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We are building a home and were planning to put 20% down to avoid paying mortgage insurance.
However, the initial appraisal came in way higher than the amount we will actually be financing, and is going to be even higher once the home is complete.
When that is the case, are you still required to pay 20% of the amount you're borrowing, or is the equity (based on the appraisal) taken into consideration?
First, I am assuming you are under contract to purchase a home that is being built from a contractor. You didn't hire the contractor and are doing a construction loan to permanent....
you pay 20% of the sales price that was agreed to in your sales contract. The appraisal is just to make sure your home is "worth" the sales price. If the appraisal came in WAY higher than your sales contracts sales price, you have "equity" in your home from the start. that is excellent!!