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80 20 loans

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  • Dopey406 Dopey406's Avatar 12-20-06 | 03:48 PM
  • We refinanced in a 15-year fixed about 2 years ago and it was the BEST thing we could have done!
     


    Here's what Dave Ramsey said in response to someone's question about 80/20 loans and if they're a good idea:

    To start with, I’ll tell you that the 100% down plan is always the best idea. That way you don’t have any payments. However, I have a really hard time selling people on that plan. An 80/20 mortgage is the next best thing. What this means is that a 20% down payment was made and the loan is 80% of the value. With this type of loan, you can get a conventional loan and do away with what is referred to as PMI – private mortgage insurance. That insurance is basically foreclosure insurance that pays the mortgage company in the event they have to foreclose on you. On other loans, mortgage companies make you buy this insurance, which costs you about $75 a month per $100,000 borrowed. So you want to do away with that if you can, and an 80/20 loan will allow you to get out of the PMI.
  • mom2nj 12-21-06 | 06:31 PM
  • thanks for the info, for now we decided not to do it. the rates were so high and would have made our mortgage like $900.00 more a month then we are paying now
     
    so we are going to have to see what else we can come up with
  • Dopey406 Dopey406's Avatar 12-21-06 | 06:55 PM

  •  
    that you find something that works for you!!!!
  • tryinfr3rd tryinfr3rd's Avatar 12-22-06 | 02:10 PM
  • depending on your situation a lot of times a loan for a shorter amount of time will have a lower interest rate, we were offered a 7 year loan when we refinanced, it was a lower rate and since we knew we were going to be moving before the 7 years was up we did it that way....the down side is you have to either sell, refinace or pay it off within that 7 years. Good luck in whatever you guys decide!!
     

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