No Down Payment Poor Credit Mortgage Loans Understanding 80 20 Loan

No Down Payment Poor Credit Mortgage Loans Understanding 80 20 Loan Option

No Down Payment Poor Credit Mortgage Loans – Understanding 80/20 Loan Option
When applying for a​ mortgage loan,​ down payments are generally required as​ part of​ the​ financing .​
Many traditional mortgages will only finance 80 percent of​ the​ home price .​
Thus,​ homebuyers are obligated to​ provide the​ additional 20 percent .​
Having a​ down payment of​ 20 percent is​ ideal in​ a​ perfect world .​
In reality,​ few people have access to​ this type of​ money .​
For this reason,​ mortgage lenders are offering 80/20,​ or​ piggyback mortgage loans.
How Do 80/20 Home Loans Work?
The concept around 80/20 home loans is​ very simple .​
Ordinarily,​ if​ a​ homebuyer did not have a​ down payment of​ 20 percent,​ they would have to​ purchase private mortgage insurance,​ (PMI),​ to​ complete the​ home financing .​
On average,​ PMI increases mortgage payments by $100.
If accepting an​ 80/20 home loan,​ PMI is​ not required .​
Instead,​ homebuyers receive two loans to​ finance the​ home purchase .​
a​ first mortgage is​ approved to​ finance 80 percent of​ the​ home cost,​ whereas a​ second mortgage or​ home equity loan is​ approved to​ finance the​ remaining 20 percent.
Who Qualifies for an​ 80/20 Home Loan?
Any homebuyer hoping to​ avoid private mortgage insurance may qualify for an​ 80/20 option .​
Piggyback loans are especially beneficial for first time homebuyers .​
Young couples will also benefit from these loans .​
Usually,​ these individuals have not been able to​ build a​ large cash reserve .​
This way,​ they do not have to​ put off buying a​ home.
An 80/20 home loan is​ also offered to​ individuals with poor credit .​
Mortgage lenders vary in​ their loan qualification guidelines .​
Traditional lenders such as​ banks,​ credit unions,​ and mortgage companies prefer applicants that have a​ high credit rating .​
Thus,​ they may not approve loan requests for credit scores that fall below 640.
On the​ other hand,​ many lenders offer a​ range of​ bad credit mortgage loans .​
These consist of​ loans that provide assistance for down payments,​ closing costs,​ low mortgage rates,​ etc.
Applying for an​ 80/20 Loan with Bad Credit
Mortgage brokers are very effective with helping bad credit applicants find a​ fitting home loan program .​
To smooth the​ process,​ brokers have websites available,​ which offer explanations on​ various bad credit home loans .​
Moreover,​ you​ can request a​ mortgage quote online,​ and receive up to​ four offers from different lenders granting piggyback loans to​ people with bad credit.

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