Appraisal values are a major factor when it comes to determining what mortgage lenders will offer. But what if the appraised value is higher than your purchase price?

This scenario presents unique opportunities and considerations to homebuyers. We will discuss the implications of a home’s appraised value being higher than the purchase price in this blog. We will also offer advice and new insights to help you navigate this situation.

  1. The equity of the property increases immediately when the appraised price exceeds the purchase cost. This immediate boost in equity may provide financial stability and flexibility. This equity may be available to homebuyers through a refinance or a home equity loan in the future.
  2. Higher appraised values give homebuyers more bargaining power. The higher appraised value of the home can be used as leverage by buyers to negotiate better deals with the seller. It could be as simple as asking for repairs, asking the seller to reduce the price, or negotiating upgrades or additional concessions.
  3. A lower loan-to-value ratio can help you avoid private mortgage insurance (PMI). If the LTV is lower, homebuyers might not have to pay for private mortgage insurance. PMI may be required by borrowers with loan-to-value rates of 80% and higher. PMI may be unnecessary, but it can save you a lot of money over the course of your mortgage.
  4. Future Selling Possibility: If the appraised price of a home is higher than what it cost to purchase, then this creates a positive precedent for future potential resale. An appraised value that is higher than the purchase price can be evidence of a property’s worth to future buyers. This can be beneficial for homebuyers who plan to sell within the next few years, or are looking at the property as a potential investment.
  5. Refinancing Options: Homebuyers with a mortgage that exceeds their purchase price could have better prospects for refinancing down the road. The value of the property may increase, allowing homeowners to qualify for more favorable terms for refinancing, including lower interest rates and reduced monthly payments.
  6. Homeowners Insurance: Homebuyers need to make sure they review their insurance policies in light of this higher value. In the event that an unexpected event occurs or the property is damaged, it’s important to ensure the coverage accurately reflects this new value. Consult your insurance provider about any changes or adjustments that may be needed.


Homebuyers can be in a better position if the appraised price is higher than the purchase cost. There are many factors to take into consideration, including increased equity, negotiating ability, potential savings from private mortgage insurance and future selling potential. Homebuyers are advised to use the higher appraised value in their favor by engaging in negotiations and exploring possible financial opportunities.

A knowledgeable real estate agent or mortgage lender can help buyers navigate the process, and make sure they are making informed decisions. By leveraging the higher appraised value of a home, buyers can build a solid foundation for their finances and ensure long-term homeownership success.