Hi, For those who recently purchased. What kind of mortgage and taxes do you pay if you put down less than 20%.
DjPiLL
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Re: What kind of mortgage?
Posted by Danielle&Scott
Posted by DjPiLL
Damm... with practually nothing down.... i couldn't even begin to imagine what your PMI payment is a month.
Probably 150-$200 a month or so?
If you do a piggy back loan, like she described above you avoid PMI. That is what my wife and i are doing too Scott
I am aware of that. I must have mis-read her post cause I didn't notice she was taking out the second loan to avoid PMI.
PMI is a waste.
DjPiLL
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Re: What kind of mortgage?
Posted by violet
There's many options I'm going through for mortgage. Like the first loan will be probably around 15%. The second loan 5%. Now this is what a broker suggested. Since the second loan is only around 20k, it would be better to do it as a line of credit and interest only for the first 10 years. The payments would be very, very low. BUT I can pay towards the principal as much as I want for the first 10 years. And everytime I pay towards the principal, the interest reflects off the new amount that's left for the principal, NOT the 20k I originally borrowed.
It's called a Heloc loan. I was told it's ideal for when the loan amount is pretty low. If it's not paid off after 10 years, then it's re-amortized for the next 10 years. It's a 20-year loan. If it's paid off within 10 years, it simply disappears.
Anyone have any experience with this kind of loan?
Almost all piggyback loans are done as HELOCs. I don't know how else you get the second mortgage. It has to be some sort of LOC or equity loan.
But anyways... interest only is fine for the second loan. With HELOC... you usually get the same interest rate if you do interest only or ARM.. so it doesn't cost you any more.
But you should NOT get into the habit of just paying the interest.
Try to start training yourself nicely by paying off the interest AND a good amount of principal (at least enough principal to get it paid off in 15-30 years).
jandt2006
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Re: What kind of mortgage?
basically i am confused because i am trying to figure out which would be better a 15 year fixed second mortgage or a 5/1 fixed mortgage?
DjPiLL
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Re: What kind of mortgage?
Posted by jandt2006
basically i am confused because i am trying to figure out which would be better a 15 year fixed second mortgage or a 5/1 fixed mortgage?
Well there is no such thing as a 5/1 fixed mortgage... unless you mean its fixed for 5 years then adjustable after.
If you can handle the payment on the 15 year fixed... along with whatever your payment is on the main loan... I would do that just for the simplicity of a fixed payment every month.
jandt2006
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Re: What kind of mortgage?
yeah its a 5/1 ARM
violet
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Re: What kind of mortgage?
Posted by DjPiLL
Posted by violet
There's many options I'm going through for mortgage. Like the first loan will be probably around 15%. The second loan 5%. Now this is what a broker suggested. Since the second loan is only around 20k, it would be better to do it as a line of credit and interest only for the first 10 years. The payments would be very, very low. BUT I can pay towards the principal as much as I want for the first 10 years. And everytime I pay towards the principal, the interest reflects off the new amount that's left for the principal, NOT the 20k I originally borrowed.
It's called a Heloc loan. I was told it's ideal for when the loan amount is pretty low. If it's not paid off after 10 years, then it's re-amortized for the next 10 years. It's a 20-year loan. If it's paid off within 10 years, it simply disappears.
Anyone have any experience with this kind of loan?
Almost all piggyback loans are done as HELOCs. I don't know how else you get the second mortgage. It has to be some sort of LOC or equity loan.
But anyways... interest only is fine for the second loan. With HELOC... you usually get the same interest rate if you do interest only or ARM.. so it doesn't cost you any more.
But you should NOT get into the habit of just paying the interest.
Try to start training yourself nicely by paying off the interest AND a good amount of principal (at least enough principal to get it paid off in 15-30 years).
Oh heck yeah, we would pay as much as we could to the principal in the first 10 years. I was thinking the worst case scenario would be that if for some reason, we paid off absolutely nothing by the 9th year, I would borrow 10k out of my 401k, and my husband would borrow 10k out of 401k just to make it disappear. BUT that's worst case scenario. I definitely want to pay it off in the first 10 years so that it will disappear. Otherwise with the second set of ten years, it would be amortized principal and interest.
violet
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Re: What kind of mortgage?
Also, I'm actually paying points to get an interest rate of 5.75. I know, I know, points suck. But it just comes out to 3/8 of a point to get 5.75, and then I need to pay half a point to get it locked for 90 days which is when my closing will happen. This all comes out to 3k. We lucked out that rates went down on Friday, but honestly, if I have to pay a mortgage that goes over 6%, it will be going towards unaffordable. It makes a big deal.
Also, I have to take this mortgage out myself because my husband's credit is horrible. I need security that I don't want sign the contract and be guessing and stressing about what's going to happen with the interest rates. If they do go down again though, my broker said my rate could be changed. But if they go up, I'm safe.
