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FHA and Appraisals

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If I negotiate a $200,000 purchase price, with 6% seller's concession, and 3.5% downpayment, will the home need to appraise for $205,000? Trying to figure out if I'm doing the math correctly. Thanks.

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July 10 - East English Village

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Roxy Redenbaugh, "LoanLady Nationwide"
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Roxy Redenbaugh, "LoanLady Nationwide"

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If I understand your question correctly the math would be as follows;200,000 purchase price - 3.5% downpymt = 7000.00 = 193,000 loan amount. Your appraisal will most likely come in at the 200KYour seller contribution or concessions are taken off the sellers Gross so this will not play into your side of the escrow. Instead of receiving 200K in gross proceeds the seller would receive 200K - 6%/12,000. = 198K
I am guessing this concession is for the seller to pay your closing costs. Normally this is called a seller contribution. I hope I've anwsered your question. If not call your Loan Officer or broker and get clarification.

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July 10

Bobbi MacPherson, "bmacpql"
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Bobbi MacPherson, "bmacpql"

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You need the appraisal to come in at the purchase price. The seller concessions come off their side of the transaction.

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July 13

yfalade
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yfalade

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Let's do this simplification of the solution.
1. Take the 6% seller concession off the selling price of $200,000.00, that is $12,000.00 from $200k or $188k.
2. Subtract from $188k your downpayment of $7k, that leaves $181K. To this you add your closing cost if you are not paying it cash,
3. Let's say closing cost is $14k making a total of $195k. This will be your total loan amount and should be less than or equal to the FHA LTV or 96.5% of the appraised or sales value whichever is the lesser.
4. So your sales price or appraised value should be at least $195/0.965 or $202,073.00

Ola Adesina, CBR
Certified Buyer Rep.
Cell (347) 869-6833
for Sales, Rentals In the 5 Boros & Long Island
Charles Rutenberg Realty, Inc

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July 13

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