Piggy Back Loans
A piggyback loan, also known as a combo or concurrent second mortgage, is a creative financing strategy that involves taking out two separate loans on a single property at once.
There are many reasons why this could be a beneficial strategy for a borrower, but the main two reasons a piggyback loan can help someone achieve their goals is by using a 2nd lien, a borrower can avoid needing a jumbo loan that often have stricter qualification requirements. A piggyback loan can also be used to avoid private mortgage insurance.
A piggyback loan isn’t right for every scenario, so make sure to schedule a consultation if you think this is a strategy that would be a good option
Appointment
Unlocking Your Financial Potential Starts with a Conversation
Navigating the world of real estate financing can be complex. A personalized consultation with one of our specialists is the key to ensuring you’re fully aware of your financing options and making informed decisions to reach your goals.
- Personalized Assessment:
Our financing specialists begin by understanding your unique financial situation and real estate goals. This tailored approach ensures that the financing solution recommended aligns perfectly with your needs.
- Transparent Guidance:
No confusing industry jargon here. During the consultation, we break down complex concepts into clear, understandable terms. You’ll have a complete understanding of the mortgage process, rates, and terms.
- Customized Solutions:
Every borrower is different. Our specialists work to find the best possible mortgage solution for you, taking into account your financial goals, credit history, and current market conditions. We aim to make your homeownership journey as smooth and affordable as possible.
F. A. Q's
Frequently Asked Questions
Piggyback loans, also known as piggyback mortgages, can be a financial tool to consider when buying a home. They involve obtaining two mortgages at the same time: a first mortgage for the bulk of the purchase price and a second mortgage to cover the rest. Here are some frequently questions asked about Piggyback loans.
A Piggyback loan is a second mortgage taken out simultaneously with a primary mortgage that helps borrowers avoid private mortgage insurance (PMI). PMI is an additional fee imposed on conventional mortgages when the down payment is less than 20% of the home's value. By using a Piggyback loan, you can effectively reach the 20% threshold without requiring a large upfront down payment.
Piggyback loans combine two separate mortgages. The first mortgage typically covers 80% of the home's value, while the second mortgage (the "piggyback" loan) covers the remaining 10% to 20%. The second mortgage can be a Home Equity loan or a Home Equity Line of Credit (HELOC).
The two most common types of Piggyback loans are the 80-10-10 and the 80-15-5. In an 80-10-10 arrangement, the borrower puts down 10% of the home's purchase price, takes out a primary mortgage for 80%, and a Piggyback loan for the remaining 10%. Similarly, in an 80-15-5 arrangement, the borrower puts down 5%, takes out a primary mortgage for 80%, and a Piggyback loan for 15%.
Besides avoiding PMI, Piggyback loans can offer some additional advantages. They allow you to buy a more expensive home with a smaller down payment, and some offer flexible payment options like interest-only payments for the initial period.
Whether a Piggyback loan is the right choice for you depends on your individual financial status and goals. Consider your budget, risk tolerance, and long-term financial plans. Consult a mortgage professional to discuss your options and determine if a Piggyback loan can help you achieve your financial objectives.