80 20 Mortgage

The 80 20 mortgage is a unique kind of mortgage product that can allow a particular borrower who might not have the full down payment for their property to borrower pretty much the full amount of the price of their home so that they still can walk away with the property despite not having the down payment. These kinds of 80 20 loans were extremely popular before 2008 when the whole economy weakened with the so-called credit-crisis and the bursting of the housing bubble. Lenders have since made it much tougher for borrowers to be approved for such loan products, and many kinds of more exotic loan products have gone the way of the dinosaur.

The 80 20 mortgage still exists, but it is not nearly as widespread as it once was only a couple of year ago. None the less, the 80 20 mortgage is still a viable option for potential homeowners with good credit who want to purchase a home by financing virtually the entire asking price without having to provide a down payment. If you think you can still benefit from such a loan then you should not fret, as you still should not have much difficulty finding a lender that can work with you as long as you can exhibit a good enough credit score and employment history.

The 80 20 mortgage loan is still a viable home loan product for the right individual, and it is important to understand the intricacies of such a loan before you look to find a lender. The 80 20 mortgage, also known as a piggyback loan and a 100% financing loan, is essentially a kind of mortgage loan arrangement that is provided by lenders that may offer the 80 20 product to allow their borrowers a way to borrow up to one hundred percent of the money they might need for the purchase of a new property. This is done via the implementation of a second loan that may cover the remainder of the costs leftover by the first loan. The actual ratio is described by the name of the loan and it is not uncommon for a borrower to take out an 80% first mortgage along with a 20% second mortgage.

The 20% second mortgage exists in place of the standard down payment that may be required by most lenders and will help enable the borrower to finance virtually one hundred percent of their home purchase. The second loan is normally made at a higher interest rate than the first mortgage and it does hold a second position to the first loan in terms of lien hierarchy. One of the prime advantages to borrowing via an 80 20 mortgage is by opting for the second mortgage a borrower can avoid paying for private mortgage insurance or PMI. The premiums for such insurance are typically more than the price for the second mortgage and this makes the 80 20 a real option for many borrowers.

The prevalence of these types of loans has decreased significantly since the fallout that occurred in 2008 but if you are a qualified enough borrower you should still have no problem finding a lender that can make you such a loan. Lenders that make 80 20 loans have fairly strict requirements, and they usually only provide such loans to individuals with good to excellent credit. If you have a credit score that is within these ranges then you should not hesitate to apply as long as you can get the rest of your application in order.

The 80 20 loan is wrapped together at once so you won’t have to pay closing costs twice. This along with some of the other advantages such a loan can provide you should make you feel confident when applying for the 80 20 mortgage, and if you have a good enough application you should not hesitate to shop around to try and find the absolute best rates. Do your homework and in the end you’ll walk away with almost 100% financing and that is something to feel good about.