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>
> Thank you all for your advice. The loan I want to get from the other
> bank is a personal loan, not a home loan. I've excellent credit so
> hopefully that shouldn't be a problem. I want to take a personal loan
> for the 15% amount at a lower rate and use that to pay off the 2nd
> loan, thus lowering my monthly. I want to do the 80/15/5 as opposed to
> the 95/5 because not only do I avoid mortgage insurance (which isn't
> tax-deductible) and pay mostly interest (which is tax-deductible), but
> I also gain equity faster since I'll be paying principal twice as
> fast (the 2nd loan is a 30 year balloon to be paid in 15 years). So,
> hopefully, I can secure a personal loan at a lower rate to pay off this
> high interest piggyback loan. Am I still missing something? lol
>
> --rafiki
>
> Thank you drive through.
1. Getting a personal loan for the 15% will have no tax benefit (won't
be considered mortgage interest).
2. Getting a personal loan may effect your qualification or change
your rate. As another poster pointed out, increasing one's debt
effects one's debt ratio (also known as debt to income or DTI; debt
ratios are a percentage of debt compared to your income. If you have a
debt ratio of 10, then 10% of your income is expended towards your
debt) which could effect both qualification and the original interest
rates quoted.
3. Going 95/5. Although you will be required to pay PMI, one needs to
weigh this against the benefits a higher loan to value/lower interest
rate 1st mortgage. You will pay less mortgage interest during the
lifetime of the loan vs. an 80/15/5. As another poster has already
indicated, doing the math is the only way to determine what makes
sense.
4. Going 80/15/5: Although you avoid paying PMI, your blended rate
will always be higher then the 95/5 approach. Whether a combo loan
saves you money depends on a number of factors. For example, a combo
loan is more advantageous then a single loan with PMI when, 1) The
difference in interest rates between both mortgages is smaller, 2) The
shorter the term on the second mortgage relative to the term on the
first, 3) The higher your income tax bracket.
If you provide the interest rate quoted on your first mortgage, I can
assist you in determining the blended rate, breakeven point and whether
it is better to get a combo loan or a larger loan with PMI.
Regards,
H. Scott Miller
National Commercial and Residential Lender/Broker
Carteret Mortgage
TOLL FREE PHONE#: 1.877.716.6495
TOLL FREE FAX#: 1.877.578.2041
EMAIL: hugh.miller@carteretmortgage.com or EZMortgageLoanz@aol.com
Real Estate Help Desk (www.RealEstate-IQ.com)
Automated Loan Assistant (www.EZMortgageLoanz.com)
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Re: real estate question
