Has anyone done a 80/20 mortgage loan?

[montoya83]

Has anyone done a 80/20 mortgage loan? I came across a program that will let me get a conventional 80/20 loan with 2% down I found the perks of this is not having to pay for mortgage insurance, low downpayment but it seems like the cons are having to pay closing costs and having 2 seperate loans.. I guess I am confused as to what to go with a FHA loan with 3.5% down and no closing costs or the 80/20 loan. Both seem to be around the same intrest rate of 4.25%

[GRate]

Conventional Loans reqiure 5% down now. No such thing as a 80/20..

[StartingOver10]

How is the lender telling you there will be no closing costs on your new mortgage?

Even if the lender has bumped up the rate a little bit to cover their own costs, the lender can't get rid of any of the third party charges. Third party charges include: title, survey, government fees etc.

They can pay those fees for you, but you need to clarify, with a fully written GFE, who is paying what fees and what your rate will be. The exchange is generally a higher rate for the lender to pay some of your closing costs as the money to pay your costs comes from the higher rate.

Also, the best way to compare loans from lender to lender is by comparing the GFE's. Remember, the lender has no control over third party costs.

[DallasLoanGuy]

if you plan on paying the 2nd lien at an accellerated rate.... paying off sooner.... the lack of pmi is awesome

curious who offers this though

[ChemGuy]

Lenders I've dealt with want a minimum of 10%.  Some are 10% no MI, others want MI.  YMMV.

Some have 80/10/10 option, but for me the 10% extra was an ARM---prime pluss 0.99%....YUCK!

[montoya83]

The program that is offering the conventional loan is a company called Homewise or in other states known as Homestart its a first time buyer program and all they required was 2% down everything was documented in writing the rates they offered was 4.35% for the mortgage 1st loan and 6.375% for the 2nd loan. For the FHA loan closing costs were being paid for by the lender its a local company here in NM. This was also documented in writing and intrest rate given was 4.25% Any suggestions in what sounds better in the long run? They both seem to have pros and cons.

[MorToProducer]

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@montoya83 wrote:

The program that is offering the conventional loan is a company called Homewise or in other states known as Homestart its a first time buyer program and all they required was 2% down everything was documented in writing the rates they offered was 4.35% for the mortgage 1st loan and 6.375% for the 2nd loan. For the FHA loan closing costs were being paid for by the lender its a local company here in NM. This was also documented in writing and intrest rate given was 4.25% Any suggestions in what sounds better in the long run? They both seem to have pros and cons.

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That sounds like a good deal to me, better than the FHA. FHA is very expensive now. They roll in 1.75 points into your loan and the MI (basically pmi in addition to your PI payment)  would be 130 basis points per year /12, which equates to $130 in MI for every 100k of loan amount. In addition, as of the new FHA guidelines, you would have this MI for as long as you have the loan, would never fall off. Best of luck.

[stillworking]

80/20 mortgages were of the biggest  culprits in the housing crash.. be extremely careful.. many of these have adjustable rates