Piggyback mortgages come in varying amounts; the most common variety is an 80/10 mortgage. This designation means your primary mortgage covers 80 percent of the purchase price, your piggyback mortgage covers 10 percent, and you pay the remaining ten percent.
This type of piggyback mortgage is cheaper than financing the entire 20 percent down payment; however, there are 80/20 loans available for homebuyers that have not saved the remaining 10 percent. Another common variety of piggyback mortgage is the 80/15 mortgage which only requires you to pay only 5 percent of the down payment.
The disadvantage of using this type of financing is that you will have two
mortgage payments to make each month, unless you can find one lender willing to
finance the entire amount.
The advantage of the piggyback loan is that your
combined monthly payments will still be less than if you had to pay for Private
Mortgage Insurance to qualify for your primary mortgage.
Private Mortgage Insurance can easily add hundreds of dollars to your monthly
mortgage payment and does nothing for you, the homeowner. You should avoid
paying Private Mortgage Insurance at all costs.
You can learn more about your mortgage options, including how to avoid common mistakes, by registering for a free mortgage guidebook.
You will have a hard time finding a lender for Piggyback Loans right not unless you have super credit -- i suggest you gather all the paper work and just start cold calling until you find some one that meets your terms.
Generally speaking, nowadays, banks only want customers, looking for mortgages,
who are able to put down a substantial amount of money towards the home.
