Query re valuations at purchase

[Tracey B.]

I'm an investor from Australia, seeking to begin investing in the USA shortly, so excuse me if my questions seems naive. Your terminology and methods of mortgaging and transferring properties are very, very different!

When you can get, say 70% LTV, what I want to know is, if I sign a contract to purchase a property for $70K that's a genuine bargain, and is worth $100K, could I borrow the entire $70K purchase price (ie 70% of valuation)?

In Australia, the lenders take the position that it's not possible to buy a genuine bargain, and the valuation for mortgage purposes is always taken to be "the lesser of market value and purchase price", meaning that this would be impossible, and on a $70K purchase one could only borrow $49K.

But lots of things are possible in your market that aren't in ours - you're generally much less regulated - so I thought this was a question worth asking! :D