I found a mortgage provider willing to do an 80/10/10 loan due to my exceptional credit score and low debt to

Asked by Mapet6, 19003 Sun Jun 21, 2009

income ration. What are the pros and cons of going this route (FYI: I have 10% to put down and the piggybank loan would be at 9% interest.) Thanks,.

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Tom Heath’s answer
Tom Heath, Mortgage Broker Or Lender, Tucson, AZ
Sun Jun 21, 2009
Some questions your lender could help you with: What is the Mortgage Insurance (MI) payment that is required if you had 1 loan at 90%. The rate on the first mortgage would likely be higher as well due to the added risk layer of being 90%. How does that payment of 1 loan compare to the combination of your first and second.

With 9% second, it sounds like a fixed rate loan, but you should confirm that.

The time that you expect to keep the loan is important. The lowest cost option, currently, is probably the way to go if you intend this loan to be short term.

A one loan option with MI may be more expensive at the moment, but it is a safer long term solution. To eliminate the second later would require a refinance, and of course rates cannot be predicted for that time, but the trends indicate we will have higher rates for some time to come. The refi would also include fees. Mortgage Insurance can be canceled once your loan balance hits a certain point (your lender could give you the specifics).

Options if you are eligible:
VA: WIth 10% down on a VA loan, the funding fee is reduced and there is no Monthly MI
FHA : There will be MI with an FHA loan and usually a 90% conventional loan is similar in payment to a 90% FHA loan, but the FHA product would allow you to put less down if you chose and keep some in your emergency fund.
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Edmund Choi, Agent, Paoli, PA
Sun Jun 21, 2009
What is the cost of PMI if you chose 90/10? What is the rate difference if you chose 90/10? What are the mortgage origination costs if you chose 90/10?
Web Reference:  http://MainLineandBeyond.com
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Mapet6, Home Buyer, 19003
Sun Jun 21, 2009
Thanks Michael. My mortgage lender has discussed the pros and cons with me, I'm just looking for another opinion.
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Michael Fran…, , Montgomery County, PA
Sun Jun 21, 2009

Your question should be addressed by the mortgage provider that is willing to do the 80/10/10 loan. A good faith estimate should be provided as well as the pros and cons. Surely your question was proposed to the lender. Is it that you don't believe their response or is it that they don't have one.

If you need more information you can always contact Ruth Falcone at Trident Mortgage.

Ruth H. Falcone

Mortgage Consultant

305 2nd Avenue, Suite 210

Collegeville, PA 19426

Phone (610) 831-8112

E-Fax (610)650-5599


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