No Down Payment Poor Credit Mortgage Loans Understanding 80 20 Loan Option

No Down Payment Poor Credit Mortgage Loans – Understanding 80/20 Loan Option
When applying for a​ mortgage loan,​ down payments are generally required as​ part of​ the​ financing .​
Many traditional mortgages will only finance 80 percent of​ the​ home price .​
Thus,​ homebuyers are obligated to​ provide the​ additional 20 percent .​
Having a​ down payment of​ 20 percent is​ ideal in​ a​ perfect world .​
In reality,​ few people have access to​ this type of​ money .​
For this reason,​ mortgage lenders are offering 80/20,​ or​ piggyback mortgage loans.
How Do 80/20 Home Loans Work?
The concept around 80/20 home loans is​ very simple .​
Ordinarily,​ if​ a​ homebuyer did not have a​ down payment of​ 20 percent,​ they would have to​ purchase private mortgage insurance,​ (PMI),​ to​ complete the​ home financing .​
On average,​ PMI increases mortgage payments by $100.
If accepting an​ 80/20 home loan,​ PMI is​ not required .​
Instead,​ homebuyers receive two loans to​ finance the​ home purchase .​
a​ first mortgage is​ approved to​ finance 80 percent of​ the​ home cost,​ whereas a​ second mortgage or​ home equity loan is​ approved to​ finance the​ remaining 20 percent.
Who Qualifies for an​ 80/20 Home Loan?
Any homebuyer hoping to​ avoid private mortgage insurance may qualify for an​ 80/20 option .​
Piggyback loans are especially beneficial for first time homebuyers .​
Young couples will also benefit from these loans .​
Usually,​ these individuals have not been able to​ build a​ large cash reserve .​
This way,​ they do not have to​ put off buying a​ home.
An 80/20 home loan is​ also offered to​ individuals with poor credit .​
Mortgage lenders vary in​ their loan qualification guidelines .​
Traditional lenders such as​ banks,​ credit unions,​ and mortgage companies prefer applicants that have a​ high credit rating .​
Thus,​ they may not approve loan requests for credit scores that fall below 640.
On the​ other hand,​ many lenders offer a​ range of​ bad credit mortgage loans .​
These consist of​ loans that provide assistance for down payments,​ closing costs,​ low mortgage rates,​ etc.
Applying for an​ 80/20 Loan with Bad Credit
Mortgage brokers are very effective with helping bad credit applicants find a​ fitting home loan program .​
To smooth the​ process,​ brokers have websites available,​ which offer explanations on​ various bad credit home loans .​
Moreover,​ you​ can request a​ mortgage quote online,​ and receive up to​ four offers from different lenders granting piggyback loans to​ people with bad credit.
No Down Payment Poor Credit Mortgage Loans Understanding 80 20 Loan Option No Down Payment Poor Credit Mortgage Loans Understanding 80 20 Loan
Option Reviewed by Henda Yesti on June 25, 2018 Rating: 5

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