Financing in 30022>Question Details

Rels, Both Buyer and Seller in 30022

we currently have an 80/20 interest only loan that works for us as we pay principal when our annual bonus comes. are these still around?

Asked by Rels, 30022 Thu Feb 9, 2012

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Rels,
There is another reason I would stay away from any ARM's previously you may have only had a 2% adjustment per either a year (based on Prime) or every 6 months(based on LIBOR) now almost every loan is written with a minimum of a 5% increase. So if you don't or can't refi in the next 5 years you could go from a 3.0% to an 8% rate and then some (in 2007 Libor was at 5.5 roughly and the 5% increase would be added to that rate. I don't think you would want to face a 10.5% interest rate (interest only or not) when you can have a 30 year fixed rate.

Also, little known to most, 30 year rates Cost either the same or less to get than a ARM does. (investors are not willing to take risky options with their money they way we were 4-5 years ago.) So with less investors interested, the Arm rates are not as noticeably lower than the Fixed rates.

Of course none of this addresses the 20% second. second mortgages also come with 2nd mortgage closing costs (although much lower). I have not seen any company go higher than 15% after a 75-80% 1st(so depending on all your other qualifications your still maxed at 90-95%. 2nd rates are no where in the ball park of 1st mortgage rates either. You'll AT BEST make the same payments with a 1st and 2nd as you would on a single fixed rate but you take all the risks and additional costs on.

If you have any other questions we can help you with, please feel free to call.

Best Wishes,

Rob

Rob Robbins
Senior Mortgage Consultant
Cornerstone Mortgage Group
6151 Powers Ferry Road NW
Suite 610 Atlanta GA 30339
Office 678-578-7613
rrobbins@cmghl.com
Cell 404-932-5353
0 votes Thank Flag Link Wed Feb 15, 2012
This product may still be around but with the way risky loans have been hit with adjustments, it may not make sense anymore..especially on the second loan. It's a great product. I put my mother in an fixed interest only loan. For purchases though, as Brian mentioned, there are so many products out there. HomePath(.com) offers as little as 3% down with no mortgage insurance (MI), however, the rate is adjusted to cover the MI. So, in reality, you are payimg the MI.
As Rodney mentioned, FHA is available. If you buy a HUD home (hudpemco.com), you can get a home with $100 down. You may also get money to completely remodel the house. There is MI until you reach 20% equity in the home.
Another option is to put 20% down and then after closing get an equity line of creditl to 100% from the credit union. This will afford you the best rate because no adjustments will be made on the combined loan to value (CLTV) loan. What does that mean? Lenders start with a basic rate at a par value. From there, points are assessed based on the level of risk you are adding: interest only, 100% CLTV, ARM etc. The buyer can pay these points or add them into the rate to save money out of pocket (when seller is not paying closing costs).
Choose your product carefully. Let me know if I can help you with your loan and/or the buyer of your current residence.
0 votes Thank Flag Link Sat Feb 11, 2012
Hey Rels,

I see that you are looking to buy a home. The answer to your question is for some people yes. Most people will tell you that there are no 80/20 loans because they dont offer them. We do have access to this type of 100% financing still. While it used to be very common it is very rare that anyone looks at this type of loan anymore. There are so many loan options for most home buyers here in GA i would recommend talking to a loan specialist like myself or any of the other ones on this page as they are all great! If you would like to contact me feel free to email me at bberman@mortgage-atlanta.com or give me a call at 678-564-1522. I wish you the best!
Thanks
Brian
0 votes Thank Flag Link Thu Feb 9, 2012
The interest only option is still availble for certian loan programs. It is not nearly as common as it was 5+ years ago though. 80/20 loans no longer exist. Very few banks offer 2nd mortgages right now. Those who do, typically will not go over 80% CLTV. 90% CLTV would be the highest you are likely to see for awhile now.

FHA has the lowest down payment option at 3.5% down.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle Renovation | VA | USDA | GA Dream | Jumbo Financing
Web Reference: http://www.rodneymason.com
0 votes Thank Flag Link Thu Feb 9, 2012
This the person who asked the question. i'm sorry, i wasn't clear. we want to buy a NEW home. we understand we will need to get out of our current underwater home, but wondering if we can finance the new home in the same way as we'll probably use up some cash to get out of old home. ps, we have excellent credit and will have almost 6 figures in reserve
0 votes Thank Flag Link Thu Feb 9, 2012
Yes, the loan is still around, the question is your value still around. Interest only loans are available but if your value has fallen faster than your principal pay downs, you may have difficulty refinancing. You may still qualify for the HARP program but this program prohibits interest only products.

You are right around the corner, email me or give me a call and I can quickly determine your options.

Best regards,


Timothy Brown
LPO Manager | Evolve Bank & Trust
11605 Haynes Bridge Road Suite 125| Alpharetta, GA 30009
tbrown@getevolved.com
678.468.5626 x110 | fax 678.935.1156 | cell 678.467.9959
NMLS#: 168281
0 votes Thank Flag Link Thu Feb 9, 2012
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