March 22nd, 2009 by Dale Raymond

Zero down loans and 80/20 mortgages are the same thing. They are also sometimes referred to as no money down loans. These kinds of loans hold a great deal of appeal for many people.

This kind loan is two mortgage loans in one. The first mortgage comprises 80 percent of the value of a house while the second mortgage makes up 20 percent of the value. These types of loans require a pristine credit report. In fact with recent mortgage foreclosures 80 /20 mortgages may be near impossible to find.

An 80/20 mortgage does not contain private mortgage insurance (PMI) and most often boasts lower interest rates than does other kinds of financing that are 100 percent. What this means for the consumer is that they do not have to provide a down payment and their monthly payments will be reasonable and low.

Let us look at an example of how this would work in the real world:

You wish to take advantage of a 30 year mortgage by way of an 80/20 home loan. The home in question is $300,000.

1st mortgage- $240,000 at a 6.25 percent rate. This equals $1477.72 (principal and interest payment)

2nd mortgage- $60,000 at a 7.75 percent rate. This equals $429.85 (principal and interest payment)

The 100% loan is similar to an 80/20 loan. In order to avoid paying the PMI seek out a lender who offers what is known as lender paid PMI (or LPMI). The greatest advantage of this loan is that there is only one mortgage to pay for, as opposed to two. If an 80/20 mortgage does not appeal to you for whatever reason, then there is an alternative to this- the 100% loan.

The biggest failing of this kind of loan is that the interest rate will be higher than with a loan that includes PMI. Talk with a qualified mortgage specialist to learn more about the 100% LPMI loan option

What this does is it provides assistance for those prospective homebuyers who would otherwise not qualify for the 20% through a conventional loan. An 80/20 home loan can also be such that there is a seller carry back which accounts for 20% of the price of the home.

This type of program means that no money needs to be put down on the home. Keep in mind however that there are still closing costs to pay for. If you choose to take full advantage of the 80/20 loan option then have the sellers take care of the closing costs for you.

This type of two loan structuring that makes up the 80/20 loan is sometimes referred to as piggyback. The 80/20 home loans have more than one variation. There is the 80/15/5 and the 80/10/10. In these cases the person wishing to buy a home would use five to 10 percent to use as the down payment.

It is common practice for piggyback loans to be used in order to make sure that a mortgage remains below the loan limit set by Fannie Mae. A viable option would be to split up an 80 percent mortgage with a first mortgage of 75 percent and a second mortgage of five percent. This helps to prevent having to pay a higher jumbo mortgage interest rate.

A piggyback loan can also work well for those who decide to put anywhere from five to 10 percent down on their new homes. In other cases, one might decide to use the five percent for an emergency fund.

If you have no money for a down payment then an 80/20 home loan is an option worth considering. In time as you build up equity you can then turn around and refinance the second mortgage of 20 percent in order to get some money out of it.

Another option is to wait until both mortgages equal 80 percent and then refinance. This will make it possible for you to pay off both mortgages with one and get a better interest rate in the process.

If you cannot find a lender to make an 80/20 loan, dont despair, banks and lenders will always have creative ways to make the American dream come true, for individuals and families. Consult your mortgage broker for the latest programs.

Business, home equity loans, loans, mortgages, real estate

March 6th, 2009 by Martin Harris

Many people work really hard to get into a home. Having a home provides so much more than just shelter for you and your family. That is why losing that home can be extremely devastating. If you find yourself facing foreclosure, it might feel like all is lost. Avoiding foreclosure might actually be more of a possibility than you think. If you take action now, you might be able to save your home.

The first step to take is to talk to someone about your situation. A housing counselor is probably the best place to start. They are educated on the different options to help you stay in your home. With their counsel, you will be able to set a course of action.

The counselor will more than likely instruct you to talk to your financial lender. If you feel comfortable doing so, you can talk to your lender before you meet with the counselor. Lenders are in the business of making money. If you aren’t making your payments, they aren’t making money.

Some lenders can offer loan modification assistance. This means that they can help modify your loan to make it more feasible for you to make your monthly payments thereby avoiding foreclosure. Refinancing your home also might be something the lender offers. Be wise not to get yourself in a worse situation by refinancing your home. Make sure it will help you not only in the short run, but in the long run as well.

There are a lot of people who have found ways to capitalize on the helpless situation people who are facing foreclosure find themselves in. Be sure to do your research and that you know exactly what you are signing up for when someone offers to help you keep your home. Unfortunately, there are a lot of scams out there.

When your bills start to pile up and you aren’t able to make your mortgage payment each month, it might be tempting to go into denial by ignoring the letters from the banks. Don’t ignore letters from your lender. There might be important information about your loan standing. It is better to know the facts.

It is important to know your mortgage rights. Read the terms of the loan and what the specifics are in your mortgage regarding foreclosure. Educate yourself about the foreclosure laws and timeframes in your state. Every state has different laws and knowing the information about your state will be vital to the fight to keep your home.

If you are facing foreclosure, all is not lost; there is still hope to keep your home. Do your homework and educate yourself about your options and be sure to talk to your lender to have them help you find a way to save your home.

avoid foreclosure, avoiding foreclosure, Finance and Money Management, mortgages