Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250
The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”
The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.
