Piggyback loans 80/10/10

[Anonymous]

I am looking into doing a piggyback loan with US Bank.  There are surely other banks who offer them but that is the one recommended to me by a friend.

My question concerns closing costs - are the closing costs comparable to a traditional one mortgage loan or will I pay a substantial amount in additional closing costs.

I understand the second mortgage will be at a higher interest rate but I was curious as to whether I should anticipate much higher closing costs.

Additionally, I know there is no set rule but is estimating 3% for closing costs too low?

Thank You in Advance.

[Anonymous]

80/10/10 loans are typically an 80% LTV first mortgage with a 10% HELOC and 10% down payment. HELOC origination fees are typically a few hundred dollars, so your overall costs won't be substantially higher than a "normal" loan.

Will you be using an impound account for taxes and insurance? What is the estimated purchase price? Are you paying any points to buy down the rate? Those factors can substantially affect the total amount of funds needed to close.

[youdontkillmoney]

Back on April 29, 2016 I received this quote from US Bank (rates were lower back then):

LOAN OPTIONS 1:

Loan Program: 30 Yr Fixed 80/10/10 (THIS IS THE 80% which will be the 1st Mortgage)
Loan Amount: $800,000
Rate: 3.625%
Payment: $3648.41
Credit from US BANK: $2000
Credit for the Platinum Checking and Savings Accounts: $1000
Total Credit from US BANK: $3000 (this will go towards cost of the loan)


Loan Program: HELOC (this is the 10% to the loan option above)
Loan Amount: $100,000
Rate: 4.50%
Payment: $375.00
Total Cost: $0.00 (NO COST ON THE HELOC)

LOAN OPTIONS 2:

Loan Program: 30 Yr Fixed LPMI (THIS IS THE 90% which will be the 1st Mortgage; No Private Mortgage Insurance)
Loan Amount: $900,000
Rate: 4.375%
Payment: $4493.57 (you will need to add the following to the payment Taxes: $1041.67 & Insurance $100.00 Total Payment: $5,635.24)  
Credit from US BANK: $2250
Credit for the Platinum Checking and Savings Accounts: $1000
Total Credit from US BANK: $3250 (this will go towards cost of the loan)

Items Needed:

• W-2's for 2014 & 2015 (for both you and your wife)
• Two most recent pay stubs (for both you and your wife)
• Two month bank statement & retirement accounts (all pages are required; if its 1 of 10 pages I will need all 10 pages)

Not sure about closing costs as I never went through with them. I wnet with a jumbo 30-yr fixed with Wells Fargo at 3.75%.

[kc0039]

It depends on the title company. Anticipate 3%-5% closing costs from the purchase price. The closings costs doing a piggyback may be higher because you have to pay the interest (dependent on closing date), plus the recording fee for the 2nd mortgage. If it's a purchase, it may require more. 

[Anonymous]

Thank You all for the replies.  Youdontkillmoney- that was extremely helpful - thanks for sharing!

[Anonymous]

Can you anyone lend insight as to whether a 20% down payment would get me an appreciably better interest rate than a 10% down payment.

My preference is to put 10% down because 20% would pretty much deplete my savings.

Credit Scores are good but not excellent - approximately 739 last time I pulled a report on here.

Thank You.

[kc0039]

It depends. If you're putting 10% down without using a 2nd mortgage, your interest rate will be similar to having 20% down. If you have a 2nd mortgage to go with the 1st, the interest rate will be slightly higher because there will be a 2nd mortgage to subordinate.