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Immediate Equity after Appraisal


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I'm 15 days from close on a property I'm buying for 210k. I got the appraisal back and they stated the house was worth 250k. What are the possibilities that can be done with this king of equity? 

Can someone give me an idea of what they might do with this type of equity? Would you do anything at all?  snow ball paying the house off? I know this is a plus but how to take advantage of it other than taking it out is the ideas i'm looking for....

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Assuming even more debt to try and do a cash-out re-fi is rarely a good idea before you even close on the original mortgage.  Using a house as a piggy bank is ALSO rarely a good idea, especially in a market that is precariously perched on the precipice of a crash, or at least a downward correction.  You don't want to revisit 2008 and be upside down hoping the market recovered by the time you go to sell somewhere down the road.  Be happy that the appraisal likely keeps you out of PMI hell.   

 

Presuming you already have emergency savings and retirement accounts fully funded to the extent possible, then throw as much at the house to clear the debt as you can afford.  Same thing as with vehicle loans...the sooner the note is gone, the sooner you have stopped paying interest.  Then all you have to worry about is insurance and taxes...

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6 hours ago, tdslf said:

Keeps me out of PMI hell? what exactly does that mean?

 

If your mortgage is at 80% or less of appraised value, you should not be saddled with the PMI, which is money you will NEVER recover.  On a $210K mortgage, I presume you are putting at least $10K down, which means your appraisal of $250K gives you the 20% cushion needed to avoid PMI...

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On 10/5/2021 at 8:11 AM, centex said:

If your mortgage is at 80% or less of appraised value, you should not be saddled with the PMI, which is money you will NEVER recover.  On a $210K mortgage, I presume you are putting at least $10K down, which means your appraisal of $250K gives you the 20% cushion needed to avoid PMI...

 

IIRC, for LTV calculation they'll use the lower of purchase price or appraised value.

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On 10/4/2021 at 4:42 PM, tdslf said:

I'm 15 days from close on a property I'm buying for 210k. I got the appraisal back and they stated the house was worth 250k. What are the possibilities that can be done with this king of equity? 

Can someone give me an idea of what they might do with this type of equity? Would you do anything at all?  snow ball paying the house off? I know this is a plus but how to take advantage of it other than taking it out is the ideas i'm looking for....

 

The only thing we "do" with the equity in our home is attach a HELOC to it, in case we ever need it.

 

This is among our last lines of defense.  We'd dip into just about everything else first, perhaps with the exception of liquidating our retirement accounts.

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On 10/4/2021 at 4:42 PM, tdslf said:

I'm 15 days from close on a property I'm buying for 210k. I got the appraisal back and they stated the house was worth 250k. What are the possibilities that can be done with this king of equity? 

Can someone give me an idea of what they might do with this type of equity? Would you do anything at all?  snow ball paying the house off? I know this is a plus but how to take advantage of it other than taking it out is the ideas i'm looking for....

 

In my 30 years of home ownership, I've made it a practice to ignore any appreciation in home value during our holding period.  This has served me well in accumulating equity and qualifying for a housing upgrade when we move.

 

I don't think my perspective would change where it comes to "instant" equity of the sort you describe.  At most, I'd take comfort that I'm not overpaying for the home and have some cushion if (when) prices contract.

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