Combination Mortgage Loans

What is referred to as a hybrid loan or mix loan is an increasingly attractive mortgage choice. Combination loans have several key advantages over conventional 30-year mortgage loans and for most financial situations there are a wide range of variations to match.Kindly visit Island Coast Mortgage Cape Coral to find more information.

The 80/20 loan is by far the most popular combination of mortgage credits. This loan is in fact two loans; the first loan is for 80% of the value of the family, and the second loan is for the other 20%. The buyer pays no down payment with the 80/20 mortgage loan, and is perfect for those without significant savings. The important advantage of the mortgage loan of 80/20 is that the borrower avoids PMI or private mortgage insurance. PMI is provided on all mortgage loans above 80 percent of the value of homes. A third advantage of the mortgage credit mix is that both loans are tax deductible. A borrower enjoys a significant cost savings advantage over traditional mortgage loans by reducing PMI and increasing their tax deduction.

There are also many other ratios of combination loans available. Generally the 70/30 mortgage loan is compared to the 80/20 loan for more expensive homes, where 80 per cent of the home value would be considered as a jumbo loan (above the FNMA / FHLMC limit) and subject to higher interest rate.

The primary loan typically has a 30-year amortization period in variations of mortgage loans, while the second loan may have a 30 or 15 year duration. Expect the interest rate for the second loan to be about 2 per cent higher. The borrower can opt for either or both loans with a fixed rate mortgage or with an ARM (adjustable rate mortgage). The ARM will have a lower monthly premium and allow additional cost savings, but if interest rates start to rise, be sure to refinance the ARM loans.