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Offer on HUD home is higher than Appraisal

There is a HUD multi-family home appraised for $125,000 (obviously it is worth more) it is 203K eligible so it can go FHA. I put in a bid for $155,000. My mortgage lender is aware the home appraised for $125,000 and is willing to front the $155,000. I keep hearing conflicting reports:

View #1: that I have to come up with the difference between 155K and 125K ($30,000) in cash at closing
View #2: If the mortgage lender is willing to put down the 155K at closing, that is fine. I won't need cash because my lender is backing me and will get the 155K to HUD.

Who is right?
  • August 31 2013 - Nashua
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Answers (3)

Profile picture for Outer Banks N C
I don't hear many stories where a bank will lend more than the appraisal came in for unless it is a 203K in which case it is normal since the repairs and upgrades will increase the value when done.

  • August 31 2013
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Profile picture for HomeYardYou
I don't believe any lender will provide a mortgage for more than the appraised value.  In fact, the FHA 203B mortgage program will only provide 96.5% financing and the dwelling must be owner occupied.  I hope to see more comments come through from HUD registered brokers and possibly some lenders.
  • August 31 2013
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Bidding on a HUD home over the list price , HUD will not allow the lender to finance the difference- the buyer will need to make the difference up-

Hope this helps

  • September 17 2013
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