Blanket appraisal - hot keyword

Blanket Appraisals is one of the hottest keyword lately when it comes to presale

If you've missed this term before and you have bought a presale that is closing soon, this will be relevant to you

A blanket appraisal is a financing arrangement where lenders appraise multiple new-construction homes....often an entire building, based on original contract prices rather than current market value

If you bought a pre-construction home at the peak of the market, you may be facing a tough reality at closing — your appraisal is coming in lower than your purchase price.

Here's what that means: your lender calculates your mortgage based on appraised value, not what you agreed to pay. If there's a gap, you have to cover it in cash. For some buyers, that shortfall runs into the tens of thousands!

To help buyers close, some lenders are offering blanket appraisals — where the bank uses your original purchase price to calculate the mortgage instead of today's lower value. It reduces the cash you need upfront, but it comes with real risk. If you sell before values recover, you could end up owing more than your home is worth.

Bottom line: a blanket appraisal can save your closing...but it's not free money. It shifts the risk to you down the road.

See below example WITH a blanket appraisal:

• Original Purchase Price - $600,000

• Current Appraisal Price - $500,000

• Loan to Value at 80% of Original Purchase Price - $480,000

• Deposit required $120,000.

  
  

See below example WITHOUT a blanket appraisal:

• Original Purchase Price - $600,000

• Current Appraisal Price - $500,000

• Loan to Value at 80% of Appraisal Price - $400,000

• Deposit required $200,000, or a difference/shortfall of $80,000 that a purchaser must come up with on a cash basis.