|
Author: Matthew Allen Article source: http://www.calculatorzone.com/. Used with author's permission.
This is an excellent loan for those that are lacking the down payment required for other types of mortgages.
The 80 20 mortgage is simply two loans for 100% of the purchase price. It is a first mortgage at 80% of the purchase price with a 20% second mortgage.
If you are a conforming borrower, doing your loan in this manner will save you from having to pay mortgage insurance. Mortgage insurance is almost always required when you have less than 20% down. But with the 80 20 loan you avoid this necessary evil.
If you are a sub-prime borrower, doing you loan in this manner will typically keep your interest rates ½% to 2.5% lower than doing a 100% one loan. A 100% one loan is simply one loan for the entire purchase price.
Many times you will have two choices when it comes to the second mortgage portion of the 80 20 mortgage. The second mortgage can either be a fixed second mortgage or it can be a line of credit.
If it is a fixed second mortgage. The interest rate is fixed for the entire length of the mortgage. Most fixed second mortgages are a 30 due in 15. Meaning that the second mortgage is amortized over 30 years, but is due in 15 years. Basically it is a balloon payment. Don't let this scare you. Statistically people refinance or sell their home every 7 to 9 years any ways.
If it is a line of credit as the second mortgage. The interest rate will fluctuate as the Federal Reserve adjusts the prime interest rate up or down. The benefit of going with the line of credit as the second mortgage is that the interest rate is normally much lower than the fixed second mortgages rate. It can be 2% to 5% lower.
If you are considering doing the 80 20 loan have your loan officer compare the two different options if you have both available to you.
You may also want to consider an 80 20 interest only loan. The interest only loan could save you hundreds of dollars in mortgage payments every month. This can help you purchase a more expensive home or keep the payments down on the home you want to buy. About The Author
Matthew Allen is a mortgage consutlant with Action Brokerage Services, Inc. in Medford Oregon. He is also the author of "How To Buy A Home With Zero Down, Even If You Have Damaged Or No Credit" You can visit his website at http://www.realmortgageadvice.com.
What is the Check 21 Act?
Check 21 is the common name for the Check Clearing for the 21st Century Act. It's new legislation that was recently passed by congress and made a law when sign...
The Secrets of Laying the Four and Ten
If you are a don't bettor, you are familiar with using lay bets to choose a number to bet against without going through the don't come box. However, you have to...
Erase Stretch Marks
Having stretch marks can cause your level of self-confidence to drop dramatically. Whenever you wear clothing that exposes the part or parts of your body that h...
How Much of Your Potential Will You Release?
You have two persons inside you - which one will you let take over? The one that produces great music or the one that stops you and diminishes your ability? See...
How to Find Hope, Remove Fear and Live Again by Harvesting the Power of Your Mind
We are blessed with the greatest gift and asset in the world and we don't even know it. You may be sitting on a gold mine without realizing it. There is no such...
Gastric Bypass Surgery - Just The Facts
This article gives a great overview for anyone looking for
information on gastric bypass surgery.
Why Laughter Is Good For You
LAUGHTER REALLY IS THE BEST MEDICINE according to the latest scientific
studies. LAUGHER discharges tension, relieves depression, anxiety, fear,and
anger. It ...
The Ultimate Beauty Tip: Good Posture
When you think of projecting a professional image, do you consider your posture?
How to Get a Website Indexed Fast
Have a website you want to get indexed fast? This article will take you through the steps to using a blog to get your site indexed in weeks, rather than months.
What a Container of Pool Chemicals Taught Me About Selling
I went into a pool supply store recently to buy a container of chlorine tablets. I left with a Masters Degree in "selling the sizzle".
The Sound of His Laughter
When you're searching for your Mr. Right, I want you to pay close attention to his laugh. It may seem odd for me to say that, but you can tell a lot about a ma...
Group Term Life Insurance and the Options Available
Group term life insurance is more affordable than individual life insurance policies because the costs to the insurer are lower.
Backstory Techniques
Show me an interesting character, and I immediately know the author has done her homework. Backstory will make or break a character.
Separate Colors in a Fall Leaf Using Chromatography
Fall is a beautiful time of year with all the leaves are changing colors. Children wonder why it happens, so it's a great opportunity to use the power of scienc...
Camellias
A brief introduction to the species and cultivars of the genus Camellia and their cultivation.
House Plans – Research Is Key
When you think about building your new home consider your needs and your lifestyle. If you are newlyweds your choices will be different from a couple who is rea...
Phone Answering Skills for Support Staff
How you answer your phone can make or break your company. In the age where the Internet has become indispensable, the good old telephone is still a favourite wh...
Insider RV Financing Secrets
We examine a "Hybrid" form of loan payment for high ticket items such as RVs, boats and aircraft. This system of financing can dramatically lower the lentgh of ...
Celtic Music: The Japanese Connection
In Japan, there is a growing awareness of Celtic music through the success of Riverdance and artists like the Chieftains, Clannad and Mary Black etc.
How You Developed Bad Habits That Rob You Of Motivation
Bad habits rob you of your motivation. Today I want to tell you why I decided I absolutely had to take charge of my self-motivation. And why you must do the sa...
Got Italian Charm?
What is Italian charm? The first time I heard this, I thought we were talking about smooth foreign charmers from Italy. No. It's a new charm bracelet trend!...
Whiners Need Not Apply
For several weeks, Shari Caudron whined, griped and complained about her lack of employment. Then, one day, she tried a different strategy: acting as if she alr...
Getting More Minerals From Your Fruits and Vegetables
Fruits and vegetables are your lifeline. Discover 4 ways that you can use to get the most minerals out of the fruits and vegetables you eat. Minerals help to ...
Internet Privacy
Over the past few years as the internet has become more and more popular, privacy has become a major issue.
Just as if you are walking down the street and can b...
|
Print this page