Financing in Fort Lauderdale>Question Details

Brandongoodm…, Home Buyer in Fort Lauderdale, FL

What is an 80/20 mortgage and is it a good idea?

Asked by Brandongoodman, Fort Lauderdale, FL Tue Apr 2, 2013

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Stefanie Cohen PA, ABR, SFR’s answer
An 80/20 mortage is what is known as Conventional Financing. This is advisable....you will not have to pay Private Mortgage Insurance with this type of financing. This means that you will be making a down payment of 20% of the purchase price and financing 80%. Make sure that you have enough money for your closing costs as well.

However, if you are buying a condo, you may be required to make a larger down payment. It all depends on the condo association. Your mortage professional will be able to guide you.

Best of luck!
Stefanie Cohen, PA, ABR, SFR
Prudential Florida Realty
Scohen77@aol.com
1 vote Thank Flag Link Wed Apr 3, 2013
Means you have to bring 20% of the total amount and the lender will give you a mortgage for the other 80%. It is the most used loan for people buying a second home or investment property within the USA. IN addition to your 20% you will still be responsible for paying closing cost.

If you are doing 20% on a conventional loan in a Single Family Home to be used as primary residence then you save money by not having to pay Mortgage Insurance, giving you a monthly savings on average of $90 for a 100K home.

Back in 2005 they were getting people to get 2 separate loans, one for 80% and one for 20% frequently from different lenders...I have not seen any of those since the market bubble exploded.

Hope this clarifies the possible definitions of 80/20.
1 vote Thank Flag Link Tue Apr 2, 2013
Brandon - this is what is known as a Conventional Mortgage, where the buyer puts down 20% of the purchase price and finances the remaining 80%. Example: House costs $300,000. Buyer finances $240,000, so the mortgage will be for $240,000 and then comes up with the remaining $60,000 themselves.

Holders who finance with this form of mortgage do not have to pay PMI (private mortgage insurance) which is required by lenders where the borrower puts down less than 20%. This can save you about $270/month on these kind of numbers. A conventional mortgage borrower is often seen as more a more attractive prospective buyer to a Seller too.

Hope this helped! If I can help in any other way, or to help you find a property, just let me know,

Best regards,

Angela
Villa G Realty, Inc.
Tel: 954-816-7996
Web Reference: http://www.villagrealty.com
1 vote Thank Flag Link Tue Apr 2, 2013
It's a conventional loan and a better option if you can afford the 20% down.
0 votes Thank Flag Link Wed Apr 3, 2013
If you can afford a 80/20, or 75/25 mortgage, you probably should go that route, particularly if you're trying to buy a condo. The reason is simple, that's what it may take to get your contract accepted, and to have the condo board approve you.
0 votes Thank Flag Link Tue Apr 2, 2013
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