Some lenders are now ordering second appraisals right before the loan closes to make sure the value is still there. So, if you go into contract, put a deposit down, apply for a mortgage and get an appraisal and a commitment letter….your done right?

Nope. If you think the house is worth what you are paying for,  your lender might not.  I am hearing on the street that a lender will order a new appraisal right before the closing if the appraisal is older than two months, if the loan to value is high or if the home is in what would be a declining market value area.If the new appraisal comes in lower, the bank will lower your loan amount even though you already have a commitment letter.  If this should happen you might think the seller will lower their price, but I doubt it. 

 How can you protect yourself?  Ask your lawyer because these are new areas we are treading in. The attorneys and clients that I am informing are shocked and not sure what to do.If this happens to you, you might be out of luck or out of pocket for more money.  As they say, it ain’t over until the fat lady signs!!

 

Dale Siegel

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