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Old 07-20-2011, 08:52 AM
 
Location: Baltimore, MD
3,864 posts, read 7,068,760 times
Reputation: 5112

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Question: Do banks still offer these kinds of loans? Where you put down 10%, get a 1st mortgage loan for 80% and a 2nd for the remaining 10%?

I've heard its possible with very good credit and substantial savings. I'd love to be able to consider it since I have a down payment (which won't be 20%) but would like to skip the PMI.

My credit score is over 800. I have a 5-figure savings account and $20k put away for a house. Would I qualify? Does anyone know of any banks that offer these?

Thanks!
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Old 07-20-2011, 11:17 AM
 
Location: Land of Free Johnson-Weld-2016
6,474 posts, read 13,413,676 times
Reputation: 6404
Congratulations you're finally buying a house! I would ask where it is etc, but that's not my business. Today, I would not recommend an 80/10/10. I had one back in the "old" days, and it did save me a little money, but it was not worth it. Possibly useful information:

1. I had a HELOC for one of the 10s in my 80/10/10 and I'm not sure how they swung it, but the amount I could borrow was based on Loan to Value ratio. I think they still offered loans OVER the LTV back then. Also, houses on paper were "worth" more. Conclusion: it may not be possible today unless you're getting the house for a lot under market value.

2. I did mine with Citibank, and my 10% HELOC was an adjustable rate, which I only found out about after closing. Of course, I rapidly refinanced out of it, but I had to pay a fee and then roll the additional amount into my mortgage. IF you can do an 80/10/10, make sure you get fixed rates on both.

3. I believe PMI is now tax deductible. So it's not as big of a deal unless you're paying a LOT of PMI. Also, if you get a 15 year mortgage, you'll get a LOWER interest rate AND get rid of your PMI a lot faster. I would go the 15 year route rather than a "creative" loan.


If you're still in the B-more area and qualify, I recommend:
State Employees or Maryland Employees (MECU or SECU) credit unions - LOW rates, LOW fees, great service.
Johns Hopkins Federal Credit Union - You may be able to do an 80/10/10 with them. If you have to go variable, they CAP their variable rates.
* Call the credit unions to see if you qualify. The terms for members are pretty generous.


FINALLY (I swear), see if you can get the seller to contribute $$ to closing costs. If you haven't signed the contract already, that is. It is easier for the seller to do that and can even be done on a conventional loan. Th extra few thousand may put you over the HUMP and closer to PMI = 0.

BEST of LUCK and CONGRATS chica!

Last edited by Green Irish Eyes; 07-22-2011 at 09:52 AM..
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Old 07-20-2011, 11:21 AM
 
Location: Baltimore, MD
3,864 posts, read 7,068,760 times
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I'm not buying a house just yet. I can't qualify for a mortgage loan until Sept. but given the deals I am seeing and liking, I may begin looking this fall. Just exploring all options right now.

Thanks for all the info Kinkytoes!! I am indeed going to try and get closing costs help. I don't want any HELOC but a regular fixed-rate mortgage. I just want to make my payment as small as humanly possible.
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Old 07-20-2011, 12:07 PM
 
Location: Land of Free Johnson-Weld-2016
6,474 posts, read 13,413,676 times
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[quote=Miss Crabcakes;20098784]I'm not buying a house just yet. I can't qualify for a mortgage loan until Sept. but given the deals I am seeing and liking, I may begin looking this fall. Just exploring all options right now.

Thanks for all the info Kinkytoes!! I am indeed going to try and get closing costs help. I don't want any HELOC but a regular fixed-rate mortgage. I just want to make my payment as small as humanly possible.[/quote]
I don't want to scare ya, but I believe interest rates are set to go way up. I would strongly recommend calling the bank or CU of your choice, and applying and getting locked into a rate ASAP. You're not required to accept the loan, so why wait?
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Old 07-20-2011, 12:07 PM
 
Location: DFW Metroplex. Not TX-born but never leaving.
302 posts, read 456,524 times
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We just bought a house with 5% down (had 10% but elected to keep a larger cash reserve), 80% first, and 15% second both at fixed rates. The second is a 15 yr loan at a slightly higher interest rate than the first. Hope that helps.
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Old 07-20-2011, 12:10 PM
 
