Question on mortgage insurance

Fiveohhh

Diamond Member
Jan 18, 2002
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I had to get mortgage insurance on my place since we couldn't afford 20% down, but I've talked to a few friends that are looking at houses and they don't have to they're taking 2 mortgages out, one for 80% and one for 20%. Is there a reason that my mortgage guy didn't do this for me...Or is there a reason to have MI instead?
Thanks
 

dionx

Diamond Member
Mar 11, 2001
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you can always pay all the MI upfront instead of monthly. that way, a percentage of the monthly payments shifts over to paying off the principal.
 

Fiveohhh

Diamond Member
Jan 18, 2002
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I'm going to refi or sell this fall so not too worried about it anymore, was just curious why my mortgage guy didn't do 2 mortgages one 80% and one 20%
 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
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apparently your mortgage guy is an idiot. 80/20 is really common, no one has 20% down
 

rh71

No Lifer
Aug 28, 2001
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we went for the 20% down but our guy did tell us about a 2nd mortgage to avoid PMI. Actually all of them (the few banks we spoke with) told us about it. Who did you go to ?
 

DBL

Platinum Member
Mar 23, 2001
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Perhaps someone w/ a bit more knowledge will chime in but I know there is a type of financing where you mortgage the standard 80% and then take out a Home Equity Loan for the difference between your down payment and the 80% mortgage. It's a clever way to avoid PMI. I don't think too many banks offer this (Citibank?) and you probably need some decent credit as well.
 

Fiveohhh

Diamond Member
Jan 18, 2002
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I went to a mortgage broker guy. NOt going back when we sell this fall though:p
 

Panakk

Senior member
Jan 17, 2000
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I just got a Loan from First National Bank. All i need is 5% down. My first mortgage is 80%. My second one is 15%. This second Mortgage is also known as a Home Equity loan therefore the interest on this is tax deductible. I got a 7 Year ARM at 4.625 person and the Home equity loan is fixed and ammortized over 30 years and it's rate is 6.5%..

If you shop around you can find the Second Loan to be Prime + 1% which is better. I was planning on making lump sumps and pay off the 15 % in 5 years but now that i have a fixed at 6.5 %, there's no hurry.

I don't think you can get an 80/20 loan. You must have a minimum of 5% down to avoid PMI with this loan type.