If a house is appraised for more than I purchase the home for, can I get a larger loan?

If it appraises for more than the asking price, yes you can get some extra for repairs and upgrades. At most auctions you need a certain percentage down, on the day of the sale, then have to get the financing within the number of days that they have posted.

Is an estate auction like a foreclosure auction where you have to have all the financing BEFORE you bid on the property? You can't bid and then go looking for a mortgage. If that is the case, you can refinance the loan amount for most likely 80% of the appraised value or about $120,000.

No you can't, the lender will only finance for the purchase price. The tax assessment means nothing and is not an appraisal and can not be used for financing. So in other words you have no clue what the appraised value of the home really is, until its appraised. Also you have been approved for a mortagage up to 200K, not the property your buying. Your lender will have it appraised and then you will know the true value. Also for conventional loans the home must be in average condition, they will not lend on a home in fair or poor condition.

Very good question. The short answer is yes you should be able to "float" your loan over the appraised value. The stipulations lie in your relationship with your bank (how long have you worked with them, assets, account balances, credit etc.). In today's lending environment banks are changing their lending standards making it more difficult to finance without significant collateral or capital. I just sold a property to an investor for under $100,000 and the appraised value was $125K. He couldn't get the loan because he was too far leveraged on his other properties... so he borrowed against another property and financed the deal with capital from an equity loan. I have seen banks requiring 25% down pretty frequently also. As a broker specializing in commercial I am working on Rite Aid and CVS, NNN deals requiring 40% down (a whole different animal we won't get into). The question is what is your cost of capital.

In commercial most buyers finance the acquisition and get a construction loan as a supplemental loan to rehab the building. In residential the scale is a tad smaller and normally one loan should be sufficient as long as the bank feels you are qualified after their due diligence on you and your ability to repay the loan.

In reponse to everyone else...you can not get pre approved for a loan because you do not know what your final bid price will be. You do know what you will be financed up to (as you noted) but a bank will not pre authorize a loan without the terms. They should be able to run a scenerio analysis for you.

My best advice would be to form a relationship with a banker, both personally and financially.

Good luck and hope this helps!

If you want to buy an investment property, you're going to need 20% down payment - and have money left over in savings just to qualify. If you're buying a house to live in (even a duplex or fourplex - hint, hint) you can get an FHA 203k loan. This is a loan specifically to include repairs. You have to hire licensed, bonded contractors though, so don't expect to pocket any of that "extra" money. To be a successful landlord, once you have the property, you need to be a bit of a handyman to make money. BTW - How's your ACL? I've had three surgeries on my knees since 1983 (basketball) Doing great now though.

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If you are approved for $200,000 and the appraisal is $153,000 then yes you should be able to have them process the loan for $200,000. But you need to talk with your lender not us.