| If you buy a house with less than 20% down or | | | | interest on the second mortgage is |
| if you haven't built up at least 20% equity | | | | tax-deductible--PMI payments are not." For |
| before mortgage refinancing, you'll typically | | | | areas where housing is more expensive, buyers |
| have to pay private mortgage insurance (PMI). | | | | find that the piggyback mortgages can help |
| This protects the lender in case you default | | | | them keep their primary mortgages below the |
| on the mortgage loan.The U.S. Public Interest | | | | conforming limits set annually by Fannie Mae |
| Group in Washington and other | | | | and Freddie Mac, the agencies that dominate |
| consumer-advocacy groups have been pressuring | | | | the secondary market in mortgages. Currently, |
| Congress to enact legislation that would | | | | 30-year fixed rate home mortgages that exceed |
| require lenders to stop billing for PMI | | | | $417,000 are considered "jumbo" |
| automatically once a borrower achieves about | | | | (non-conforming) mortgages, which carry |
| 20% equity. Right now, the consumer generally | | | | higher interest rates.Piggyback mortgages are |
| has to ask a lender to stop charging for PMI, | | | | also flexible. You can either take it out as |
| which is not easy to do. "I have heard of | | | | a home equity installment loan (HEIL) where |
| lenders who won't cancel PMI, regardless," | | | | you get a lump sum all at once or as a home |
| says Keith Gumbinger, vice president of HSH | | | | equity line of credit (HELOC) where you can |
| Associates, a mortgage-information provider | | | | pay off the line of credit and draw down on |
| in Butler, N.J. This is one of the main | | | | it and use the funds for other purposes |
| reasons why a growing number of buyers are | | | | without having to apply for another loan. |
| avoiding PMI altogether by getting what's | | | | And, of course, you can refinance both loans |
| known as a "piggyback mortgage." "A piggyback | | | | when your home appreciates in value and |
| mortgage is a second mortgage that closes | | | | possibly pay a lower rate of interest, making |
| simultaneously with the first," explains | | | | your savings even greater.Maria Ny is an |
| Chris Larson, chief executive officer with | | | | acclaimed free-lance writer from San Diego. |
| E-Loan, an online provider of consumer loans | | | | She has published many articles that covered |
| based in Dublin, Calif.A piggyback mortgage | | | | a broad range of subjects ranging from Home |
| is also known as an 80-10-10 loan because it | | | | Purchase, Bankruptcy Reform, Credit Repair to |
| involves a first mortgage for 80% of the | | | | Subordinate Loan Financing. Get more useful |
| purchase generally offered at a lower rate, a | | | | tips if you read her loan articles online at |
| second trust loan (second mortgage) for 10% | | | | BD Second Mortgage Loans. You can learn more |
| at a slightly higher rate and the remaining | | | | about financing credit card debt and get |
| 10% as a down payment. But variations, such | | | | additional loan parameters for debt |
| as 75%-15%-10%, are also available."This can | | | | consolidation loans. Get a free loan quote |
| significantly reduce a borrower's monthly | | | | for a 125% second mortgages. We suggest you |
| payments," says Mark Smith, president of the | | | | get more information and learn more about the |
| Mortgage Bankers Association of America in | | | | guidelines for fixed rate second mortgages |
| Washington and chief executive officer of | | | | that could help lower your monthly payments |
| Crestar Mortgage Corp., a unit of Crestar | | | | by reducing the high interest rates of your |
| Financial Corp., Richmond, Va. "And the | | | | credit card debt. |