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80/10/10 loans

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Established Contributor

80/10/10 loans

I bought my first house ~7 years ago with a 80/15/5 loan (80% first mortgage, 15% second mortgage, 5% down).

Do these loans still exist in todays climate? I am looking to purchase a new home and would be interested in a 80/10/10 loan or something similar (80/5/15 etc). 

Thanks in advance for any help.

Cheers 

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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Super Contributor

Re: 80/10/10 loans

still very available.

requirements are just tighter...... like reserves and scores.

 

Retired Lender
Message 2 of 7
Established Contributor

Re: 80/10/10 loans

Thanks Dallas. My wife and my scores should not pose any problem, nor should reserves.

 

Can I get your take on these types of loans? I like the idea of them because I have heard that it can be difficult to have PMI removed from a mortgage. I also like that I can pay down/off the second loan at an accelerated pace basically lowering my monthly payments in the future.

 

Thanks again for your help! 

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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Valued Contributor

Re: 80/10/10 loans

If reserves are no problem would it not make more sense to have a clean 80/20 loan from the get go?  That way PMI is not an issue and you don't have the pesky 10% loan hanging about.  It would make the whole transaction a lot easier.  Just a thought.
Message Edited by Watchmann on 09-08-2009 06:45 PM
Message 4 of 7
Established Contributor

Re: 80/10/10 loans

Hi watchmann, you make a good point--and when we get to the point of putting an offer on a house we will seriously look wether we can reach 20% down without too much pain. Keep in mind that reserves considers things like retirement savings etc that we have no interest in touching until we retire. Also, we have a number of investments that we would rather not liquidate at this moment--although we certainly could in order to get to 20% down.  I think it all comes down to comfort. I would rather pay a bit of extra $$ for a second mortgage than to liquidate most of our savings.

 

Having 6 months of reserves is not hard terribly difficult. Converting those reserves to $$ is not always easy or desirable.

Cheers

 

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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Super Contributor

Re: 80/10/10 loans

80/10 is a great option. Compare it to 90% + PMI and pick one.

 

Retired Lender
Message 6 of 7
Valued Member

Re: 80/10/10 loans

We were looking for 90% conventional loans, and ended up choosing an 80/10/10 where the 10% is a HELOC, not a second mortgage. Even with reserves and excellent credit, we were only offered an 80/10/10 once out of about 60 different LO. Our house is a short sale, so there is some equity...not sure if this is a possibility for you. It's a pretty good loan though, especially with the interest rates on HELOCs. We are actually putting 20% down, and then after we close and get the final HUD-1 we are going to US bank to take out the HELOC if we still feel like we need it...US bank's interest rates on HELOCs right now are about 3.99%. Some banks have floors on HELOC interest rates right now, so you might have to do a little finagling to make sure that 10% of your loan sn't at a 9% interest rate or something. Good luck!
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