What is an 80/20 Mortgage?
An 80 20 mortgage sometimes called “no money down” morgage is actually two loans. You will have a first mortgage for 80% of your home’s value and a second mortgage for the remaining 20% of the value of the home to cover the down payment. By using this 80/20 mortgage you will avoid paying Private Mortage Insurance which can add hundreds of dollars to your monthly mortgage payment. You can also greatly reduce your out of pocket expenses and get a possible tax deductions. In addition to your 80/20 mortgage some lenders offer financing for 103% of the asking price on your home. This allows you to finance your closing costs and minimizes the cash you will need out of pocket to close on your home. A reverse mortgage is an attactive option to rise cash. How to get a no money down morgage? A good place to start shopping for an 80-20 mortgage is your trusted mortgage broker. Mortgage brokers have access to a variety of unconventional mortgage lenders and programs to help get people qualified to
Many mortgage companies require you to put a sizable down payment of at least 20% on homes you plan to purchase. Since the failure of so many subprime loans, the decline in housing values and the economic downturn in the US, this requirement has become even more stringent. Previously, especially when housing prices were high and the housing market was booming, people might be able to take out what is called an 80/20 mortgage. The 80/20 mortgage means the borrower actually take out two loans. Other names for this mortgage include piggyback loan and 100% financing loans. One loan is for 80% of the money borrowed and the other loan is worth 20%, essentially what would be paid in a down payment. Loans may be offered through different companies, which means the borrower can be responsible for making payments to two different companies and for paying closing costs on two loans. Some lenders offered 103% financing which helped to meet theses costs. One of the reasons to take out an 80/20 mort
What an 80/20 mortgage is, is 2 loans which equal 100% of the purchase price. The first mortgage is 80% of the purchase price and the second mortgage is the remaining 20% of the purchase price. Generally, the second mortgage is either a fixed mortgage or a line of credit. If you are considering doing the 80 20 mortgage, you can compare multiple mortgage quotes to see which loan product will save you money and suit your needs. This type of mortgage program works well for first-time buyers if they don’t have a large down payment and want to avoid paying the dreaded PMI – Private Mortgage Insurance. Mortgage insurance is almost always required when you have less than a 20% down payment. For borrowers with less than perfect credit, an 80 20 Mortgage will typically keep your interest rates ?% to 2.5% lower. Benefits Of The 80/20 Mortgage: • No cash reserves required for combined loan amounts as high as $1.
