Avoiding a Mortgage 80 20 Mortgage Insurance [mortgageloan-processor.blogspot.com]
Welcome to EitanPinsky.com, where you will find all the answers to your home financing needs. In this video, I will explain: Mortgage Basics When you want to buy a house, there is a good chance that you will need to get a mortgage. For instance, take my friend Byron the Home Buyer. Byron wants to buy a home but he only has a small down payment to pay for it. Byron would need to get a mortgage for the remainder... A mortgage is a loan, usually from a bank, that provides a home buyer with the money required to purchase a home. In return for receiving a loan, the homebuyer needs to pay back the bank with interest. Let's assume that Byron has 000 and would like to purchase a 0000 home. In this case, Byron doesn't have enough cash to pay for his home. Byron will need to borrow 0000. Byron chooses a 30-year amortization 5% fixed rate mortgage. - Don't worry, I will explain what all of that means in another video... This mea ns that Byron must make monthly payments to his bank of 14. After making this payment for 30 years, Byron will own his house! Congratulations Byron, on purchasing your first home!! Over the course of 30 years, Byron pays back the 0000 he owes the bank plus 5000 in interest. In very simple terms, this means that his 0000 home actually cost him 5000. However, if the loan was paid back, in let's say, 20 years, Byron would save a over 000 Byron's mortgage helped him purchase his home. But it's important for him to remember that his home ...
mortgageloan-processor.blogspot.com Mortgage Basics - What is a Mortgage?
An 80 20 mortgage loan is also referred to as a zero or no money down loan later. There is actually two loans, mortgage home regular home accounts for 80% of the price of the house and a second mortgage or loan capital consisting of 20% of the cost. The idea behind this type of loan is to avoid mortgage insurance (PMI) since the net worth of mortgage payment.
- No cost refinanceAlmost all mortgages require a form of mortgage insurance, if you are unable to doA deposit of at least 20 percent. By acquiring a second mortgage or home equity loan for 20 percent of the costs you can get around this requirement, the second property loans as a deposit.
There are variations on this type of loan, a loan 80-15-5.
This means that the borrower was a big mortgage to 80 percent of the purchase price of the house, a mortgage on his back 15 percent, and made a 5 percent down payment. This can be a good option if you have somethingThe money for a down payment, but not enough to cover the entire 20%. - No cost refinanceThe second mortgage may be a second or a fixed mortgage may be a line of credit. If there is a fixed second mortgage so the interest rate is usually fixed for the duration of the loan. Most mortgages are fixed rate second half from 30 to 15 that the second mortgage is amortized over 30 years, but is payable in 15 years.
The advantage of going with the credit line as a second mortgage is that interestis usually much lower than the second mortgage interest rate fixed. You can also use an interest only loan can save you hundreds of dollars in mortgage payments every month.The 80 percent first mortgage can be a fixed interest rate (15 years or 30 years), with variable interest rate (typically 1.5, 1.7 or 10/1fixed period ARM) or interest-free loan only. Normally, the interest rate for mortgage loans second highest rate for the first loan. But because the borrower has to payMortgage insurance that cost less than a traditional mortgage, the mortgage interest rate higher for the second loan.
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Find More Avoiding a Mortgage 80 20 Mortgage Insurance IssuesQuestion by kevin l: should i agree for a 20 year mortgage at a fixed interest rate? should i agree for a 20 year mortgage at a fixed interest rate or should i agree to an interest rate that fluctuates and is based on the performance of the economy. i know the benefits and disadvantages of both, bit i do not have access to historical trends to make an intelligent decision. can any financial or loan officers out there assist? Best answer for should i agree for a 20 year mortgage at a fixed interest rate?:
Answer by rose253099
In my opinion and upon my extensive research before I purchased my home I would have to say that a fixed mortgage is safer. That way there are never any surprises and you can budget your monthly income accordingly. If you can afford to pay more than your monthly payment then make sure that you do not have a early payment or early payoff penalty. Good luck!
Answer by Maggie G
If you qualify, go for the fixed interest loan with 20% or more down and total monthly payment equaling no more than 25 - 30% of your take home pay. If interest rateds dip, you can always refinance.
Answer by eany1955
Fixed, fixed, fixed. Go with fixed all the way! If there is a lower rate in the future you can refinance.
Answer by Tony k
Stay away from the adjustable mortgage,this is what got us into the housing mess at least that is what I believe.It goes something like this,the house is really more then you can affo rd but they tell you the intrest is low but it will go up a little bit in XXXXXXX time,but you should not worry because you will be making more money then and Bla bla bla and you buy into this and everything is fine,as an example the monthly payment is $ 1000.00 THEN GOES UP TO $ 1350.00 then $ 1600.00 and so it goes. If you buy a house you want a FIXED mortgage this means a fixed interest rate that will never change.You must remember this what ever your interest rate is and things change you can always refinance to a lower rate and the mortgage company cannot raise a fixed interest rate so once again STAY AWAY FROM ADJUSTABLE MORTGAGE
Answer by Dan B
ARM or variable interest rates ALWAYS adjust UP. I've not heard of any of them adjusting down (but it could happen when heck freezes over). The lender has no way of knowing what the future will hold. Ask 'em. They'll tell you they can't. But the lender is expecting you to know what the future will hold for you; whether the future will allow you to make the higher monthly payments that almost certainly will occur. There is ALWAYS a disclaimer that says "past performance is no guarantee of future results." I would go with a 30 yr fixed. Here's why: $ 150,000 @ 6% for 30 yrs = $ 900 payments Pay off in 30 yrs. $ 150,000 @ 6% for 20 yrs = $ 1,075 payments. Pay off in 20 yrs. $ 150,000 @ 6% for 30 yrs with extra $ 175/mo = pay off in 20 yrs. The advantage here is that you will have the mortgage paid off in 20 yrs anyway, but you aren't locked into the higher $ 1075 monthly payment should you have a minor financial emergency (car repair, medical, etc) or a more permanent increase due to taxes or insurance rates. You'll pay $ 70 extra interest over the life of the loan compared to the straight 20 yr fixed at the higher monthly payment.
Answer by Mike
Typically adjustable mortgage rates are based on prime or lately more commonly 12 month libor. Typically the premium over 12 month libor is about 2.25%. At the current libor rate at a record low of about 1.25, the interest rate for an adjustable mortgage would be a very good 3.50%. However, if past history is any indication, 12 moth libor will hit 5% or greater at least every 5 years making your mortgage interest rate go to 7.25% or greater. The question that you have to ask yourself is whether you want to take the risk. Also if you take the risk, do you have emergency funds set aside to hopefully wait out the high interest rate? Trying to refinance when libor is high will not help since fixed interest rates will also be high. The following is the history of 12 month libor rates for the past 20 years. The 10 years prior to that was even worse hitting over 15%. http://www.wsjprimerate.us/libor/libor_rates_history.htm
Answer by Banker
Hi Kevin, All the answers have some merit, but they do not address the key most important item, YOU. What are your plans in the next 3,5 or 10 years and beyond. If you only plan on being in the house for 2-5 years then an Adjustable Rate Mortgage (ARM) may be good for you and your family the rate on a 3 year ARM could be 1% less then a 20/30 Year Fixed mortgage and it would be fixed for 3 years. Who cares if goes up.... if you are already sold the house and moved on. .... If you are unsure of where and what you will be doing then a Fixed rate will let you sleep better a night knowing your interest rate is locked down. Rich www.loanonelender.com
Answer by Nabers
Fixed mortgage is always safer. You might get the payments low, still it contributes you with a minimal level of risk.
