I was wondering if I could put both my home loans into one loan? I have an 80-20 loan. My 80% loan is at 6% intrest and my 20% loan is at 11% intrest. Why can't I have a 100% loan and maybe a 6-7% intrest rate? Can anyone explain this to me? If this 100% loan isn't possible, does anyone have suggestions on what I could do? Oh, and I don't want any cash back or any of my bills included in the loan. Just the house. Thank you to everyone!
2007-03-08 13:56:26 · 8 answers · asked by stephaniea 2 in Business & Finance ➔ Renting & Real Estate
So, everyone thinks I should at least find out if I can get them into one loan? Maybe I will try and save as much as possible and continue paying off my second loan. Thanks everyone.
2007-03-08 15:08:10 · update #1
Well, here's the deal. As a few members have mentioned, you currently have 100% financing as you did not have the 20% to put down. A broker gave you an 80 / 20 because it avoids PMI (private mortgage insurance) which basically guarantees the lender that in the event of a default in payment, they will pay for all foreclosure fees and the Lender will not loose money.
Now the reason you do not want to pay PMI is because there are no tax benefits! You should speak to a financial adviser to determine the current tax benefits available to you.
As previously mentioned, if there is equity in the home, you can refinance and consolidate your debt or, you can refinance for a lower rate on the 2nd loan. With interests rates at an all time low, now would be the best time to act if this is the direction you're headed.
2007-03-08 16:46:49 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Hey Stephani, I'm not really too sure what you are asking but it sounds like you have a 1st and 2nd mortgage on the same residence. If this is the case, I'm willing to guess that each loan is from a different lending institution. The 2nd mortgage rate is normally higher than the 1st because the lender takes a greater risk. That is because if you should default on the mortgage, the 1st mortgage lender get first dibs at getting their money back by foreclosing and selling your house. The 2nd mortgage lender would normally get second dibs. It might be possible, if you are solvent (good job with good wage) to clear both mortgages through a third party lender at a loan rate between the two you now have, but I wouldn't count on it. Mortgages are normally set for a fixed term, say 5 years. You can always try to renegotiate your mortgage at that time. Also, most mortgage lender will charge you a penalty for any changes made before the term has expired. the term is not the same as the amortization period. Good Luck! If you need more, e-mail me.
2007-03-08 22:15:20 · answer #2 · answered by The Hiker 3 · 0⤊ 0⤋
Lenders use the 80% level as the line in the sand so to speak. If you cannot pay, they will take the house and be forced to sell it at auction, where they would receive about 80% of its real market value.
So, you will not be able to get a 100% loan. The interest rate on the 20% is higher, as it sounds like you have noticed. This is b/c that last 20% is very high risk for the lender in case you default. If you did not pay and they took your house, this 20% is lost b/c they cannot get the full market value.
You could refinance and pay PMI, but that not cheap either and it's you paying for insurance for the lender. At least with the 20%, you are building equity - though it may be slowly.
2007-03-08 22:06:35 · answer #3 · answered by Matt K 4 · 0⤊ 0⤋
The reason why you have two types of loans is that you probably didn't have enough for a down payment, so the lender broke the purchase price into two loans: a) One for the mortgage (80%) b) One for the Down Payment (20%).
That's also why you see a normal mortgage rate on the 80% slice and a low-interest credit card rate on the 20% slice.
These loans are generally called subprime loans or loans given to those who cannot normally qualify for normal mortgages. They command higher interest rates since there is more risk in your case of piggybacking the two loans.
I have never dealt in this situation but I would maybe either try to find a plan to pay off the 2nd loan or ask your bank or another bank to refinance.
2007-03-08 22:07:33 · answer #4 · answered by Jesse 4 · 0⤊ 0⤋
I'm in the same situation, I have a 80/20 loan. The reason why we did this is because we did not have the 20-30% to put down on the house. When you do it this way you do not have to pay PMI which is property mortage insurance. If you were to go 100% you would have to pay for PMI because your consider more of a risk to the bank when you first purchase your home.
Find out when you can refiance, it depends on your loan. I am able to refiance in a year but if I was to do it before the year there would be penalities.
2007-03-08 23:55:58 · answer #5 · answered by Paula A 2 · 1⤊ 0⤋
You didn't qualify for your original mortgage amount and it sounds like you didn't put much, if any, down on the house. The person who did your creative loan packaging got you out of putting down any money and at the same time got you out of paying PMI, so you actually aren't as bad off as you seem to think. 11% is definately high. If you have any equity built up in your home you could refinance and roll them together, but check to see if either loan has a prepayment penalty. You will also need to qualify for that bigger loan amount (good credit) and all the rest.
2007-03-08 22:09:28 · answer #6 · answered by Anonymous · 1⤊ 0⤋
You should be able to combine both of your loans into one, IF your property value is enough to cover it. Some lender will finance over the current value if they can show probable appreciation in the future. Talk to a good mortgage broker in your area.
2007-03-08 22:04:38 · answer #7 · answered by ANSWERMAN 1 · 0⤊ 0⤋
yes you can find a mortgage lender willing to consolidate you loan gmac dtech etc
2007-03-08 22:04:56 · answer #8 · answered by holdencaufield 2 · 0⤊ 0⤋