How do Appraisals Work on Building a New Home?
My wife and I are building a home and want to borrow $140,000 to build - the appraisal on the blue prints is $153,000. The bank says we need a down payment of $30,600 and they will loan us $122,400.
Based on what I know, this does not sound right.
My understanding is then we would only need $17,600 for a down payment, and the bank is wrong. We still only need $140,000 to build, but the bank says we have to make up the difference to the appraised value. ($153,000 - $122,400 = $30,600)
The bank is telling us that had we received a lower appraisal, closer to $140,000 that we would have had a lower down payment.
I've never heard of it working this way....any information on how this works would be appreciated.