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80/20  Mortgage Combination Financing                                                                                                         

80/20 mortgage combination financing or piggyback mortgage offer a convenient way to provide financing in a purchase, refinance, or debt consolidation transaction. In a purchase transaction, a second trust or line of credit is used in combination with a first mortgage to avoid paying PMI. The first mortgage is always set at 80% of your purchase price eliminating te need for PMI. Add a second mortgage of 20% of the purchase price. There are actually versions of this 80/20 mortgage combination financing offered by several lenders. I have had clients close their 80/20 mortgage transaction with no cash by having the seller pay all of their closing costs. I also see lenders offering 100% financing using a single loan with lender paid mortgage insurance. Typically, I will run both sets of numbers and make a suggestion based on how long you plan to be in the home. Email 80/20 mortgage questions

You have a wide range of mortgage options on this 80/20 mortgage, including fixed rate or 80/20 mortgage arms. Also, interest only 80/20 mortgage products are available. Several advantages using this 80/20 mortgage approach include:

  • Your entire 80/20 payment is tax deductible (mortgage insurance is not)

  • You may decide to pay off your second early reducing your total payment.

However, there are some potential problems with the strategy.

  • Your second trust may include a prepayment penalty - Our programs do not

  • Depending on the rate on your second your total payment may actually be more. Send me an email with your anticipated sales price and I will be happy to run Good Faith Estimates comparing both approaches for you.

Second Trust Ratios

A second mortgage or second trust is a loan secured by your property which takes second position to the first mortgage. A second trust carries a fixed interest rate for the life of the loan and amortization periods range from 5 to 20 years with a great new product amortized over 30 years with a balloon due in 15 years. The longer amortization period lowers your monthly payment significantly. Generally, your total debt ratio should not exceed 45% of your monthly pretax income.  Depending on credit scores, an interest only HELOC may also be available to you as well

I have included a page on how to calculate your 80/20 qualification ratios.

I also have a Free report "Buying your First Home with an 80/20 mortgage" available by email.

Read more about 80/20 Closing Costs

I have included a page on documentation requirements. These products should be fully documented but reduced documentation products are readily available with 5% of the sales price as a down payment.

We offer you the ability to qualify and close into several unique programs which accommodate borrowers with non traditional income or asset situations. Please visit my No Docs page for additional information on a Stated Income Second Trust. 

Many of my clients are converting from fully amortizing payments to an interest only approach with a significantly lower monthly payment. I have some extensive information available. Read more to see if this powerful tool could work for you.

In 2008, Short Sales are where most of the bargains in real estate are. Learn more about Short Sales

I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

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