Md, Home Buyer in Philadelphia, PA

What mortgage companies still offer 80-10-10 mortgages for Philadelphia condos?

Asked by Md, Philadelphia, PA Mon Apr 27, 2009

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Bryan Furse, Agent, Atlanta, GA
Tue Apr 28, 2009
Indeed they are gone but remember this: GOOD RIDDENCE!!! You truly, truly wouldn't want such a loan. They were great for agents (because EVERYONE could get a house), but awful for buyers; you might as well just throw half your paycheck in the street! Bear in mind, that if you are not fiscally sound enough to come up with a reasonable down payment, you probably are best off not buying a house. I advise all my buyers that they need to approach very carefully when making a purchase and they seriously need a bit of cushion in their budgets and savings accounts in order to be successful in the transaction. There just isn't any way around it. The only people that get away with playing it fast and loose with money are banks and the government. The sadly humorous thing about that is, they both own a whole lot of property they don't want!
1 vote
Such nonsense!!!!!! We have one of those loans and we did not default on our home loan, As a matter of fact we lived in that home for 10 years then sold it for a nice profit ALL ZERO MONEY DOWN, with the 80-20 piggyback loan. Your advice is to waste money on rent? Lol. The real problem was never the loan or zero money down it was the fact that brokers were able to simple state what income people made with zero proof. Called stated loans, which had nothing to do with zero money down. Responsible people can make responsible choices. Regardless of having money down.
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Lori Lewis, Mortgage Broker Or Lender, Bethlehem, PA
Tue Apr 28, 2009

Like Terrence said, they are long gone. FHA is the way to go but make sure the condo association is approved with fannie mae and/or FHA
1 vote
Terrence Cha…, Home Owner, Allentown, PA
Mon Apr 27, 2009
Good luck! If there are companies which still lend like this, then they are still living in the 90s. FHA is the best way to go. You need 3.5% down, seller can pay most (if not all) of the closing costs, and the down payment can be gifted to you from family.

This type of money lending (80-10-10 or 80-20) is partially the reason why we got into this mess. Save at least ten percent for a down payment and save about six percent for closing costs. This is the best way to purchase a home.

Even is you could find a seller to pay the closing costs, this will more than likely increase the sale amount of the home and it probably will not be able to be appraised at the higher amount.

Please seek a financial advisor and start cutting saving for a down payment.

Terrence Charest, e-Pro
1 vote
Bruce Lang, Agent, Philadelphia, PA
Sun Apr 24, 2011
I have beenm reading the posts. I think some of the helpful suggestions note solutions but the real issue is condo. Fha may be expensive but so is pmi. Evaluate both and see wgats best for you. Condo buyers with ltv over 75 pay a penalty. Over 80 pay another. Anyone is isn't buying a condo doesn't know this
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Tom Hanson, Home Owner, Laurel, MD
Mon Apr 18, 2011
I honestly don't understand the "logic" most of these lenders are giving. Only two lenders in this thread actually understood that the home buyer has 10% to put down and answered the question that was asked. The rest are "misinformed" at best as they try to steer the buyer to an FHA loan that has a lower down payment but higher associated costs.

I ran across this thread will looking for a 80/10/10 loan for myself. At the time, I already had a lender working on a 90/10 loan but ran into a roadblock with the PMI company with 11 days to go in the contract. The house I was buying had a "mother-in-law" area that the PMI company didn't like.

I contacted Ben Fox and he was able to close a new 80/10/10 loan in 11 days. He saved the day for me, eliminated the need for PMI and gave me a lot of great advice along the way. He is very informed of all of the options available and listens to my questions.
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Ben Fox, Mortgage Broker Or Lender, Washington, DC
Tue Feb 1, 2011
Some of these answers are befuddling. An 80-10-10 is a loan where the purchaser puts 10% down. How is an FHA loan BETTER than a 10% down 80-10-10 in terms of affordibility for the purchaser or quality for the lender? It is infinitely more difficult to qualify for an 80-10-10 if they are available than it is to qualify for an FHA loan.

For the borrower, the division of the loans into two trusts allows for greater flexibility, no m/i and a much lower monthly payment and interest savings. The math is very simple if anyone wants me to walk you through it.

The reason most banks don't offer them anymore is because the second trust lender is in subordinate position to the first. With declining markets, the collateral would be dry not long after closing. In chapter 13 bankruptcy situations, subordinate leins above and beyond a 100% the value of the home are "stripped" and are no longer secured by the house. Much too risky in declining markets for the yields on generally smaller loans.

We offer 80-10-10 in our area but only for the cream of the crop borrower. The maximum debt ratio is 40% while FHA can go up to 56.99% with aus approval. The minimum credit score is 740 while FHA is 640. FHA requires zero reserves while a minimum of 6 months is required for 80-10-10.
FHA has always been a more "dangerous" loan than 80-10-10 except for when lenders were doing the 80-10-10 with no income verifications. Still, that has to do with underwriting as opposed to structure. The bottom line is that if you put hard satistics together with distressed rates comparing fixed 80-10-10 and FHA loans, FHA loans present a much greater percentage of default.
We are not in this mess BECAUSE of 80-10-10's. Most banks don't offer 80-10-10 because we are in this mess. Big Diffference.
0 votes
Dallas Texas, Agent, Dallas, TN
Sat Jan 29, 2011
Simple answer:

Thing of the past. Lending changed back in 4/2008 where it required all home buyers now have a down payment purchase

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes
Andrew Luett, Mortgage Broker Or Lender, Chicago, IL
Sat Jan 29, 2011
Hey Md,

We have been and are doing 80/5/15 and 75/10/15 (15% down) condo mortgages in Chicago, IL as well as in other parts of the country. These were not and are not bad loans if understood correctly. Moreover, structuring condo financing as 75/10/15 avoids the LLPA [… for Fannie Mae/Freddie Mac condo loans above a 75% loan-to-value.

Feel free to reach out to me if you're able to put another 5.000% down.

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Bruce Lang, Agent, Philadelphia, PA
Wed Jan 26, 2011
FHA is the highest leverage I believe you can get. I have seen a 75/15 deal this year but both borrowers had 800 scores
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Marty S, , Irvine, CA
Tue Apr 28, 2009
There are a couple that I deal with, but as the others said, look at FHA with PMI as well.

I am a loan officer. If I can be of further service, please let me know!

0 votes
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