As much as you might not want to spend any more money, I would suggest consulting with a tax specialist, both for the benefit of you and your parents. Minimizing the tax burden is worth the fee for an hour or so consultation.
Best of luck with your purchase!
Probably any conventional lender you would use would want you to have some of your own funds in the transaction. But doing it the way you are suggesting doesn't get you out of PMI. The total amount of the financing is still 100%.
There are more creative ways of doing this transaction. Talk to a qualified real estate attorney and ask him to write a purchase contract that allows your parents to carry back a $45,000 note, while you assume their $185,000 balance. Or do a wrap-around mortgage, but again don't attempt it on your own. Work with a qualified attorney. Good luck!!
Real Estate Consultant
Keller Williams Realty Downtown
I'm assuming that the lender you choose will provide the most ethical option, while still allowing you complete the transaction. If not, maybe your parents will carry the note for you while you come up with the proper down payment. It sounds like there are a few that have answered already that can give you more in-depth advice.
The are many options that you can consider to achieve your goal. However, what you suggest above won't work for what you want to do. Depending on how much short you are, you may be able to get special loan programs that will allow you to avoid PMI. Two of these are offered as a special FHA loans.
Contact me at 303-856-8980 and I can provide you with the details of the different options as they are to detailed to discuss in this forum.
Keller Williams - DTC
The Besser Choice in Real Estate!
Guild Mortgage Company
Direct Office Line: 720-746-4062
He is the best lender out there and will help you find the right solution. Best, -John
No you can't do that, but why not go with the mortgage insurance and then refinance later with no mortgage insurance, by having your parents pay the loan down to 80% loan-to-value?
That is something you want to speak to your lender about but it doesn't sound right. Have you considered an FHA loan? There are many buyer programs that you might qualify for. Perhaps you could get a loan for a slightly higher interest rate and not have the PMI. You would be paying the same payment but more would go toward interest which could be a tax deduction for you. Make sure what ever you do always consult an attorney and tax professional.