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I'm possibly buying a house. It belonged to my grandmother, and she passed away about 6 months ago, so it is now owned by my Aunt who is in charge of the estate.
The house has a value of 95k according to the county auditor, and a real estate agent said it would probably sell for about 95k perhaps a bit more.
If I buy the house, I will probably buy it for 80k, since we are avoiding the 6% realator fee, and I am getting a bit of a price break since I would have received a bit of money from the sale. I would probably put 5-8k down. Putting 16k down would be a huge stretch to put 20% down based on selling price.
I talked to one loan officer, and they said that PMI is based on purchase price, and appraised value is irrelevent. I get why they do this, since the buyer traditonally wants the most money they can get, and the seller wants to pay the least, when a home is sold, that is tradionally a good indicator of current market value.
Since my situation is a bit different, could I avoid PMI by finding a lender to base it on current market value once its appraised? Any other solutions?
It would also be possible to sell it to me for a higher amount, say 90k, and I put down 18k, then take 10k from the proceeds of the house. Seems like an odd way to do it, and it would raise the closing costs, but by avoiding PMI, I would probably come out ahead within 6 months doing it this way.
Google gifted equity I think this is what you need.
The family estate would have to give you a gift of equity -
basically the sales price is $95k (using your numbers) but they are gifting you $15k in equity plus your additional down payment
This should put you at or below 80% - this will only work for conventional - FHA has PMI regardless
Good Luck
Brian