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The Boston Real Estate BlogI am an independent real estate broker, focused on the residential real estate market in downtown Boston. |
Whether Or Not To Refinance, And What To Do About Your Second Loan
Okay, I see a trend here.
First, the story about deducting interest on your second mortgage loan.
Now, a story about when to refinance your first and second mortgage loans, and whether or not getting PMI can actually save you money.
Piggyback mortgages ... stack a smaller home-equity loan or line of credit on top of a primary mortgage ...
A piggyback loan is commonly designed as a primary mortgage that covers 80% of the home's cost, paired with a second loan that usually covers 10% to 20% of the remaining cost. (Anything left over is accounted for by the down payment.) ...
Why divide up a loan in this way? To help homebuyers avoid paying private mortgage insurance, the pricey coverage lenders demand when homeowners need to borrow more than 80% of the value of a home with a primary mortgage. Typically, PMI costs 0.5% of the loan amount, or roughly $108 a month on a $250,000 mortgage.
With a piggyback mortgage, a homeowner isn't borrowing enough with one single loan to trigger the need for PMI.
If you are buying or thinking of refinancing, there are some things to think about.
A good article to read, so bookmark it.
More: Is Now the Time to Trade In A &8216;Piggyback' Mortgage? - By Terri Cullen, The Real Estate Journal
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