Question:

What is an 80/10/10 mortgage loan?

Answer:

What is an 80/10/10 mortgage loan is a question that easily comes up to the borrower's mind. This is basically a creative way to avoid paying a PMI - private mortgage insurance, and a convenient way to purchase or refinance or consolidate debt, employing the benefits of combining a first and a second mortgage or trust.

The 80/10/10 mortgage loan is a first mortgage of 80 percent, combined with a second mortgage of 10 percent, and you supply 10 percent for the down payment. This is how combining first and second mortgage the prerequisite for PMI is eliminated. With an 80/10/10 mortgage loan your monthly payments will be tax deductible while PMI is not.

Also, with an 80/10/10 mortgage often you are enabled to pay the second mortgage whenever you wish, reducing the overall payment. Before you sign an 80/10/10 mortgage, be sure to have selected a second mortgage program without prepayment penalties and run a rates comparison - one with a 10 percent second mortgage, another with a PMI, to make sure you get the cheaper one.

In addition, a HELOC may take the place of a second mortgage in an 80/10/10 loan, and there are fixed rate and ARMs, and even interest only options for this loan. You should simply select the best option for yourself.

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Common misspellings: mortage and morgage