125% Loan

Okay, so wait a minute. The house is worth $300,000; we all agree on that price or value. Yet you want to borrow 375 grand? That's $75,000 MORE than the entire house is worth. Um...how's that work? And you nod sheepishly. The bank manager exhales and says regrettably, "Then we have to charge you up the yin-yang in interest rates. Like, if the market rate is 6%, you'll have to pay 8% to make up for the fact that you have essentially "negative down payment" here. You good with that?" You nod again sheepishly, wondering what a yin-yang is, and if the process will, in fact, hurt. You clench. Then you sign.