how does an 80 10 10 mortgage work?

Question

i need details and lots of em..

Answer 1

Let me add...

Don't be afraid of Private Mortgage Insurance. Things are quickly changing in the lending industry. For many borrowers, PMI will be the better choice. Make sure your loan originator works the numbers with PMI so you will know which works best for you.

The lenders who were gung-ho on the 80-10-10 are dropping like flies. Twenty-three of them in the past two months have disappeared. The web site http://www.ml-implode.com has an Implode-O-Meter and information tracking this. Why have the lenders gone under? Because people default on the loans. Why do people default? Because the loans are set up for the people to fail.

There are several ways to pay for PMI. Monthly is the most common, but it's usually the most expensive. There are two other options that bring the price way down: Lender Paid or Financed. With lender paid, the lender ups the interest rate ont he loan slightly and pays for the PMI. With financed, you pay up front, but roll it into your loan. It will usually up your payment about $12/month per $100k borrowed.

And remember, PMI is usually tax deductible now. And only having one loan means you can easily get a home-equity loan down the line.

Finally, if you qualify for Fannie Mae's MyCommunityMortgage product, which is either based on income or the neighborhood where you're purchasing, the PMI is cheaper. Much cheaper. (Freddie Mac has a version, too.) Ask your loan originator if you qualify. This is new, and many loan originators haven't heard about it yet. Tell yours to go to the Fannie Mae web site to learn more. Or you go there: http://fanniemae.com.

Good luck.

Answer 2

you purchase or refinance a home and the lenders give you a first loan for 80% of the value/purchase price, and another loan for 10% of the value. The last 10% is the equity or downpayment you have in the property. This takes away the need for PMI. It is also used when a borrower isn't qualified for PMI. An 80/10/10 is great for the marginal borrower because they can get a decent first 80% and take a high interest second for the 10% and still be able to purchase or refinance to a total 90% loan to value.

Answer 3

bank lends 80% first lien, 10% second lien. You come up with the additional 10% plus closing costs. you will have two mortgage payments to pay monthly. the advantage is that you will avoid PMI. Also look for an 80/20 mortgage. where you do not need to come up with the 10% downpayment. good luck.

Answer 4

it means that - you will have 2 loans -
1st at 80% of the purchase price
2nd loan 10% of the purchase price
the remaining 10% is the down payment that you have to come in with (this does not include closing costs)

example:
purchase price is $250k

1st Loan @ 80% = $200,000
2nd Loan @ 10%=$ 25,000
your down payment the remaining 10% = $25000

Hope this helps!