80/20 Mortgage Loans
One of the newest developments in the mortgage industry is the ability to purchase a home with no down payment. Simply check out all the details in the section below for a 80/20 Mortgage Loan. That development eliminates what was one of the major challenges to owning a home – trying to come up with sufficient cash for a down payment. Research has shown that 40 percent of first-time buyers purchased their new home with 100% Financing last year. These no-down-payment programs are targeted to consumers with good credit but not much cash. While most consumers may know there are 100% Finance Home Purchase mortgage programs available, they may not be aware there are dozens of them available.
About 80/20 Mortgage Loans and Recent News, News History, if applicable
What Exactly is 80/20?
• An 80/20 mortgage loan is a “combination” loan for 100% Financing and no down payment. This mortgage type will provide a consumer with two loans: 1) one for 80% of the purchase price, and 2) 20% of the purchase price.
• 80/20 Option (100% Financing) and No Down Payment. A major advantage of this loan, aka 100% Financing, is the ability to purchase a home with
almost no money down. If a consumer has a strong credit record but have limited funds to commit to a down payment, then the 80/20 Mortgage Option is perfect. Generally, lenders require a down payment minimum of 20% of the purchase price. And, if the loan amount is over 80% of the purchase price, Private Mortgage Insurance (PMI) is usually required. A consumer can avoid paying PMI by obtaining a Second Mortgage (piggyback loan) to back up their first mortgage. The first mortgage is provided for 80% of the cost of the home and then the piggyback-Second Mortgage is for the remaining 20%. The 80% first mortgage can be fixed-rate (15 or 30 year), adjustable-rate (typically 5/1, 7/1, or 10/1 fixed period ARM) or interest only. The 20% Second Mortgage can be a Home Equity Line of Credit that will change along with the Prime Rate. COMBINED, the two loans allow a consumer to finance 100% of their home with no money down.
This site is not a broker and does not collect or solicit mortgage applications. Content is for informational or comparison purposes only. Services are not available in New York. Products and services may not be available in all other states.Source: www.mortgage-guide.us