I bought a house with a 80/20 loan now I have to refinance so this one mortgage is offering a 30 yr fixed but they are braking my mortage in two. One with one apr & the other with other apr. Does this sound legit? Would anyone offer any banks that they've refinanced & that are legit?
2007-01-22 12:31:55 · 3 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
The advantage is the rate on the two loans comes out lower than with one loan. If the rate on the 80 were, let's say, 5% and the rate on the 20 were 10%, the upshot would be for the full 100 you would be paying the equivalent of 6.25%. Apparently, if you were to get one loan, the rate would be higher than that, so your loan originator thinks it best that you get two loans.
A couple things to remember. Mortgage insurance kicks in on any loan that is above 80% LTV. Now the conventional thinking is that you avoid MI by splitting into two loans, but the truth is you pay more on the second rate to make up for the lack of MI. Now that MI is tax deductible, make sure your loan originator gives you the costs both as an 80/20 and as a single 100% loan figuring the MI tax deduction. Also, ask about both financed and lender-paid MI on a single 100% loan, as those may be the lowest cost option for you. Your lender will know about both of those.
Finally, be sure to shop around and ask for the payment amount on various loan scenarios from each lender. (80/20, single loan with monthly MI, single with financed MI, lender paid MI, etc.)
2007-01-22 13:01:32 · answer #1 · answered by CJKatl 4 · 0⤊ 0⤋
Good info above. Best advice I can give you (I'm a mortgage broker) is to shop. You are refinancing so you have some time to go through this process.
Indeed it may be cheaper to refinance your two loans into two loans, but it may be cheaper to get one loan if you have built up enough equity. Even if you don't have 20% equity, it still may be cheaper to do one loan. A good mortgage broker should be able to look at all the options available, and get you in the best possible package for your scenario.
If you are shopping, go with a trusted referral. Compare Good Faith Estimates and APR (TIL's), but make sure you are comparing apples and oranges. Some of the more unsavory lenders will leave off taxes, insurance and other misc. stuff from their Good Faith Estimates. This will drive your closing costs way down, but will not be realistic. A good title company can also offer up some great referrals, they prepare the documents on the day of reckoning and will know who is "more aggressive" with their fees and who isn't.
Happy shopping and post back if you get more questions.
Joe...
2007-01-22 20:53:39 · answer #2 · answered by Joe K 3 · 0⤊ 0⤋
It's legit if they can get you to agree to it.
It sounds like you still don't have 20% equity. In that case two loans are cheaper than one, you get two loans with a lower combined rate.
Did you ask your realtor for a referral to a mortgage broker?
I have used the following co 4 different times and each time they were wonderful.
www.eloan.com
2007-01-22 20:42:08 · answer #3 · answered by Anonymous · 0⤊ 0⤋