's comment about highest and best use, there are many possible approaches. 

The week we started discussing our financial goals, my wife's coworker approached her with the deal.

Most auction companies if the house is occuppied will tell you your not allowed to approach the homeowner.I violate this everytime.. set max bid and semi stick with it though.. but one trick is its human nature to stop at round numbers IE I will bid to 205k and thats it..

That type of deal isn't a shotgun approach, it takes the right property in the right neighborhood.

The engineers at ReVision will help you calculate what approach will make the most sense for you.Also, if you have hard water, I'd strongly recommend AGAINST tankless water heaters.

Monthly payment $231.36.Zillow tells me that my PMI would be $237 if I put 5% down on this home (just an example).https://www.redfin.com/NJ/Bloomfield/34-N-End-Ter-...20% is $79,800 down payment5% is $20,000 down paymentNow, I'm trying to understand the pro's and cons of each approach.

Can anyone recommend a recourse that is a sort of a step-by-step approach?

There is quite a lot of variety of approaches.  

Also the strategy you use may not be the best strategy for someone else, and vise versa, everyone's situation is unique and need to be approached accordingly. 

Approach these meetings as opportunities to make personal connections.