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