An appraisal that comes in lower than the purchase price could derail the entire home buying process. Mortgage lenders use the appraised value of the home to calculate your loan-to-value ratio (LTV) which measures how much of a home’s value the lender will finance.
When the appraisal comes in lower, your lender will likely decrease the amount you can borrow. So, here are a few potential options you can do in that situation?
- Buyer will pay more out of pocket to meet new LTV & downpayment
- Negotiate with the seller to lower their asking price.
- Cancel the home purchase contract
- Request an appraisal rebuttal (however, rebuttals often have little or no effect)