Location: Baltimore, MD
3,864 posts, read 7,068,760 times
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Quote:
Originally Posted by kinkytoes View Post
I don't want to scare ya, but I believe interest rates are set to go way up. I would strongly recommend calling the bank or CU of your choice, and applying and getting locked into a rate ASAP. You're not required to accept the loan, so why wait?
Where did you hear this? I've been told I won't qualify until Sept when I would have been working full-time for 2 straight years after my unemployment.
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Old 07-20-2011, 05:50 PM
 
Location: Wake Forest, NC
835 posts, read 3,528,843 times
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You can get financing with 6 months at your current position providing it is in the same line of work. Had a client out of work for 8 months then back for 6 no problem. Same line of work is a must.

Change of career- 2 years.
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Old 07-20-2011, 05:50 PM
 
Location: Land of Free Johnson-Weld-2016
6,474 posts, read 13,413,676 times
Reputation: 6404
Quote:
Originally Posted by Miss Crabcakes View Post
Where did you hear this? I've been told I won't qualify until Sept when I would have been working full-time for 2 straight years after my unemployment.
I have been listening to the news lately. Primarily, interest rates are at historic lows, so they're going to go up over the long term. But in the short term, if the US doens't reach a debt compromise, interest rates for everything could go up quite dramatically.

I don't think lenders took my number of years of employment into consideration. I think it is in your best interest to at least apply and try to get locked in now.

The application process can take a while, anyway. I know from my expereince that the CU's have the best rates and lowest fees (if you qualify) but you'll also want to get some disclosures from various lenders and take some time comparing their fees line by line so you can make the best decision.
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Old 07-21-2011, 08:40 PM
 
Location: MID ATLANTIC
7,600 posts, read 17,629,190 times
Reputation: 8084
80/10/10 and 80/15/5 are a fantastic way to buy a home and avoid worthless mortgage insurance. Many lenders will tell you you don't want to do this type of financing, but that's only because they don't offer them. (I actually received a client's forwarded email from a competitor that said the combo loan was bad for her). The standards are much higher than what they were in the past. With your 800 credit scores, you are actually the target audience for these loans.

You don't say where you are located, but there are not may combo lenders. Most of the second trusts are not helocs, so you have no fear about a line being more than what you need. As for the rate going up, if the budget is not resolved, a short term disruption could be experienced, but the majority of the folks out there don't expect it to last long, at all. As usual, the sky is falling chickens are alive and well, but they are in the minority. If the fear were really strong, we wouldn't be able to obtain a 30 day lock, much less a 45 day or 60 lock.

Get the numbers side by side and then make your decision. The payment will come in less every time, than the FHA or conventional insured mortgage.
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Old 07-22-2011, 06:16 AM
 
Location: Baltimore, MD
3,864 posts, read 7,068,760 times
Reputation: 5112
Quote:
Originally Posted by SmartMoney View Post
80/10/10 and 80/15/5 are a fantastic way to buy a home and avoid worthless mortgage insurance. Many lenders will tell you you don't want to do this type of financing, but that's only because they don't offer them. (I actually received a client's forwarded email from a competitor that said the combo loan was bad for her). The standards are much higher than what they were in the past. With your 800 credit scores, you are actually the target audience for these loans.

You don't say where you are located, but there are not may combo lenders. Most of the second trusts are not helocs, so you have no fear about a line being more than what you need. As for the rate going up, if the budget is not resolved, a short term disruption could be experienced, but the majority of the folks out there don't expect it to last long, at all. As usual, the sky is falling chickens are alive and well, but they are in the minority. If the fear were really strong, we wouldn't be able to obtain a 30 day lock, much less a 45 day or 60 lock.

Get the numbers side by side and then make your decision. The payment will come in less every time, than the FHA or conventional insured mortgage.
I'm located in Baltimore, MD. Thank you so much for your comment. Its very helpful. I will start mortgage shopping in Sept and I'm going to explore my every option.
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