
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