Illinois, Wisconsin and Florida Combo 80/10/10 and 80/15/5
Update: Due to
current market conditions and lender requirements the 80/20 and 75/25
programs have been discontinued. We will still offer 80/10/10 and
80/15/5 programs.
Whether purchasing or refinancing your home, you can build your equity
(i.e. pay down your mortgage) faster by NOT using a loan that requires
private mortgage insurance in the structure of your financing. This is best
accomplished with a "Piggy-Back" mortgage.
Private mortgage insurance (PMI) enables you to buy a home with less than
a 20 percent down payment. Likewise, it allows refinance loans with less than
20 percent equity in your home.
Though PMI allows many people to obtain financing, the added monthly cost
can be significant. The portion of your monthly mortgage payment attributed
to PMI is like paying rent because paying this money benefits someone other
than you.
The Piggy-Back mortgage is simply an additional (2nd) mortgage that represents
any amount financed ABOVE the 80% Loan-To-Value level. A first mortgage is
written for 80% of the loan-to-value amount with the second mortgage written
for the remaining loan amount requested. This prevents the need for PMI. An
additional benefit is that ALL of your monthly payments go to the reduction
of principle (on your 2 loans) and may be tax-favored. PMI doesn't give any
tax advantages and the money paid for it simply vanishes every month.
If you see mention of an 80-15-5
loan, it means that the borrower got a main mortgage
of 80 percent of a home's purchase price,
a piggyback loan for 15 percent, and made a 5-percent down payment. Combinations,
such as 80-10-10, are also possible
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