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I am planning to purchase a house that my wife, son, and I have been living in for the past 2 and 1/2 years. The home is owned by my Mother-in-Law. We have been paying rent applied towards her mortgage, insurance, and taxes. We are seeking a loan in the amount of 65,000 dollars and would like to avoid paying the closing costs. We estimate the value of the home to be around $85,000-$90,000. A couple of people, including my mother-in-law, have suggested we use a "gift of equity". What I don't understand is how this will effect the down payment amount and how much of the equity will be applied. I need further explaination.
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