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  #11  
Old 07-27-2005, 03:18 PM
Patrick del Poker Grande Patrick del Poker Grande is offline
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Default Re: About to buy a house

[ QUOTE ]
[ QUOTE ]
What is an 80/20 loan?

What percentage is Property Mortgage Insurance tax?

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80/20 means you put 20% down, and get a mortgage for the remaining 80%.

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This is not what an 80/20 loan is. The 20 part is a second loan for 20% of what you're paying. It lets you get around PMI, which you have to pay up until you have 20% equity in your home. Basically, think of it as you're getting your mortgage for 80% and then you're borrowing the other 20% (at a higher interest rate) to put up as your 20% down so you don't have to pay PMI.
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  #12  
Old 07-27-2005, 03:21 PM
chaas4747 chaas4747 is offline
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Default Re: About to buy a house

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
What is an 80/20 loan?

What percentage is Property Mortgage Insurance tax?

[/ QUOTE ]

80/20 means you put 20% down, and get a mortgage for the remaining 80%.

[/ QUOTE ]
This is not what an 80/20 loan is. The 20 part is a second loan for 20% of what you're paying. It lets you get around PMI, which you have to pay up until you have 20% equity in your home. Basically, think of it as you're getting your mortgage for 80% and then you're borrowing the other 20% (at a higher interest rate) to put up as your 20% down so you don't have to pay PMI.

[/ QUOTE ]

This is correct. The mortgage that you put up 20% (or more) for the down payment is known as a conventional home loan.
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  #13  
Old 07-27-2005, 03:21 PM
Hiding Hiding is offline
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Default Re: About to buy a house

Expanding on PMI... Its not tax deductable, while the 20%HELOC or 2nd mtrg would be.
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  #14  
Old 07-27-2005, 03:26 PM
Cased Heel Cased Heel is offline
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Default Re: About to buy a house

So this just boils down to going to another lender and talking them into loaning you 20%?

Seems like they'd be hesitant to do this, knowing what you're getting it for (simply to forego the PMI).

Basically, you're trying to get a cash loan from another bank?
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  #15  
Old 07-27-2005, 03:27 PM
James Boston James Boston is offline
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Default Re: About to buy a house

Not to sidetrack too much, but can you get around PMI with the equity in property you already own, pending its sale? In other words, if I find a house I like, can I get another mortgage and postpone the downpayment until I sell the house I'm in now?
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  #16  
Old 07-27-2005, 03:29 PM
Patrick del Poker Grande Patrick del Poker Grande is offline
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Default Re: About to buy a house

[ QUOTE ]
So this just boils down to going to another lender and talking them into loaning you 20%?

Seems like they'd be hesitant to do this, knowing what you're getting it for (simply to forego the PMI).

Basically, you're trying to get a cash loan from another bank?

[/ QUOTE ]
No. You work it out all with the same lender/agent. The reason you need PMI if you're under 20% equity is because they're risking quite a bit giving you this money, so you have to buy insurance against you defaulting. In lieu of that, they'll loan you the 20% at a higher interest rate (to account for their higher risk - that there's no equity in the house when they repo).

I'm with you on this one. It's all a bunch of hijinx and hand waving as far as I'm concerned. If you think 80/20s are weird, wait until your agent gets into more exotic and creative financing. There's a few 'new' products out there that I don't even remember how they worked now that it's been a while since I bought my house.
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  #17  
Old 07-27-2005, 03:30 PM
chaas4747 chaas4747 is offline
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Default Re: About to buy a house

You must owe 20% less than the appraised value of your home to avoid PMI insurance.
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  #18  
Old 07-27-2005, 03:37 PM
James Boston James Boston is offline
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Default Re: About to buy a house

So if your current home appraises for $100K, you can borrow $80K, or do I have it backwards?
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  #19  
Old 07-27-2005, 03:41 PM
Patrick del Poker Grande Patrick del Poker Grande is offline
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Default Re: About to buy a house

[ QUOTE ]
So if your current home appraises for $100K, you can borrow $80K, or do I have it backwards?

[/ QUOTE ]
Right. Without getting into other crazy things, you can borrow up to $80k before you have to pay PMI.
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  #20  
Old 07-27-2005, 03:43 PM
ThisHo ThisHo is offline
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Default Re: About to buy a house

[ QUOTE ]
So if your current home appraises for $100K, you can borrow $80K, or do I have it backwards?

[/ QUOTE ]

in San Diego you can get exactly NOTHING for $100k. I hope these are made up numbers just for example purposes.

There are a LOT of ways to avoid PMI. We did a "piggy back" where we put 10% down, got a "2nd" mort for 10% at a higher interest rate and then 80% on the standard. Of course, we refid 3mo after moving in and our home appraised for 50% more than what we paid for it (to clarify - we locked in the price 7mo before moving in because it was a new build, but in 10mo the value was 1.5x what we paid for it)... such is the SD housing market.
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