EXAMPLE OF HOW A 2ND MORTGAGE WORKS:
-A potential borrower typically applies for a primary mortgage loan for 80%of the home value.
-The borrower would then also apply for a 2nd mortgage loan that would be used as part of
the 20% down payment of the sales price.
-Borrowers are expected to contribute a 5-15% down payment from their own funds towards
the 20% down payment.
-The 2nd mortgage loan would incur fees and closing costs in addition to those incurred with the 1st loan.
This also means the borrower will have 2 monthly mortgage payments
AN UPFRONT 20% DOWN PAYMENT CAN BE DAUNTING TO ANY BUDGET. the use of a piggyback second mortgage can help
-Avoid Large Down Payment
-Avoid Private Mortgage Insurance (PMI)
-Avoid High initial upfront costs
-Avoid High interest rate associated with jumbo loans