LPMI or PiggyBack (2nd Lien) Loan (Howe: mortgage, credit rating, buying)

[DFW_Success]

Hello All, trying to get a mortgage and have two options to avoid the pesky PMI without putting 20% down. I am unable to write off PMI due to AGI limits. Does anyone know pros and cons of each and which is better option. Lender is adding 0.5% to my rate as LPMI another lender is offering piggyback 2nd Loan at 8.25%, both end up with same monthly payment pretty much. Thanks !

[TurtleCreek80]

Originally Posted by DFW_Success

Hello All, trying to get a mortgage and have two options to avoid the pesky PMI without putting 20% down. I am unable to write off PMI due to AGI limits. Does anyone know pros and cons of each and which is better option. Lender is adding 0.5% to my rate as LPMI another lender is offering piggyback 2nd Loan at 8.25%, both end up with same monthly payment pretty much. Thanks !

Not the "creative financing" answer you're looking for, but the best option is to suck it up and put 20% down. If you don't have 20% to put down, you probably shouldn't be buying. You do realize there are areas in the DFW metroplex that have lost 20%+ in value since 2007, right? Are you confident they're at the bottom now? Do you have enough money in cash savings to pay for closing costs & broker's fees (10% of home's value) if you need to sell quickly?

[DFW_Success]

Originally Posted by TurtleCreek80

Not the "creative financing" answer you're looking for, but the best option is to suck it up and put 20% down. If you don't have 20% to put down, you probably shouldn't be buying. You do realize there are areas in the DFW metroplex that have lost 20%+ in value since 2007, right? Are you confident they're at the bottom now? Do you have enough money in cash savings to pay for closing costs & broker's fees (10% of home's value) if you need to sell quickly?

TurtleCreek80, I understand where you are coming from but this is actually not about having 20% down, but more about not tying my liquid assets down. I am simply trying to see which is a better option LPMI or Piggyback (80/15), putting just 5% down in each scenario. Thanks !

[loves2read]

would either one have more of negative effect on your credit rating than the other

does either one have a payback-early penalty that the other does not

what about if you sell the property within 5 yrs--is there penalty

[DFW_Success]

Originally Posted by loves2read

would either one have more of negative effect on your credit rating than the other

does either one have a payback-early penalty that the other does not

what about if you sell the property within 5 yrs--is there penalty

Not sure if either one affects credit more negatively than the other, hopefully I can get opinions on this as well.
No Payback early penaltly, there is however a ballon due in 15 years

[txgolfer130]

80/15. Must figure out plan to refi 2nd into 1st before balloon due! If you're looking for liquidity ease, this is the way to go. However, you must be careful w/ that 2nd note. It will eat into your liquidity quickly if you don't refi that piggy back way before being due.

I would always recommend the 20% down, but if you can swing a 2nd and you need liquidity this is the way to go.