Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Can y'all help me here:
Sales Price of property: $200,000
Appraised value: $249,000
Down Payment: $0
Does the buyer still need to pay PMI? Is this considered a loan-to-value ratio of 80% (my math)? In other words if you buy a distressed property as long as the price of the property is lower than the appraised value by let's say atleast 20% then is it true you do not have to put any money down to avoid paying PMI? Or to get the lower interest rate loans that require a LTV of atleast 80%?
yes because the lender will ALWAYS use the lesser of the purchase price or appraised value
they will use 200k as the value
Quote:
Originally Posted by need2knowplz
Can y'all help me here:
Sales Price of property: $200,000
Appraised value: $249,000
Down Payment: $0
Does the buyer still need to pay PMI? Is this considered a loan-to-value ratio of 80% (my math)? In other words if you buy a distressed property as long as the price of the property is lower than the appraised value by let's say atleast 20% then is it true you do not have to put any money down to avoid paying PMI? Or to get the lower interest rate loans that require a LTV of atleast 80%?
Remember that lenders WANT you to have PMI because it limits their risk exposure, so when you're purchasing they will use the lesser value, as renriq02 indicated. However, if you decide to refinance or can prove an LTV of 80 or lower later on then you should be able to request removal of your PMI.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.