Here is the thing I want to know. If you get pre-approved for a loan can you use that money to buy a house at the county auction (note: I have the money for the 10% you have to pay that day once you bid on it). Since you only have 30 days to pay off the rest of the balance. Also if you cannot do it that way, is there any other way of getting the finance to buy a house through the auction. Reason I ask this is because auctions start off at 2/3 the value of the house (sometimes market value is actually higher than the value given by the state). But even saving 1/3 of the value and putting 10% of the 2/3 down leaves you with some equity to keep working from so it just makes more sense to buy it there if you can manage to buy it as close to 2/3 (patience I am sure is needed). That makes it a loan for 57% of the value of the house, which keeps the "downpayment" well over the 20% that keeps you out of having to pay a PMI (Private Mortgage Insurance). Thank you.
Justin – You make a good point that I was kind of aware of. I definately don’t want to borrow more than the purchase price but you left me a bit confused does it structuring it that way still keep you from paying the PMI? Or do they just consider the purchase price when they considering weather your going to pay the PMI?
The PMI is additional insurance you pay so the bank can cover itself when people pay less than 20% of the downpayment. Thats separate and in adition from just the regular insurance you pay.