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80 20 loans

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  • mom2nj 12-14-06 | 09:19 PM
  • do any of you know anything about 80 20 loans? its where you have two mortgage loans instead of one but they seperate it out 80% and 20%
  • ChristaMc ChristaMc's Avatar 12-16-06 | 01:39 AM
  • basically, yes that is what it is...dh & I did that w/ our 1st home and it did really help....only because we didn't have the 20% to put down toward the house w/ the "main" mortgage co. so the 2nd mortgage company took over that and we put nothing down on the house.
  • tryinfr3rd tryinfr3rd's Avatar 12-17-06 | 06:13 PM
  • we did an 80 10 10 once (one loan for 80% one for 10% and we put 10% down) which is basically the same thing....they do it that way so you dont have to pay mortgage insurance, because if you dont have 20% equity in your home you have to pay mortgage insurance (at least that is why here in WA I think its the same everywhere else but dont quote me)
    anyways mortgage insurance isnt for you, its for the bank, I had a friend of mine say to me "but isnt it good to have mortgage insurance, that way the mortgage would be paid".....nope its not gonna be paid so you could keep your house, its so the BANK doesnt loose money if you default....anyways loan wise it worked out fine for us, we just had two mortgage bills instead of one
    eventually we refinanced after we had more equity (we had remodeled and etc) and consolodated it all into one loan
  • rudolphia rudolphia's Avatar 12-17-06 | 07:43 PM
  • The 80/20 spreads the risk of your defaulting over 2 lenders so you don't need PMI. Usually the 20% loan is at a higher interest rate, so it comes out the same price as with added PMI with a single lender. The benefit is that the extra cost is deductible because it's interest, rather than a fee you drop down the rathole.

    This is a great option if you don't have a down payment.
  • Oreo Oreo's Avatar 12-20-06 | 02:24 PM
  • We are looking into refinancing right now since our lives are being flushed away as we speak. This is great info! thanks!

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