Here is some great information for buyers wanting an overview of the loan market. If you are thinking of buying or selling your home in the Tampa Bay area, please call me. I can connect you to local loan professionals who will always give solid advice related to your personal situation.
Thanks to David Krichmar for this great article.
When getting a mortgage you will want to know all your options? And of course you want to make sure you are choosing the best mortgage for your needs. Many times I hear that other banks do not offer 2nd mortgages or that they do not exist. I am here to say they do exist and to explain when getting a 2nd mortgage could be best for you.
A jumbo loan is considered any conventional loan with a loan amount over $417k. So what do you do if you loan amount is over $417k? You could get a Jumbo mortgage, but the rate for a Jumbo Mortgage is usually .75% to 1% higher then a normal loan on a 30yr fixed rate. But if your total loan amount is small enough you can split the loan into 2 loans. You can keep the first loan at $417k and get a 2nd mortgage for the difference. As an example, you have a $500,000 loan. Your rate could be 5% on a Jumbo loan. Or your could do 2 loans, one at $417k and a 2nd mortgage of $83k with a rate of 7.5%. The option of 2 mortgages would save you about $180 a month.
Waiving your Escrow account
Waiving your escrow account means to not include your taxes and insurance in your payment. The only way to do this is to put a down payment of 20% or have 20%+ equity in your home if you are refinancing. Or you could use a 2nd mortgage to make up that 20%. As an example, your home is worth $200k and you need a new loan of $190k. based on this you would need to include your taxes and insurance in your payment. Or.... You could do a first mortgage of $160,000(80%) and a second mortgage of $30,000. This would allow you to not include your taxes and insurance in your payment
Avoiding Mortgage Insurance
If you get a conventional loan for more than 80% loan to value(less than 20% down payment), you will have it. Unless you get two loans. Another example, you only want to put a 5% down payment. So you would want to do a first mortgage for 80% of the sales price and a second mortgage for 15% of the sales price.
A Lower Payment
Some times getting a 2nd mortgage will allow you to get a lower payment. Just like our example under "Jumbo Loans". But you can also save on your monthly payment if you are not getting a Jumbo loan. Let's say you are buying a home of $200k with a 5% down payment. If you chose to get one loan with mortgage insurance your payment would be about $88 higher then a mortgage option of two loans.
Keep in mind 2nd mortgages are not for everyone. You have to have great credit(680+). They expect you to have money in the bank for reserves and there may be other requirements. A rate on a 2nd mortgage can be from 6.99% to 9%. And the min loan amount is $10k to a max of $100k(sometimes higher). Our home is our biggest asset, make sure you are getting the best mortgage for that home. Whether you are buying a new home or refinancing that home, call me today to make sure you are getting the best mortgage possible.
Mortgage Broker/Banker NMLS#293883
Weststar Mortgage dba Core Lending
Has Written For Realtor Magazine, Houston Agent Magazine, Scotsman Mortgage Guide
Approved MCE Instructor
For More Mortgage Info and Social Media Tips For Realtors Follow me at Dave's Blog
If you are looking for a FHA, VA, USDA, Homepath, Conventional, Jumbo, Construction, FHA 203k mortgage in Fort Bend County, Sugar Land, Houston, Katy, Harris County, Brazoria County, Pearland, The Woodlands, Kingwood, Tomball, Spring, Conroe, Montgomery County or anywhere in Texas I am your GUY!
Use or reproduction of the material published on this site is expressly prohibited without the express written permission of the author