What kind of mortgage?

Hi,
For those who recently purchased. What kind of mortgage and taxes do you pay if you put down less than 20%.

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Posted by myasmom

Hi,
For those who recently purchased. What kind of mortgage and taxes do you pay if you put down less than 20%.

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You can get a regular conventional mortage, but PMI (mortgage insurance comes into play with less than 20% down)

You can structure it as an 80/10/10 where there are two mortgages that make up the 90% financing where you can put down 10%. There is also a 90/5/5 mortgage as well. The second mortgage interest rate tends to be a little higher and will most likely go up and down with interest rates.

Paying PMI is a TOTAL RIPOFF.

It makes absolutely NO sense to pay PMI when you can very easily piggyback a loan.


I made this mistake once when I was young, stupid, and uninformed. Never again.

Get an 80/10/10 loan if you can't put 20% down.

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Posted by DjPiLL

Paying PMI is a TOTAL RIPOFF.

It makes absolutely NO sense to pay PMI when you can very easily piggyback a loan.


I made this mistake once when I was young, stupid, and uninformed. Never again.

Get an 80/10/10 loan if you can't put 20% down.

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Have to agree, that's what we did. We just refinanced and consolidated the two loans.

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Posted by DjPiLL

Paying PMI is a TOTAL RIPOFF.

It makes absolutely NO sense to pay PMI when you can very easily piggyback a loan.


I made this mistake once when I was young, stupid, and uninformed. Never again.

Get an 80/10/10 loan if you can't put 20% down.

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What about the interest rates on the 10/10 parts? or if it was a 80/20?

I've heard those rates fluctuate...is that true?

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Posted by laborday06

What about the interest rates on the 10/10 parts? or if it was a 80/20?

I've heard those rates fluctuate...is that true?

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Its the rate on the second mortgage (usually the /10 part) that may fluctuate.

But I believe people have gotten these second loans at a fixed rate as well (higher rate than the primary loan).


But its a tax deductable loan because its actually considered a HELOC (home equity line of credit). Thats what makes it a no-brainer.

Besides... even if u get a rate that fluctuates... even if jumps up a whole percentage point... its a much smaller loan so its really not that much more money a month. And adjustable loans are usually capped at a certain percentage anyways so it cant get too high.

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Posted by jandt2006

we're doing a 1st and 2nd mortgage, with the mortgage on the 2nd a lot lower so we could pay it off quicker, and yet avoid PMI.

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we just did the same thing... both intrest rates are fixed, but our 2nd is MUCH higher then the first... we are just going to have tgo put a little extra cash into it so we pay it off quicker...

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Posted by DjPiLL

Its the rate on the second mortgage (usually the /10 part) that may fluctuate.

But I believe people have gotten these second loans at a fixed rate as well (higher rate than the primary loan).


But its a tax deductable loan because its actually considered a HELOC (home equity line of credit). Thats what makes it a no-brainer.

Our second loan is a fixed rate and it's the same rate as our first loan. So you can find banks that do it like that but it seems that most give you a higher rate.

Besides... even if u get a rate that fluctuates... even if jumps up a whole percentage point... its a much smaller loan so its really not that much more money a month. And adjustable loans are usually capped at a certain percentage anyways so it cant get too high.

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Our second loan is at a fixed rate and it's the same rate as our first loan. You can find banks that do it like that but it seems most give you a higher rate for the second.

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Posted by NPbride

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Posted by DjPiLL

Its the rate on the second mortgage (usually the /10 part) that may fluctuate.

But I believe people have gotten these second loans at a fixed rate as well (higher rate than the primary loan).


But its a tax deductable loan because its actually considered a HELOC (home equity line of credit). Thats what makes it a no-brainer.

Our second loan is a fixed rate and it's the same rate as our first loan. So you can find banks that do it like that but it seems that most give you a higher rate.

Besides... even if u get a rate that fluctuates... even if jumps up a whole percentage point... its a much smaller loan so its really not that much more money a month. And adjustable loans are usually capped at a certain percentage anyways so it cant get too high.

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Our second loan is at a fixed rate and it's the same rate as our first loan. You can find banks that do it like that but it seems most give you a higher rate for the second.

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Thanks for the info. When you do an 80/10/10 or 80/20, what was your downpayment like? 0%, 3%, 10%?

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Posted by laborday06

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Posted by NPbride

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Posted by DjPiLL

Its the rate on the second mortgage (usually the /10 part) that may fluctuate.

But I believe people have gotten these second loans at a fixed rate as well (higher rate than the primary loan).


But its a tax deductable loan because its actually considered a HELOC (home equity line of credit). Thats what makes it a no-brainer.

Our second loan is a fixed rate and it's the same rate as our first loan. So you can find banks that do it like that but it seems that most give you a higher rate.

Besides... even if u get a rate that fluctuates... even if jumps up a whole percentage point... its a much smaller loan so its really not that much more money a month. And adjustable loans are usually capped at a certain percentage anyways so it cant get too high.

