“Hi Gary. We make good income, but we don’t have a lot of money to put down on a home. I’ve heard if you don’t put at least 20% down you have to pay mortgage insurance. Is there any way around that?”
***ANSWER:
Yes!
Mortgage insurance is generally required for home loans with a “loan-to-value” ratio of over 80%. The insurance protects the lender (NOT you) should you lose your home to foreclosure.
Now, to avoid paying high mortgage insurance premiums, “80-20″ loans are becoming very common. A lender makes a 80% loan-to-value loan with no mortgage insurance. Then, the same or another lender makes a 20% loan with a higher rate, due to the risk. But the higher rate on the small 20% loan still allows a total “blended” rate much lower than getting a 100% loan with mortgage insurance.
If you have further questions or are interested in an 80-20 loan, call me office at (858)457-KENT and we’ll put you in touch with our preferred mortgage lender.
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