Any benefits to buying a home well below appraisal?

[Guinevere9877]

I am currently in a rent with option to buy lease. We got into this home before the market
went crazy.

The price of the house goes up 5% every year. We have 3 more years on our renewable lease.

We are in Sarasota and home prices seem to be increasing by the second. Rent prices are following suit.

We have the option to purchase this house for $377,000 before May of this year. A home 2 houses down from us with
one less bedroom sold for $460K last month. We looked at that house before we rented our current house. Along
with one more bedroom, our house is nicer has new updates, has a bigger garage, a bigger lot and has a water view.

Realtor.com lists the value at $450K.

We both have credit scores in the low 600's. Nothing above 620 but not below 580.

We are looking at taking out an FHA 203K loan with the extra money going into a new HVAC unit.

If the appraisal comes in and shows that much equity in the house, do we still have to put the same
amount down on the loan? We currently have enough for 5% down and extra put aside but keeping as
much of that as possible would be great.

Other than the immediate equity in the home, is there any other benefit of buying a house with that much
instant equity?

[Guinevere9877]

Another thing I forgot to add is we like the idea of being able to buy this house without getting outbid or turned down because we need an FHA loan.

[VALoanMaster]

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@Guinevere9877 wrote:

I am currently in a rent with option to buy lease. We got into this home before the market
went crazy.

The price of the house goes up 5% every year. We have 3 more years on our renewable lease.

We are in Sarasota and home prices seem to be increasing by the second. Rent prices are following suit.

We have the option to purchase this house for $377,000 before May of this year. A home 2 houses down from us with
one less bedroom sold for $460K last month. We looked at that house before we rented our current house. Along
with one more bedroom, our house is nicer has new updates, has a bigger garage, a bigger lot and has a water view.

Realtor.com lists the value at $450K.

We both have credit scores in the low 600's. Nothing above 620 but not below 580.

We are looking at taking out an FHA 203K loan with the extra money going into a new HVAC unit.

If the appraisal comes in and shows that much equity in the house, do we still have to put the same
amount down on the loan? We currently have enough for 5% down and extra put aside but keeping as
much of that as possible would be great.

Other than the immediate equity in the home, is there any other benefit of buying a house with that much
instant equity?

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Your down payment will be based on the sales price and the loan type so the instant equity does not benefit you right now.

Where the equity will help you is when you go to refinance in to a conventional loan 12 months or more after you purchase the home.

I would try to get the seller to cover the HVAC for a higher purchase price so you can avoid a 203K loan.