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Our second loan is at a fixed rate and it's the same rate as our first loan. You can find banks that do it like that but it seems most give you a higher rate for the second.

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Thanks for the info. When you do an 80/10/10 or 80/20, what was your downpayment like? 0%, 3%, 10%?

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on the 80/10/10 ; 1 of those 10% is your down payment. the other 10% is a loan... add it together and you have 20% down payment (avoiding pmi)
(this can also be 80/15/5 or any combo to add up to 100)

80/20 load is pretty much 100% financeing. at this point, you will be responsible for closeing cost or you can do 106% fianceing (selling consesion) where the seller must agree to this and your closeing cost will be involved in your loan thus nothing out of pocket besides other fees not covered under closing.

from my knowledge, the second loan is higher if you were to take out to mortages cause the 2nd bank (if not the same) really has little at stake with the property so to make up for it, they will charge you more for there protection.

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Posted by violet

Question - I had a broker tell me PMI sometimes isn't so bad because she said it drops off your mortgage whenever the value of your house goes up 5% (to be determined by appraisor). Is this true? She said sometimes the second mortgage is not a good idea.

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it really depends on serveral factors which are but not limited to...
-house value
-neigborhood value
-market trends
-how much of a down payment you put down
-what you can afford monthly
- pmi could be less then a 2nd mortage.

the aurgement can go both ways as the end result is you get a house

once you get it appraised and you reached property is woth less then 81% of your motrage, PMI = gone. all those things play into the price when it gets appraised

The house I might get is a beautiful house. The landscaping is amazing. The backyard is so tranquil. Actually, I don't even know what I can do to increase the value of the house since it's so well done. The area is in Lindenhurst, south of Montauk. It looks like a nice area?

I'm just so confused about doing PMI or a piggyback loan.

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Posted by MCDO15

once you get it appraised and you reached property is woth less then 81% of your motrage, PMI = gone. all those things play into the price when it gets appraised

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Getting rid of PMI is not as easy as you think.

First off... a lot of banks will NOT remove the PMI if your home simply appreciates in value in a short period of time.

If you want to get the PMI removed... and the bank agrees that you have owned the property for long enough (at least a year or two)... you have to pay for an appraisal of the property (your cost).

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Posted by violet

Question - I had a broker tell me PMI sometimes isn't so bad because she said it drops off your mortgage whenever the value of your house goes up 5% (to be determined by appraisor). Is this true? She said sometimes the second mortgage is not a good idea.

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PMI is throwing money away. Plain and simple.

First off... if you borrow more than 80% loan to value... you will not be eligable for the same interest rates that you can get if you put 20% down.

But lets assume you do and you bought a 400k house at 6% interest.

With 20% down... your monthly payment is $1918.

Now... if you do a simple 10% down loan... you will be paying an extra $240 dollars on your loan.

But with this type of loan... you will be paying approximately another $156 dollars a month in PMI. A total monthly payment of $2314 and a total waste.


Now... if you do an 80/10/10 loan and your second loan is say 6.75 percent fixed... your secondary payment will be $259.43. Total monthly payment of $2177.


As you can see by these numbers... its very clear that paying PMI should be avoided at all costs.

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Posted by DjPiLL

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Posted by MCDO15

once you get it appraised and you reached property is woth less then 81% of your motrage, PMI = gone. all those things play into the price when it gets appraised

---

Getting rid of PMI is not as easy as you think.

First off... a lot of banks will NOT remove the PMI if your home simply appreciates in value in a short period of time.

If you want to get the PMI removed... and the bank agrees that you have owned the property for long enough (at least a year or two)... you have to pay for an appraisal of the property (your cost).

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intresting...i will keep that in mind

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Posted by DjPiLL

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Posted by violet

Question - I had a broker tell me PMI sometimes isn't so bad because she said it drops off your mortgage whenever the value of your house goes up 5% (to be determined by appraisor). Is this true? She said sometimes the second mortgage is not a good idea.

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PMI is throwing money away. Plain and simple.

First off... if you borrow more than 80% loan to value... you will not be eligable for the same interest rates that you can get if you put 20% down.

But lets assume you do and you bought a 400k house at 6% interest.

With 20% down... your monthly payment is $1918.

Now... if you do a simple 10% down loan... you will be paying an extra $240 dollars on your loan.

But with this type of loan... you will be paying approximately another $156 dollars a month in PMI. A total monthly payment of $2314 and a total waste.


Now... if you do an 80/10/10 loan and your second loan is say 6.75 percent fixed... your secondary payment will be $259.43. Total monthly payment of $2177.


As you can see by these numbers... its very clear that paying PMI should be avoided at all costs.

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Weird...because the broker I was talking to quoted it being higher with doing the second mortgage as opposed to PMI. I'm short a little over 5%...so I don't know.