Mortgage loan with PMI or a piggyback loan

Private mortgage insurance is required when you buy a house with a down payment of at least 20% of the sale price or estimated value of the home, if it is minor. Your creditor, in this case is expected to buy private insurance guides so that even if by default, can compensate the loss. So when you are down payment for home purchase, you pay for insurance premiums on a monthly basis until they can provide sufficient equity in your home. You can avoid PMI premiums if they are approved for a mortgage loan on his shoulders. 2 These loans involve mortgages that are combined in the ratio of 80/20, 80/15/5 or 80/10/10. This implies that you take a first mortgage against the 80% of the value of your home and second mortgage against the remaining 20% of the value of the property. Otherwise, you can opt for a loan against the first 80% of property value, with a second mortgage worth 15% and make a deposit of 5% on sale price. The third option is to make a deposit of 10% on the sale price and then a 80% first mortgage with a second mortgage, compared with 10% of property value. But the question remains as to which is the best option - if you go for a home loan with an SME or look for a mortgage on his shoulders. With a mortgage loan that requires PMI premiums, you do not get the benefit of tax deductions, as these premiums are not deductible. But for a road-rail loan, the payment of interest on both mortgages are tax deductible. So, you get the opportunity to make savings. But then, with this type of mortgage, you are obliged to repay the loan with a higher interest rate than the first. This is because if you default, the second mortgage must be repaid after the first repayment. Then the creditors believe a big risk to offer a second mortgage in these situations. But if you go for a mortgage with an SME and home values go higher, you can build up equity faster and this will help you get rid of discount on insurance premiums in a shorter time than when they house prices are stable. Furthermore, the monthly premiums decrease when you are closer to build 80% of the capital house. Although these do not work in your favor, you can go for a lender-paid mortgage insurance policy or LPMI allowing a reversal of costs in SME loan itself. But most experts do not agree with this policy as the payments are amortized throughout the life of the loan. On the other hand, if you go for a piggyback mortgage, which will help you get a larger amount of loan and at the same time will give the opportunity to keep the primary mortgage loan complies below the limit. You can use the difference in the loan amount and the limit in accordance with the second mortgage and this will prevent you from paying more interest on the mortgage primary, which is well below the limit to comply. Besides that, you can use the second mortgage as a home equity line of credit. Once you pay off the credit line, you can still obtain cash from it until the loan period is over. But after taking 2nd mortgages, most lenders will not approve an additional loan against your home equity. Furthermore, it is easier to qualify for a mortgage with a traditional SMEs, rather than with a mortgage on his shoulders. Lenders often require a FICO score of 680 on the second loan and approximately 620 for the first mortgage and the majority of borrowers are unable to construct such an assessment. In addition, some lenders may accept payments of interest only for a second loan for a period of 10 to 15 years and then require you to pay the expenses with payments balloon. Borrowers accept these options, often fail to make payments and end up huge loan refinancing second, that even when market rates are high. But a loan with a PMI can help avoid such situations. Considering the pros and cons of a mortgage on his shoulders, we recommend that you choose a traditional mortgage loan with payments for insurance private guides. Prizes can not be deductible, but you should pay those premiums, rather than making interest payments on mortgages and 2, that even when the interest rate on the second loan is much higher. The second mortgage piggyback loan is usually a variable rate loan, so in order to avoid higher interest rates, borrowers should preferably opt for a mortgage loan that requires PMI instead of a mortgage on his shoulders .