80 20 mortgage loans
80 20 mortgage loans are also known as piggyback loans or 100% loans and are basically mortgage loans that are offered without any down payment requirement. Through these loans are not so easily available in United States due to market conditions, these are still one of popular loans among people here. Experts feel that as real estate boom will strike back, 80 20 mortgage loans would again be available readily. 80 20 mortgage loans are provided to people having good or excellent credit in most of cases. These loans are availed by those people that are not able to provide 20% down payment as is required in most of traditional mortgage loans. Thus, 80 20 mortgage loans are different from conventional loans. Another important characteristic of these loans is that a person in not required to pay PMI or private mortgage insurance.
In 80 20 mortgage loans, a person is required to take additional mortgage, which must not be confused with second mortgage. There are basically two mortgage liens, first lien and second lien that are made for securing the principal mortgage. Through additional mortgage, a person can piggyback the first mortgage and a situation is created where 100 financing is arrived at. There are some advantages as well as disadvantages attached with 80 20 mortgage loans. For example, overall cost of mortgage is lower despite the fact that interest rate attached with additional or piggyback mortgage is higher than rate of first mortgage.
This happens due to nonpayment of PMI. Another advantage is that a person can get closing costs for both the mortgages overlapped. There are many title companies in U.S that charge one closing cost for both the transactions. As far as disadvantages are concerned, a borrower may pay two closing costs if two mortgage loans are obtained from different lenders. If finance is being obtained through broker, it would definitely happen. As said above also, home is financed 100% and thus, if its market value depreciates, as is happening right now, borrower is not allowed to sell the home or get refinance against the same, until he has paid the outstanding amount in full.
Despite disadvantages, 80 20 mortgage loans have proved to be an excellent option for those people who don't want to pay private mortgage insurance and are unable to make down payment. First mortgage is done for 80% of the purchase price of home while second mortgage is done for 20%. It should be noted here that in United States, a person is required to pay PMI if down payment made is less than 20%. But with 80 20 mortgage loans, there is no problem at all if a person is a conforming borrower. Even if a person has bad credit, interest rates offered are 0.5-2.5% lower than rates attached with bad credit 100% loans. There are some lenders that offer options in second mortgage. A person can choose from fixed rate mortgage or a line of credit. In case of fixed rate mortgage, interest rate remains same for entire length of mortgage. In most of cases, second mortgage is amortized over a period of 30 years but it is made due in 15 years through balloon payment. If a person opts for line of credit, interest rate fluctuates as per the existing market conditions. Interest rate attached with line of credit is 2-5% lower than the interest rate attached with fixed rate mortgage.
Many people call 80 20 mortgage loans as no money down loans also as there is no down payment requirement. Apart from saving out of pocket expenses, borrowers can also get tax deduction in some cases. There are few lenders in United States that offer up to 103% of home asking price. Through this, a person can also get the closing costs financed and hence, does not have to make any substantial payment for moving into home.
Getting 0 20 mortgage loans
As said above also, a person may face difficulties in getting 80 20 mortgage loans due to existing market conditions. However, by making extensive search, a person can get these loans. One of best ways of finding 80 20 mortgage loans is to search for lenders online. Mortgage brokers can also prove to be of great help in finding these loans as these have access to many types of unconventional mortgage lending institutions. It is advised here that if a person has utilized services of mortgage brokers, he must get all the terms and conditions in writing. It is always good to get many offers and compare them for choosing the best. Before approaching any lender, copy of credit report should be obtained. If credit score is not encouraging, it should be tried to improve the same for getting effective deals.
Debt Consolidation Plus is one source offering 80 20 mortgage loans in U.S. It is located at 1496 SE Brighton Way, Madison NE. Its contact number is 866-416-7817. It offers 80 20 consolidation loans and repayment varies from 15-40 years. It works with lenders located across U.S for offering loan amount. Services are offered in all the 50 states.
Mortgage-X is another source that can be approached for getting 80 20 mortgage loans. A person can easily become homeowner without making any down payment. Loans are offered to people having good to excellent credit scores. Options available regarding first mortgage are fixed rate 15 year and 30 year loans, ARM for 5/1, 7/1 or 10/1 and interest only loans. Similarly, options available for second mortgage are fixed rate and home equity line of credit. A person can complete the online short request form for searching various lenders of 80 20 loans located in U.S. Mortgage-X has been offering services since 1998 and is one of leading educational web sites. Its database comprises lenders in all the 50 states.
Secondmortgagequotes.com is also one of leading online sources offering 80 20 mortgage loans in U.S. It has helped many people in buying home without down payment and PMI requirements. There are some minimum requirements prescribed for getting above loans. It offers mortgage quotes free of cost. Loans are offered through a network of leading lending institutions in U.S.