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How to pick the best mortgage option? 80/10/10

I have excellent credit and can put 10% down. Which would be beneficial for a 500K plus loan - 80/10/10 or 90/10? What are the pros and cons?
  • April 12 - Richmond
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Answers (3)

It really depends on the terms of the second mortgage, compared to the MI option you go with (monthly MI, upfront MI, or lender paid MI).  You will want to look at total interest paid (plus any MI) over the time period you expect to be in the home, factor in how quickly you could pay down the second, and compare the different options.  You should be able to have your lender run the different options for you and explain the pros and cons.  If not, I would be happy to run them for you and show you the differences.  It will likely come down to the 80/10/10 vs. the lender paid MI.  

You just have to be careful in Richmond that you stay below the Fannie limit of $535,900, otherwise splitting the loans is the option to go with.
  • April 14
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Only con could be the terms of the 2nd mortgage which are typically a Home Equity Line of Credit. Payment on this is usually interest only in the beginning years. As Dave said previously, aggressively pay off or pay down and you will have a nice first mortgage left along with a zero balance HELOC that could be used for emergency purposes.

  • April 14
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Profile picture for daveskow
80/10/10 Avoid mtg ins Get best conforming loan amt Pay off / pay down 2nd mtg as quick as possible
  • April 12
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