80/10/10 Financing

80/10/10 financing can get you into a home with a lower down payment but still avoid PMI.

One option to getting into a home without making a large down payment is through 80/10/10 financing. It can be a good alternative to saving for a large down payment.

What exactly is 80/10/10 financing? It breaks up the mortgage loan. 80% of the loan is financed as a first mortgage. 10% of the loan is then in a second mortgage. The final 10% comes from a cash down payment, which is determined by the purchase price of the home.

There are advantages to 80/10/10 financing. It can get you into a home more quickly since it does not take as long to save for 10% of the purchase price of a home as it does to save 20%. This can be advantageous if you are in a community with rapidly rising home prices. Another big advantage is that this is a way to finance 90% of the home loan without having to pay private mortgage insurance (PMI). Most homebuyers prefer to avoid paying PMI since it can be expensive and may not be tax deductible. 80/10/10 financing lets you make a smaller down payment while avoiding PMI costs.

80/10/10 financing can even be a good option if you do have the 20% down payment already saved. Instead of putting all 20% into your new home, you can use 10% for a down payment but use the other 10% for other things. You can use it to invest, pay off other debt, or even to buy needed furniture for your new home.

80/10/10 financing gives you the flexibility to decide what works best for you while avoiding PMI.

Related Life123 Articles

Graduating from college and starting your career probably means your first mortgage is on the horizon. This is a huge financial milestone, so you should know what options you have when it comes to down payments and financing your home.

A mortgage is nothing more than a loan. Like most loans, it requires some collateral (the thing you'll lose if you don't pay the lender back). In this case, the collateral is a house or apartment you want. A bank lends you money to buy a house, and if you don't pay them back when they say to, they get to seize the house, put you out on the street, and sell your home so they can get their money back.

Frequently Asked Questions on Ask.com
More Related Life123 Articles

With the majority of Americans pinching pennies to avoid financial catastrophe, the slightest change in budget can have a severe impact. And what if your home mortgage rates go up? A change can leave a family struggling to make ends meet, but you can prepare yourself.

The Federal Reserve has proposed a new set of lending regulations designed to help protect borrowers. In an effort to tighten up some of the questionable lending practices that are being blamed for much of the current credit crunch, the Fed is calling for stricter guidelines for mortgage lenders.

Although it may seem overwhelming, the mortgage foreclosure process is actually easy to understand. This article breaks down a typical foreclosure process, stage-by-stage from beginning to end.

© 2014 Life123, Inc. All rights reserved. An IAC Company