Securing an 80/20 mortgage
Nov 12, 2008 Type
First time homeowners who cannot afford to pay the 20-percent down payment as asked for by most mortgage lenders turn to an 80/20 mortgage for rescue. The difficulty of securing traditional mortgage credit is being made more difficult with the sudden surge of housing prices.
Before securing an 80/20 mortgage, what borrowers need to know is that it consists of two loans. They need to have an initial mortgage, 80 percent of home value, before obtaining a second mortgage or the remaining 20 percent. Using this type of mortgage, borrowers are not subject to payment of a Private Mortgage Insurance, which actually add up to the cost by as much as hundreds of dollars to their monthly mortgage payment.
Getting an 80/20 mortgage starts with looking for the right mortgage brokers who have access to different types of unconventional mortgage lenders and other means that aid people to qualify for a home purchase. In order to become a good and responsible borrower, which also means that you can avoid paying unwanted debts, make sure that you read and understand how mortgage works and not just depend on a broker.
An 80/20 mortgage are not made available to borrowers recently unlike during the real estate boom when borrowers can purchase a house without down payment. While the overall cost of an 80/20 mortgage is less than that of PMI, borrowers cannot avoid paying two sets of closing costs since the loans are coming from different lenders.
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