$100,000 in equity when I purchase my home.

larryhonline · Joined: 28 Mar 2007 Posts: 4 2.52 Dollars($)

I’m buying my first house from my mother for $160,000 and the house is worth $260,000.
Will I still need 20% down to get a conventional loan or do they consider the equity in the home to be good enough?

jameshogg · Posted: Wed Mar 28, 2007 2:24 am Post subject: RE: down payment to purchase home

Welcome larry,

Equity is the difference between the fair market value of a property and the principle balance on the mortgage. I don't think the difference here is the equity. May be you are buying the home at a lower price. Or is there any debt against it?

Usually lenders require you to pay 20% down payment if you wish to avoid paying for the private mortgage insurance premiums on a monthly basis. But they are open to borrowers who can put down as low as 3% to 5% of the purchase price. Such borrowers will have to pay higher interest rate on their loan programs compared to those making a higher percentage of down payment.

Thanks,
James.

larryhonline · Joined: 28 Mar 2007 Posts: 4 2.52 Dollars($)

I'm a little confused because she has $100,000 in equity on the house and she wants us to have that with the home. does it work that way? how can I use this to benefit me in the loan process? sorry for not understanding.

Thanks,
Larry

adonis · Posted: Wed Mar 28, 2007 5:09 am Post subject:

Larry,

I found another answer to your query at http://www.mortgagefit.com/predeal/about6765.html . Just have a look.

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