I have learned being a real estate agent; you don’t realize some of the questions people truly have. When chatting with my sister, she asked me, “If I’m pre-approved for $200k, but I buy a house that’s cheaper – do I get the keep the extra money, or can I put it towards repairs?”
This is a phenomenal question, and we are ready to answer it for you!
Do I get to keep the extra money?
The answer is no. Your lender is only going to lend you the purchase price amount. Even if your 500k home appraises for 520k, you still do not get to keep that money.
Can I use that towards repairs or upgrades?
This is also a no – unless you’re acquiring a renovation loan. And a renovation loan does not involve you just being handed a check for the extra amount. There are many hoops you have to jump through to get that loan as well.
[RECOMMENDED READING: How to buy a home that needs renovations]
One last thing: how do I get the money to pay for the house at closing?
The mortgage company will send the funds to the title company. The title company then distributes the money to the seller and/or pays off their existing mortgage, if there is one. The seller gets the remaining amount after their mortgage, and any liens are paid off.
Let’s find your home! Text us now!