80/20 loans

What is the status with these?
Are they impossible to come by now?

How exactly do they work? The 80% is fixed at a lower rate, and the 20% is adjustable? How often is it adjusted?
What are some example rates?

Sorry- I thought we were all settled on this, but it turns out that the loan recommended to us is actually too good to be true.

Any help is appreciated!
Thanks!!!

Re: 80/20 loans

We did 80/10/10 Fixed - so 80% std mortgage at the lower rate (5% or something - can't remember exactly what it was) and 10% at the higher rate (9%) and 10% down plus all closing costs. We are putting all extra money towards that 10% to pay it off quick since it is a higher rate. Both loans are fixed.

Re: 80/20 loans

We did the same. Our first loan was Interest only and our 2nd was at a higher rate but fixed. We will pay off the 2nd loan right away. We did this to avoid paying PMI. If you take out a loan for more thatn $415k ( i think thats the number) you are supposed to pay PMI. One way to avoid is to take out the second mortgage.

Re: 80/20 loans

Great, thanks!
So- those who have the 80/20- there is definitely no PMI?
Did you pay all closing costs out of pocket?

Is 9% a standard rate for that 20% mortgage?

Thansk!

Re: 80/20 loans

We did this with our mortgage, too.

There is definately no PMI. Although you are paying a higher interest on the 2nd mortgage, it is a much smaller amount than the first, and you can write off the interest on your taxes. You cannot write off PMI.

Then, if your house goes up enough in value and you feel that you have enough equity, you can always get in appraised and refinance into one mortgage (assuming it works out based on the interest rates at the time).

Good luck.

Re: 80/20 loans

FM!

Re: 80/20 loans

Cool- so, if you have an interest only on the 80%- there's no equity being built, right?

Re: 80/20 loans

Oh I forgot to mention our 80% loan is a 30 yearer and the 10% is a 20 yearer. Not sure if this is standard.

Re: 80/20 loans

Re: 80/20 loans

Right, any time you are paying interest only on a loan you are not building equity. You equity only goes up when you apply payments to principle.

A lot of people with Interest Only loans end up paying more than just the interest every month, its just nice to know you dont have to.

Re: 80/20 loans

Re: 80/20 loans

as long as you have good credit- you can still get 100% finacing

their are new requirments for subprime loans- people with less the good credit

Jake can help you guys if you have questions- FM me for his email

Re: 80/20 loans

That is good info about the PMI being tax deductible....but I read the article...and these are some important points to be aware of

The tax deduction applies only to mortgages that are closed in 2007

There are income limits. You get the full deduction if your adjusted gross income is $100,000 or less. The amount you can deduct phases out rapidly after that, and no mortgage insurance deduction is available if you make more than $110,000.

This is a one-year deal, and Congress would have to renew the deduction to make it apply for the 2008 tax year and beyond. Congress probably will extend the deduction, but you can't know for sure.

If you take the standard deduction instead of itemizing deductions, the new law makes no difference to you.

Message edited 3/16/2007 2:54:45 PM.

Re: 80/20 loans

Re: 80/20 loans

Re: 80/20 loans

We did 80/15/5 but our 2nd fixed rate is not 9%, it's only in 7.375%. Personally I wouldn't go the PMI route until after this 1 year trial...if they repeal it, everybody who took out a loan with PMI in 2007 instead of piggy back loans will get s c r e w e d.

Re: 80/20 loans

you have FM!

Re: 80/20 loans