Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
it can be fixed rates. During the go-go real estate boom, creative financing was everywhere. that particular loan wasn't available, then it was and very easy to get, now it is tightening up. Have good credit, it shouldn't be a problem...
I always suggest you tell your mortgage broker/banker everything and have them help you look at several different loan options to find the one that best fits your needs. You can also suggest some loan types that you would like to compare, i.e. the 80/20.
I have never seen a fixed 20 in an 80/20 though I am sure Shelly is right and it is possible...just not usual. I have seen 5 or 7 or 10 year fixed then adjustable. If the 80/20 works for you these would not be a problem. The liklihood of greater than 20% appreciation in 5 or 10 years is pretty good in growing areas.
Make no mistake about it however you can easily end up under water for a while. So be cautious.
They are called "closed end 30/15's" They are a fixed rate, amortized over 30 years but due in 15 years. They are fixed rate but have a balloon payment after 15 years. I have found most people have no problem paying them off before the 15 year period because they are such small payments compared to a 80% 1st mortgage and very comfortable to make extra payments too which avoids the balloon payment. Or the more popular plan is to refinance the house in 10-12 years when it has gained much more than the 20% equity and then they not only pay off the second, but get cash back and still only have a 60% or so loan to value mortgage.
All that being said, statistically, a person only holds ownership to a house for 7 years so the 15 year balloon payment doesn't come into play there either because both loans are paid off at closing.
mb is correct. Fixing the rate on the 20% 2nd mortgage is just as readily availble as the HELOCs. Most of them do have the 15 year balloon that he mentions as well. However, the source I usually use for my 2nd mortgages (stand alone or piggyback) you can fix the rate on your 2nd for any term you choose up to 40 years. And the rate is the same for all the term options (currently 8.99% fixed 10, 15, 20, 30 or 40 years you choose the term!)
As for 100% financing there are many A-paper options availble today beside the 80/20 including VA, My Community Mortgage/Home Possible, "Piggy Back Buster" (1 loan at 100% with no mortgage insurance), Flex 100, Rural development, Emerging Markets/Barrier Buster. I put these in a sort of best to worst order.
Most require at least a 620 credit score (mediocre) and as all A-paper loans do not have a pre-payment penalty.
As far as lending guidelines tightening up...as with anything else don't listen to the media too much. It is true in the subprime world things have tightened up some and even in the A-paper world things have tightened up just ever so slightly. However, overall we are still able to do "creative financing" which is to say low or no down, interest only, high debt to income and even those dumb option arms.
When you can add the no money down 100% mortgage to the lower than market interest rates of the 1st time homebuyer bond programs then you really have something! FYI-most of your smaller broker operations will not be "signed up" for these bond programs.
Example: A first time homebuyer buying in Dakota Co., MN can get 5.75% on a 30 year fixed with $0 down and $0 out of pocket today!
OK, I am confused with all these scenarios and loans everyone is talking about but thank you for your help. I will read up on them online some more. (maybe a mortgage site for "dummies") and maybe truely understand everything! Thanks again. And I know we will have excellent credit so that is not a problem!
OK, I am confused with all these scenarios and loans everyone is talking about but thank you for your help. I will read up on them online some more. (maybe a mortgage site for "dummies") and maybe truely understand everything! Thanks again. And I know we will have excellent credit so that is not a problem!
I would suggest you not only do that (research and information can be invaluable when going into any large financial transaction) but interview your mortgage broker before they pull your credit. Check with your local bank first and see what mortgage programs (types) they offer and if they give any special discounts on closing fees for there current account holders. I would then check with a mortgage broker. They work with many and sometimes hundreds (as I do) of national banks and lenders. Make sure you feel comfortable with the person who is going to facilitate your mortgage. Make sure you understand them and they offer you options, not push you into the "best deal of the day". My suggestion is to not ask the question" what is your rate?" Because the rate can only be determined after they know you credit score, job situation, Debt to income ratio, how much you are going to put down and other factors like that. It is kind of like interviewing a babysitter. You want to feel comfortable and confident whit whom you leave your child with, well this person is going to be handling your financial records and information as well as informing you or your mortgage options. Make sure you understand each other, that is key. Also, do not let anyone but the person you decide to work with pull your credit. The more people that pull you credit, the score goes down.
Good luck.
Wow, I didn't know that about your credit! The more people that pull it, the more it goes down! I did just finish reading a number of articles online that explain the 80/20 and I really think that that is probably what would work best for us. We are not looking to move until next spring or summer but just trying to get all my options together now.
To simplify for you an 80/20 is one of many $0 down options. It would probably be recommended to do a $0 down loan instead of taking a loan out on the 401k.
Example- If you were buying a $200k property you would have 2 mortgages:
1st mortgage $160,000 6.625% 30 year fixed based on today's pricing
2nd mortgage $40,000 9.0% fixed or adjusting with prime rate (your choice)
You would make seperate mortgage payments on both-so 2 payments a month. Interest rates above are 'ballpark' based on today's pricing.
You could either pay the closing costs yourself or have the seller pay them. If the seller pays them you will need little to no money to purchase your home.
I So since the 20% isn't fixed your mortgage payment continues to go up?
The 20% can either be fixed or remain floating...your choice. FYI-if you choose the floating that does not mean that it continues to go up over time. It can fluctuate either way...up or down or remain the same.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
